Custom Software Development Cost, Pricing Models and Rates in 2023
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Nobody wants its software to be similar to the competitors. That is the first reason why customers prefer custom software development services instead of COTS. Yet, custom software development is considered to be costly. In RexSoft, we decided to comprehend what are the estimates for custom software products consist of and how to reduce this custom software development pricing.
Custom Software Development What Is It?
First of all, what is custom software development? You may know there are lots of products designed similarly. Yet these products have one big drawback which is low functionality and flexibility. When you need a software product to cover all your needs and to be adapted to your business' peculiarities, on-the-shelf solutions won't work. In that case, it is better to apply for custom software development services. These services include designing, deploying, and maintaining a product with strict requirements and wide functionality implemented in it.
As for the question, whether custom software development is beneficial, we can prove it by listing the 4 main benefits each custom-developed software product has.
High efficiency of custom software development. As it is a purpose-built solution, it is more effective than any on-the-shelf product. You spend less time adjusting this type of software for your business needs and get the highest productivity ever.
Decreasing integration costs. As usual, custom software can be easily integrated with all the products you use in your working routines as it is designed in accordance with these products.
Independence from the vendor. As this software is developed custom for a client, it is maintained also by its developer. This could come in handy as you do not need to search for dedicated support and pay for it extra. Besides, custom development allows getting rid of license payments and other expenses as all these are already integrated into the estimation of the custom-developed software.
You can make your custom-developed software product a source of profit. As you can license it and sell it to other customers. All the properties belong to a customer that means you.
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Custom Software Development Cost Examples
To make the whole concept of custom software development pricing understandable, let’s take an example from the latest successful cases of custom software development provided by RexSoft’s pros.
Moving is a specific niche, that is why a ready-made software is difficult to customize to the specifics of the moving business. Such CRMs often do not have the necessary functionality, or the user does not have the ability to customize them for the company's processes. For our client, in addition to the indicated disadvantages of a ready-made software, it was important that all information inside the CRM system was securely protected and stored on its own server. So the client contacted RexSoft to develop a custom solution.
iMover is a custom software that automates the processes of ordering and performing moving work (transportation). Software serves a group of transport companies. CRM is used by more than 200 workers of these companies - agents, managers, drives, estimators, mounters. The software system accompanies more than 1,500 trips per year.
Custom software has two versions - web for agents and managers and mobile - for movers (drivers, mounters).
How the Software Works
- A client generates a request for transportation (through the form, or through a phone call).
- An agent generates an application (job) for transportation (forms a team of specialists, calculates the cost of services).
- The client receives a cost calculation and makes a prepayment (deposit).
- The generated application proceeds to work for the moving team.
- After a successful move the client makes the payment and sings the work completion certificate (electronic signature).
Custom software includes 4 roles: Admin, Manager, Agent, Responsible for moving. You can learn more about the functionality in terms of roles here.
Main Custom Software Modules
The system includes a lot of modules, we have chosen 8 main ones which are described below.
Internal telephony through the integration of the Twilio service
Each agent has a separate phone and number. When a customer calls a phone number to order moving services, this call is distributed to all phones of available agents. When one of the agents accepts a call, all other agents' phones end the call. In addition, Telephony (Telephone communication) allows to organize internal communication between employees of the company
Automatic customer reminder: Pre-sale - when the client has made a request but has not made a prepayment yet; Post-sale - after a successful move.
Efficiency of working time
Custom software allows to optimize workload and minimize driver downtime using the Gantt chart.
Relocation request widget (client side)
While creating a request to move through the site, the system synchronizes all planned requests to move and the client sees what dates for the move order are available. The system shows the average cost of moving from the building at the address specified by the client. The client indicates the approximate amount of work and the system calculates the required number of specialists for relocation and calculates the approximate cost of services.
Applications for relocation management
Custom software includes a list of statuses (stages), which provides management of applications from the moment of registration to the execution of works and acceptance of payment.
Custom software automatically generates the client's history, which includes a history of contacts of the company's specialists with the client (calls, correspondence, sending SMS, E-mail), a list of applications, and work on the client.
