How Much Does Custom Software Development Cost? A Comprehensive Guide

8 min readDec 19, 2022
Custom software development cost

To meet up changing consumer requirements and evolving pace, adopting a software solution is a must.

You can achieve the following benefits with the right software solution:

  • Meet the business’s exact needs.
  • Obtain higher efficiency.
  • Integration with existing products is possible.
  • Highly secure.
  • Able to deliver good customer experience.

Developing custom software can be costly. As the features and other elements vary, it is impossible to provide a fixed price.

1. What is Custom Software Development?

Custom software development is designing and building tailor-made software to serve a particular business or individual.

Businesses usually use them when they require to

  • Fulfill specific requirements.
  • Provide personalized experience to users.

Experts expect the global market size of custom software development to expand at a compound annual growth rate (CAGR) of 22.3% from 2022 to 2030.

2. Factors That Can Affect Your Software Development Cost

Factors that affect custom software development cost
  1. Platform Type

Do you want to develop software for web or mobile apps or both Android and iOS? Or sometimes it could also be building software app desktop apps on Windows or Mac.

The software development cost may change depending on the platform you choose.

Let us see some of the platforms that businesses deploy custom software:

  • Unix
  • Linux
  • Windows
  • Mac
  • Android
  • iOS
  • Web

Choose cross-platform development if you plan to deploy your software on multiple platforms. It often allows you to reuse the code and build the software in less time. Hence, the cost will be less than building code in separate native environments.

2. Development Approach

Check whether the software development team follows the Agile process.

Agile projects have a 64% success rate, while waterfall projects have a lower success rate of 49%.

Agile Process:

Agile methodology
  • The process emphasizes flexibility, collaboration, and continuous iteration and improvement.
  • Agile teams work in short, iterative cycles called “sprints” by dividing the project into smaller tasks.
  • They are easily adaptable and highly responsive to business needs and market conditions.
  • They follow a cost-effective development lifecycle.

The advantages of the agile process are:

  1. You can create a roadmap in the starting stage and get clarity about different aspects of the project.
  2. The software development team will develop prototypes that help in determining whether the product is right for you.
  3. Iterative sprints ensure minimal bugs, and the project doesn’t take longer development time.

3. Software Size

Bigger the size of your software, the higher the costs.

It would be advisable to go for MVP development first. Once you are happy with the MVP, you can develop the complete version. It will help you invest the optimum budget and get the proper result.

4. Software Complexity

Does your project include automation requirements?

Or does it involve overly complex workflows?

Such situations can lead to an increase in the complexity of your project. More complex ones call for more productivity.

Reducing the complexity of your project can be a great way to reduce the price of your custom software development.

5. App Integrations

Your app may need integrations with the following:

  • Third-party app integrations
  • APIs
  • Enterprise legacy apps.

Integration with legacy applications may cost more while building software. Likewise, building new APIs can also result in a rise in development costs.

6. Database Migrations

Creating a backup of existing data removes the risk of data loss. A more extensive database will have higher security requirements and existing potential vulnerabilities. These elements will increase the cost of custom software development.

An experienced software development team can help to complete the phase more smoothly.

3. Engagement Models For Outsourcing Custom Software Development

You will need to partner with a software vendor to build your custom software.

You can mainly follow the below two engagement models:

IT staff augmentation

Does your company already have an inshore IT team?

Do you need to strengthen the team further to develop the custom software?

As per this model, you can hire as many team members to meet your requirements.


  • Increase the overall capacity or expertise of its IT department.
  • Get experienced professionals who have specialized knowledge and skills.
  • A cost-effective way to meet business objectives.

Product Development

Do you have an idea for a solution for building software for your dream project?

This model is the best option if you are looking for a development partner to develop your idea.


  • Start building the software from scratch.
  • The developer will be responsible for creating your product.
  • The price depends on the agreement with your partner.

4. The Major Expenses Involved in Custom Software Development

Let us look at the principal costs associated with the custom approach. It will help you to figure out the fees accordingly.

