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The cost of custom software development can vary widely. A small internal tool may cost a few thousand dollars, while a large platform can require a six-figure investment or more.
In this guide, you will learn what drives software development costs, how pricing typically breaks down by project type and development phase, and what hidden expenses to consider. You will also see how to estimate your own project budget step by step, using clear and realistic assumptions.
Key takeaways
- There is no fixed price for custom software. Costs depend on scope, complexity, features, team structure, and long-term support needs.
- Project size and feature set are the biggest cost drivers. The more complex the system and the more functionality you include, the more development time is required.
- Software cost goes beyond coding. Planning, UX/UI design, testing, deployment, security, and maintenance all require time and budget.
- Hidden costs can increase the total investment. Changing requirements, third-party integrations, scaling, and infrastructure expenses should be considered early.
- A structured estimate reduces financial risk. Defining an MVP, prioritizing features, calculating time based on complexity, and adding a contingency buffer help create a realistic budget.
Key factors that impact software development costs
Software development costs are shaped by practical, measurable factors. The more work required, the more time the team spends — and time is the main driver of cost. Below are the key elements that usually have the biggest impact on the final budget.
1. Project size and complexity
Project size refers to how much software needs to be built. A small internal tool with limited users and simple logic will cost far less than a large platform with multiple user roles, dashboards, data processing, and integrations.
Complexity also plays a big role. For example, building a basic website is much simpler than creating a real-time messaging app, a financial system, or a healthcare platform. Complex systems require more architecture planning, deeper technical knowledge, and more testing. As complexity increases, development time grows — and so does the cost.
2. Feature set and functionality
Features are one of the biggest cost drivers. Each feature takes time to design, build, test, and refine. A login system, user dashboard, payment processing, search functionality, and reporting tools — each of these adds development hours.
Advanced features such as artificial intelligence, real-time updates, video streaming, or complex data analytics increase costs further because they require specialized expertise and additional infrastructure.
3. Developer location and hourly rates
Developer rates vary widely depending on location and experience level. Teams in North America and Western Europe typically charge higher hourly rates than teams in Eastern Europe, South America, or Asia.
However, hourly rate alone does not determine total cost. A more experienced developer may charge more per hour but complete tasks faster and with fewer mistakes. In contrast, a lower hourly rate can sometimes lead to longer timelines.
The project model also matters. Hiring freelancers, working with an agency, or building an in-house team all come with different cost structures, including salaries, taxes, benefits, and management overhead.
4 .UX/UI design complexity
User experience (UX) and user interface (UI) design affect both development time and cost. A simple, template-based design takes less effort than a fully custom interface with animations, interactive elements, and responsive layouts for multiple devices.
If the software must work smoothly across mobile, tablet, and desktop screens, the design and front-end work increase. Accessibility requirements and usability testing can also add to the design effort.
Good design improves usability and reduces user errors, but it requires planning, research, wireframes, prototypes, and revisions. All of this contributes to the overall budget.
5. Testing, QA, and deployment
Testing ensures the software works as expected. The larger and more complex the system, the more testing is required. This includes functional testing, performance testing, security testing, and compatibility testing.
Quality assurance (QA) may involve manual testing, automated testing, or both. Automated tests require additional setup time but can reduce long-term maintenance effort.
Deployment also has associated costs. Preparing servers, configuring environments, setting up monitoring tools, and ensuring smooth releases require technical work. Skipping or reducing testing may lower short-term costs, but it often leads to higher expenses later due to bug fixes and system failures.
6. Security and compliance
Security requirements can significantly increase development costs. Applications that handle personal data, financial information, or health records must meet strict security standards.
Compliance with data protection laws and industry regulations may require additional encryption, secure authentication systems, audit logs, and documentation. Security reviews and penetration testing may also be necessary.
The more sensitive the data, the more attention and resources must be allocated to protecting it. This adds time and cost but reduces long-term risk.
3. Maintenance and post‑launch support
Software development does not end at launch. Ongoing maintenance includes bug fixes, updates, performance improvements, and adapting the system to new operating systems or devices.
Infrastructure costs — such as servers, cloud services, and monitoring tools — continue after release. Over time, businesses may request new features or improvements based on user feedback.
Post-launch support is often underestimated in early budgets. Planning for maintenance from the beginning helps avoid unexpected expenses later.
Average cost of software development
Estimating software development costs can be difficult because each project is unique. However, we can look at typical ranges for different types of projects to give you a general idea of how time and cost grow with complexity.
Below is a simple comparison of three broad categories — simple, medium, and advanced projects. These categories are based on typical development time, the range of cost you might expect, and the kind of team usually involved.
Project type
Timeline
Cost range
Team composition
Simple
1–3 months
$10,000–$50,000
1–2 developers, part-time designer
Medium
3–6 months
$50,000–$150,000
2–4 developers, designer, QA/tester
Advanced
6+ months
$150,000+
3–6+ developers, designer, QA, project lead
Simple projects often include basic apps or internal tools with straightforward features and limited user roles. Because they are small in scope and technically straightforward, they take less time to design and build. A small team — perhaps a couple of developers and a part-time designer — can usually deliver these projects.