Custom software automatically accrues wages to the company's employees. An employee with the rights of the Admin can set the rate of employees, work schedule, method of accrual of wages (hourly/monthly rate).
The client has the possibility to pay for the relocation deposit using a bank card. Payment for the move can be made by card, check or in cash.
Software Development Time Expenses & Costs
Overall time expenses for this type of custom software reach 5-6 months (3,120 hours). The cost of this CRM software development is $110,000. We’ve indicated the average rates of Ukrainian offshore developers working in RexSoft. Their average rates are $35-40 per hour and this is 1.5-2 times lower than the cost of the same software developed by the US or Western European development teams as their average rates are $70-100 per hour.
Recently, our team launched the logistics app called Brocars – Freight Brokers ERP System. The essence of an app was to provide logical and easy communication between the chain Customer-Dispatcher-Driver to make the process of ordering, driving, tracking faster and safer. In this app, several features were integrated at once:
- Web and mobile versions of the application with various user interfaces for customers/drivers/dispatchers.
- Document flow was also integrated to make the process quicker which means we have integrated request forms, pictures made by a driver, electronic signature use.
- Tracking system to supervise the route and driver’s movement in real-time.
All this was developed in 1110 hours in total. The team that worked on it consisted of a PM, an IT architect, designers, front-end and back-end developers, QA. The whole custom software development cost for the Brocars project reached $40,000. Yet you can be sure that when applying for a similar pack of services in US agencies, you will have to pay several times more.
Custom Software Development Rates in Different Countries
It seems logical that custom software development rates vary depending on the region. As usual, the most costly services in this field belong to IT pros from North America (the USA and Canada) and Western Europe (primarily, UK and Sweden). On average, software development hourly rates are dispersed in the following way in 2022:
- North America - $80+;
- Western Europe - $75+;
- Eastern Europe - $55+;
- Latin America - $55+;
- Asia/Pacific - $28+;
- Africa - $31+.
It is not a good idea, by the way, to immediately apply for custom software development services in regions with the lowest rates. There is one important reason for this: the low salaries of IT specialists are often associated with the fact that the specialists of these countries themselves have an insufficient level of qualification to carry out custom projects. Accordingly, instead of a high-quality custom product that will be flexible and easily integrated into your business, you will get the software of dubious quality and performance.
As the statistics for 2022 show, the best offshore specialists for the development of custom products with rates below the countries of Western Europe and the USA are Ukrainian developers. Their main advantages, besides reasonable rates, are:
- High level of qualification and high-quality higher specialized education in the field of high technologies.
- The desire to go further and high learning skills.
- Excellent communication: most Ukrainian developers speak English at B+ level and above.
Accordingly, by choosing the golden mean among the average rates of custom software development, you not only save the budget but also retain the high quality of the work of developers.
Cost Estimation Models for Custom Software Development
Making cost estimation is a real die-hard task for a customer. Yet estimation is a considerable part of planning. When it comes to custom software development estimations, there are several models you can use for performing it. Here they are.
Imagine that you have to develop a product. You divide the whole process into stages, evaluate the developer's demands and rates, distinguish all the factors that impact the total cost of the product you want to get. Then you can evaluate each of these factors, taking them as algorithms, and calculate the total custom software development cost by adding costs for each stage and factor. This is quite a flexible method yet it won't save you from some unpredictable expenses that could appear while working on the product you ordered.
Expert's Opinion Model
You can delegate estimation of costs to the expert. Yet, it is a bit of an uncertain method as lots in it depends on the human factor and subjectivity of an expert. Besides, experts from various regions could provide you with estimations that will vary several times so the total custom software development pricing is a little bit uncertain when using that model.
Analogs Inspection Model
The simplest way on how to estimate custom software development cost is the analog inspection model. Everything is just a piece of cake. Choose several software projects that have similar functionality and technical features to your future product and compare their costs. The golden mean will be the answer to how much custom software development will cost in your case.
Top 4 Factors to Influence Custom Software Development Costs
In the algorithm model for custom software development cost estimation, we have already mentioned that several factors influence the total cost of a product. Let's enclose them in detail to understand the whole process and stages of custom software development.