Team Salary

  • The cost of team pay may vary depending on the skill level and experience of the members you hire.
  • Wages for highly trained and experienced software developers will be higher.
  • The development team size can also reflect the total cost of team wages. A larger team will usually have more compensation than a smaller one.
  • The development team’s location can also affect the cost of team wages. For example, wages in significant cities or tech clusters may be higher than in other regions.

First, let us see the team members required for your custom software development:

Team members required for a custom software development

Full-stack Developer: They are in charge of the complete development process, from initial concept and design to coding, testing, and software deployment.

Project Manager: The project manager manages the project team, defines timetables, and ensures that all tasks proceed per the project plan.

Business Analyst: The business analyst identifies stakeholders’ business needs, collects and assesses requirements, and presents those requirements to the software development team.

QA Analyst: The QA analyst guarantees that the software satisfies the customer’s demands and ensures the product delivers high-quality output.

UI/UX Designer: UI/UX designers are responsible for creating the best appearance and feel of the software and the user experience. They prepare wireframes, mockups, and prototypes to test the software’s usability.


Are you planning to build an e-commerce app that requires integration with a payment gateway?

Do you want to build an AI-powered conversational chatbot solution to converse with customers?

Such additional features may attract additional development expenses.

Tech Stack

Programming languages, databases, frameworks, libraries, and other tools and technologies fall under the technical costs of custom software development.

You may need to hire with particular expertise to implement specific technologies for your product. Implementing next-gen features like Artificial Intelligence, Predictive Analytics, Virtual Reality, etc., will cost you more.

Project Completion Time

Building an MVP will take less time; thus, you can find the right product for your business within less time.

If you plan to build an MVP first, you will be able to test the quality of your product soon.

The shorter the development period, the lower the costs you will incur.

Always begin from the product discovery phase and reduce the project risks early. It will help you spend the optimum budget for your custom software project.


  • The UX/UI design cost of custom software development varies depending on the design team’s experience.
  • Design and prototyping can affect the cost depending on the number of screens and features.
  • User testing and iteration and creating design assets such as icons and graphics will add to the final price.
  • Ongoing maintenance and design modifications can also increase the overall cost.

5. Custom software development cost in different regions

The cost to develop custom software for your business can vary depending on the location of the software development team.

To get a rough idea, let us see each region’s average price per hour for software development.

Location and cost table

6. Simple Tips to Reduce the Cost of Custom Software Development

Tips to reduce the cost of custom software development

The below tips will help you reduce the overall budget of custom software development without compromising the quality.

  • Understand the project requirements clearly.
  • Find a reliable software development company that provides experienced engineers.
  • Communicate well with the software development team.
  • Proper planning regarding the project timelines.
  • Perform software testing which is an integral part of software development.
  • Prioritize the necessary features.

7. Estimate Your Custom Software Development Cost

Now you know the cost-determining factors of custom software development. It’s time to learn an estimated cost for your custom software project.

Estimate cost of custom software development

8. Request for Proposal

A Request for Proposal (RFP) is a document requesting proposals from potential vendors for custom software development projects. A typical request for a proposal must have the following information:

  • Project scope and deliverables
  • Desired features and functionality
  • List of experts you seek
  • Deadlines, etc.
  • Criteria to evaluate the proposal, etc.

The document allows a potential vendor to give an accurate estimate of the budget you will require to complete the project.


Basic projects often cost a few thousand dollars, whereas massive, sophisticated projects require a considerable budget. Before beginning a custom software development project, firms should carefully examine their needs and budget and work closely with a credible development team to ensure the project’s success.

Outsourcing can be a great option for creating a custom application. You don’t have to worry about providing employee benefits, covering infrastructure costs, or other IT costs.

At RaftLabs, we have a team of experts who can build custom software solutions aligning with a client’s needs. We communicate the requirements and budget with each client before proceeding further with the project. We also provide suggestions that will help you to reduce costs and get the best results. Contact us if you wish to have a free technical discussion with our team to build custom software solutions.

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