Medium projects add more features, user types, integrations, and a stronger design focus. These systems require additional planning, testing, and coordination, which means a broader team and longer timeline. A dedicated designer and a tester help maintain quality.
Advanced projects involve complex logic, real-time functionality, large data handling, integrations with external systems, or specialized features such as AI or secure transaction processing. These demands increase development time, require more specialized skills, and often need a formal project lead or technical architect.
These ranges are general and can vary based on team location, technologies used, and unique project requirements. Still, they help show how cost grows with scope and complexity — simple software tends to be faster and cheaper, while advanced systems require more time and resources.
Software development: cost breakdown by phases
Software projects are usually divided into clear stages. Each phase requires time, people, and specific skills. Understanding how costs are distributed across these stages helps you build a more realistic budget.
While the percentage spent on each phase varies depending on the project, most custom software follows a similar structure.
Below is a general overview of how costs are often distributed across phases. These percentages are approximate and vary depending on project complexity.
Phase
What it covers
Estimated cost range (for $100 K project)
Typical % of total
Planning
Requirements, scoping, architecture planning
$5,000–$15,000
5–15%
Development
Coding, backend & frontend implementation
$40,000–$60,000
40–60%
UX/UI Design
Wireframes, visual design, usability work
$10,000–$20,000
10–20%
Testing
QA, bug fixing, performance and compatibility tests
$10,000–$25,000
10–25%
Deployment
Launch setup, servers, environment config
$5,000–$10,000
5–10%
Maintenance
Ongoing support, updates, fixes
$10,000–$20,000 annually
10–20% yearly
These percentages show that development is usually the largest expense, but other phases also require significant resources. A balanced budget across all stages reduces risk and improves the chances of delivering stable, reliable software.
1. Planning
Planning is the foundation of the project. This phase includes defining goals, gathering requirements, outlining features, creating technical specifications, and estimating timelines.
During planning, the team may conduct workshops, competitor research, and technical assessments. Architects or senior developers decide how the system will be structured. Clear documentation is created to guide development.
Planning usually represents a smaller portion of the total budget compared to development, but skipping or rushing it often leads to costly changes later. A well-defined scope reduces misunderstandings and prevents unnecessary rework.
2. Development
Development is typically the largest cost component. This is when developers write code, build features, connect databases, and implement integrations.
The cost here depends heavily on the number of features, system complexity, and required technologies. Backend and frontend development may run in parallel. Larger systems may require multiple developers working together, which increases coordination effort.
Development often accounts for the biggest share of the budget because it involves the most hours.
3. UX/UI design
UX/UI design focuses on how the software looks and how users interact with it. This phase includes user research, wireframes, visual design, interactive prototypes, and revisions.
Design may start during planning and continue alongside development. The more custom the interface and the more screens involved, the more time designers spend refining layouts and improving usability.
Good design reduces user confusion and lowers support costs after launch, but it requires careful preparation and testing.
4. Testing
Testing ensures the system works correctly before release. It includes functional testing (does it work?), usability testing (is it easy to use?), and performance testing (does it handle load?).
Quality assurance specialists review features, report bugs, and verify fixes. Automated tests may also be created to check core functionality.
Testing is sometimes underestimated in budgets. However, fixing issues before launch is usually far cheaper than correcting them after users encounter problems.
5. Deployment
Deployment covers preparing the system for launch. This includes setting up servers or cloud environments, configuring security settings, migrating data, and publishing the application.
This phase may also involve final performance checks and monitoring setup. Although deployment is shorter than development, it requires experienced engineers to ensure a smooth release.
6. Maintenance
Maintenance begins after launch. It includes fixing bugs, updating dependencies, improving performance, and adapting to new operating systems or browser versions.
Over time, businesses may request new features or adjustments based on user feedback. Infrastructure costs, such as hosting and cloud services, continue throughout the software’s lifecycle.
Maintenance is an ongoing cost rather than a one-time expense. Many teams estimate annual maintenance at a percentage of the initial development cost.
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Hidden costs in customized software development
When planning a software project, most budgets focus on development hours and design work. However, several costs are not always obvious at the start. These hidden expenses can increase the total investment if they are not considered early.
Understanding these factors helps avoid surprises and makes budgeting more realistic.
Discovery and changing requirements
Discovery is the early stage where the team clarifies goals, user needs, and technical constraints. If this phase is rushed or incomplete, gaps in understanding often appear later.
As the project progresses, stakeholders may request new features or adjustments. Sometimes this happens because users test early versions and suggest improvements. Other times, business priorities shift.
Even small changes can require reworking existing code, updating designs, and repeating tests. Over time, these adjustments add hours that were not part of the original estimate.
Clear documentation and strong communication reduce this risk, but change is common in custom software projects. It is wise to reserve part of the budget for evolving requirements.
Integrations and third-party tools
Many applications depend on external services. These may include payment gateways, mapping services, email systems, analytics platforms, or customer relationship tools.
Integrations can be more complex than expected. APIs may have limitations, poor documentation, or frequent updates. Some third-party services charge usage fees, monthly subscriptions, or transaction-based costs.