Project Requirements and their Complexity
This is the first factor that impacts custom software development pricing. Agree, developing a simple mobile app for your e-commerce business is easier than creating an enterprise product that will be integrated with several other systems or products. So the more complex tasks you set for custom software developers, the higher will be the cost of the product. And vise versa, the easier the task is, the less time it will take to make it done and the lower custom software development rates you’ll pay.
The Level of Security and Reliability
The complexity of the task at hand for developers is just the tip of the iceberg. The next factor that determines custom software development cost for your product is its reliability and safety. Let's take a simple example. For the development of a custom entertainment product that does not require the use of personal and payment data of users, security will not be in the first place. But if you want to order the same software for managing an online store, where customers will pay online, you will have to pay much more attention to the security of payments and personal data. And this will also entail additional costs because the developers will have to think over both the functionality of the software and its methods of protecting information. In addition, for this type of software, support and service will be a mandatory option, for which you will also have to pay.
Custom Software Developer's Experience and Skills
There is no need to say that every customer strives to get his custom-developed software from the real pro. Yet the services of skilled and in-demand developers always cost more than custom software development by an unknown agency or team. Besides, there is a big dispersion in custom software development rates even in the US. No matter to say that developers from other countries will cost you less.
The Type of the Framework Your Software Will Be Developed on
The client usually does not delve into the intricacies of software development but the choice of a platform for development is one of those factors that should be taken into account. The fact is that many modern frameworks can be used for custom solutions but each of them has its own advantages and disadvantages. The better the platform is protected, the more functional it is, and the more features it provides, the more expensive the finished product is. It is one thing to get software developed on free frameworks, it is quite another thing to use a product developed on modern best technologies.
Top-3 best Technologies for Custom Software Development: Pros&Cons
In RexSoft, we use only top-rated software development technologies. So we are eager to share our experience and thoughts about the best custom software technologies with you.
Node JS and Its Pros&Cons
Let's start with one of the most popular frameworks for today's custom software development. That is the Node JS framework.
Benefits of Node JS Custom Software Development
This framework has already recommended itself as the most light-weighted and functional ecosystem for web development. Its merits are diverse as Node JS allows to:
- Reduce full-stack custom software development rates,
- Get supported by a wide community to solve the hardest tasks,
- Boost application's performance and reduce its response time,
- Provide all the requirements in the custom product.
As for its cons, they are inconsiderable for a customer as an experienced developers' team could cope with them.
Rates for Node JS Development in the US, India, and Ukraine
Comparing costs of custom software based on Node JS framework, there is wide dispersion in hourly rates depending on the location of the team.
- In the US, the price per hour of the work of a Node JS developer will be $60-$120.
- In Ukraine, the same working process costs 33% cheaper with an average rate of $20-$40 per hour.
- In India, Node JS development is not widespread yet the pricing will be $25-$40 with no guarantee that the product will be of high quality.
per hour of the work of a Node JS developer in Ukraine
React Technology for Frontend Development
React Native and React itself is one more technology we widely use in RexSoft. Let's consider why it is profitable to develop custom software using that framework.
Benefits of React Development
Using React you can create native apps for all the major OSs and web apps in a full. That is one of the main benefits of that ecosystem. Various sets of components and libraries for React Native (an advantage of all good frameworks) help to close performance tasks during product development. Besides, it is the best solution for MVP.
If talking about React's drawbacks, there is one that should be considered. It's quite a young framework so it requires skills from a developer to implement all the requirements of a customer in the product.
Rates for React Software Development Comparing US, Ukraine, and India
As for custom software development rates, in the US, you will pay from $52 to $75 per hour to get your React software developed. In Ukraine and India rates are lower at least several times. In India, you can find a full-stack developer for a React project for $6 per hour yet he won't be a real pro. In Ukraine, average React developer's rates are higher but the quality of a product you get will also be higher.
per hour to a Junior React developer up to a Senior developer's services in Ukraine
Flutter Mobile Software Development
For mobile apps, Flutter is among the best solutions ever. This framework allows making apps with better UX and native-like origin.
Benefits of Developing Software Using Flutter
Talking about Fluter's bright sides we should mention that this framework allows the quickest bug fixing and instant changes provided. This is the best option for customers who want to get their custom-developed software timely. As for the cons of that ecosystem, there is one but considerable. It is used for mobile app development only.
Rates for Flutter Development
As for actual pricing, the US holds the palm, as usual. Flutter developers in the US get hourly salaries of $75-$120. While in India, the average rate is only $25-$50. Ukrainian Flutter pros are the golden mean as they require only
per hour for custom software development in Ukraine
Custom Software Development Costs
Let's check out how much it will cost for you to get custom-developed software. As the total pricing depends on the complexity of a product and its functionality, let's list major product types and their prices for custom software development.
- Enterprise companies that hire hundreds and thousands of employees and create software products with the widest functionality will require from you from $200,000 up to the amount of 5 times higher.
- Custom software by big companies costs cheaper as their requirements are lower. The total price may vary from $125,000 to $1,000,000.
- For products developed by middle-class agencies, the pricing will be from $50,000 to $750,000. Here also could be several peculiarities that impact the estimation.
- Small agencies will be the cheapest option yet not the worst one. When you need just a simple product for your business, you can apply for it for the price of $10,000 up to the total cost of $50,000.
So everything depends on your product's specifics and on your ambitions whether you want to get custom software from the market's big fishes or you will be content with the services provided by middle-class or small IT agencies.
How to Decrease Custom Software Development Costs?
Since custom software development is rightfully considered not a cheap service, many clients refuse such a solution. Completely in vain, we can tell you. It is easy enough to reduce custom software development pricing if you use a few fundamental tricks.
First of all, estimate custom software development pricing from local developers. We are sure that you will be shocked by the heights of the rates of American development agencies and even freelance developers. Now think, why not order custom software development offshore? This solution will allow you to reduce the cost of the finished product almost several times. Today in the IT market, there are a lot of brilliant specialists working remotely. Moreover, in terms of their qualifications, they may well compete with employees of Silicon Valley companies. IT specialists and developers from Ukraine are especially highly valued today. Due to the high quality of higher education, the absence of a language barrier, and, at the same time, very modest demands, Ukrainian developers have become an excellent competitive force. You can easily set the most difficult tasks for them and get a guaranteed quality product as a result. And the price of custom development software in this case will be three times lower than when ordering the same product in the United States.
Availability of Portfolio
No one likes to buy a sandwich in the bag so it is worth applying for a portfolio further. Responsible and experienced developers will always be able to provide you with samples of their work and recommendations from clients to assess their skill level. What happens if you order custom software development without looking at the portfolio? There are great risks that in the future you will have to pay extra for fixing bugs and bringing the project to a working state.
Saving Costs for Testing and Maintenance
Do you know what is MVP? It is a minimum viable product. This type of software could be planned and designed but its release will provide you only with basic functionality. Yet, you can improve its drawbacks further. What is the merit of MVP? You can start using it quicker than when developing it in full, Besides, you do not need to pay all the cost momentarily so you can postpone paying total estimation and use the software as-is.
Let's summarize. Custom software development is a fairly effective solution for businesses of various levels. In the case of ordering such a product, you get software that is fully adapted to your needs, does not require long-term integration, and is ready to work in your business realities.
Of course, such software is more expensive than ready-made on-the-shelf solutions. But in this case, you pay for the quality and customization to your requirements.
The cost of custom software development depends on a number of factors. This is the complexity of the product, and its security, and the level of qualifications of the development team. The reputation and the size of the IT agency also affect estimations. Even the location of the developer's company also plays a role. For example, even within the United States, rates may vary from state to state. It is believed that offshore custom software development is cheaper. This is indeed so because the rates of developers from India and Ukraine are several times lower than the cost of the services of American specialists. But you should be careful in choosing a contractor for custom software development. For example, Indian programmers are not regulated by the state in any way, and no one will give guarantees that for a low price you will receive a really workable product. At the same time, all this is precisely regulated in Ukraine, and you can be sure of the decency of local outsourcers.
In addition, do not forget that you can reduce the cost of custom software development by requesting a portfolio of developer projects, ordering an MVP, and recruiting offshore specialists.
Bogdan MisiurenkoBusiness Development Manager