If a provider changes its pricing or technical requirements, the software may need updates to remain compatible. These recurring fees and maintenance tasks are often overlooked in early budgets.
Technical debt and scaling
Technical debt refers to shortcuts taken during development to meet deadlines or reduce initial costs. For example, skipping documentation or writing quick but fragile code may speed up launch but create problems later.
Over time, technical debt increases maintenance effort. Fixing bugs becomes harder, adding new features takes longer, and performance issues may appear.
Scaling is another hidden cost. A system that works well for 1,000 users may struggle with 100,000 users. Improving performance often requires infrastructure upgrades, code optimization, or architectural changes.
Planning for growth early can reduce these future expenses.
Infrastructure and cloud costs
Hosting, servers, databases, and cloud services generate ongoing expenses. Costs depend on traffic, data storage, and system complexity.
As usage grows, infrastructure costs increase. High availability setups, backups, security monitoring, and content delivery networks add further expenses.
These costs continue after launch and must be included in long-term financial planning. Ignoring them can lead to unexpected monthly bills and pressure on operational budgets.
How to estimate your project cost
Estimating software costs becomes easier when you break the project into clear steps. Instead of guessing a total number, you can calculate it based on scope, time, and team structure. The process below helps create a more realistic and structured estimate.
1. Define your goals and MVP
Start by clarifying what problem the software should solve. Who will use it? What outcome do you expect?
Next, define the minimum viable product (MVP). The MVP includes only the core features needed to launch and deliver value. It does not include every possible improvement or future idea.
Focusing on the MVP keeps the first version manageable and reduces initial costs. You can always expand later once the core system works well.
2. Outline features and set priorities
List all desired features, then separate them into categories: essential, important, and optional.
Essential features are required for the software to function. Important features improve usability or efficiency. Optional features can be added later.
This prioritization prevents the budget from growing too quickly. It also gives flexibility if time or financial limits require adjustments.
3. Estimate development time based on complexity
Each feature requires development time. Simple features may take days, while complex ones may take weeks.
Complexity increases when features require advanced logic, real-time updates, integrations, or strict security controls. The more interconnected the features, the more time developers need for implementation and testing.
After reviewing all features, estimate the total development hours. Even rough time estimates provide a stronger foundation than guessing a total price.
4. Calculate costs based on team rates
Once you estimate hours, multiply them by the hourly rates of the team. Rates vary depending on location, experience, and project model.
For example, senior developers typically charge more than junior developers, but they may complete tasks faster. Agencies often include project management and QA in their pricing, while freelancers may not.
Be realistic about how many people are needed. Larger or more complex projects require designers, testers, and possibly a project manager in addition to developers.
5. Include testing and ongoing support
Testing should not be treated as optional. Allocate time and budget for quality assurance, bug fixes, and performance checks.
After launch, plan for ongoing support. Software requires updates, security patches, and occasional improvements. Annual maintenance is often estimated as a percentage of the initial development cost.
Ignoring post-launch costs can lead to financial strain later.
6. Create a budget with a contingency buffer
Even with careful planning, unexpected changes may occur. Requirements may evolve, integrations may take longer than expected, or technical issues may appear.
To manage uncertainty, include a contingency buffer in your budget. Many teams reserve an additional 10–20% of the total estimate for unexpected work.
This buffer provides flexibility without disrupting the entire project. A well-structured estimate combined with a realistic safety margin gives you better control over both costs and timelines.
Conclusion
Custom software development costs depend on many factors: project size, feature set, team rates, design complexity, testing, security, and long-term maintenance. There is no single fixed price, but with clear goals, a defined MVP, and realistic planning, you can build a reliable cost estimate. Breaking the project into phases also helps you understand where your budget will go and how to avoid hidden expenses.
If you are planning a software project and want a clear, structured estimate, contact Setronica. Our team will review your requirements, explain your options, and help you build a solution that fits your goals and budget.
FAQ
How much does it cost to develop an application?
The cost of developing an application depends mainly on its complexity and feature set. A simple app with limited functionality may cost between $10,000 and $50,000. A medium-sized application often ranges from $50,000 to $150,000. More advanced applications that include complex logic can exceed $150,000. The final price depends on the number of features, design depth, developer rates, and post-launch support.
How much does it cost to hire a software developer?
The cost of hiring a software developer varies by region and experience level. In North America, hourly rates typically range from $80 to $180 or more. In Western Europe, rates often fall between $70 and $150 per hour. In Eastern Europe, developers usually charge between $40 and $100 per hour. In South America, rates commonly range from $35 to $80 per hour, while in many Asian countries, rates can start around $25 and go up to $70 per hour.
How much does it cost to develop software?
Custom software development can cost anywhere from $10,000 for a small internal tool to $200,000 or more for a large, complex system. The total investment depends on project scope, feature complexity, team structure, security requirements, and long-term maintenance
Is custom software worth it for a small business?
Custom software can be a practical choice for a small business when existing solutions do not fully support its processes. Tailored software can improve efficiency, reduce manual work, and support growth over time. However, it is important to start with clear goals and a focused minimum viable product to control costs. Many small businesses benefit from launching a smaller version first and expanding the system gradually as their needs grow.
