How much does custom software cost? – ultimate guide

Do you have an idea for a new website to build which will be much more complicated than just a simple landing page? Do you believe that it has a chance to become successful? Great! Unfortunately you aren’t a web developer and also you don’t have your own development team. This means you will need to find a reliable partner in order to achieve your goals.

So, you find the right team, everything looks amazing, but then you hear the price and your dreams… fall apart. You never realized that creating a website application could be so expensive! Your idea seemed to be so simple… but you should be conscious that behind the beautiful graphics lurks a lot of work.

Today we are going to explain to you how much custom software costs and other issues like: how to assess the complexity of the project and how to write a good request for quotation. Before you get in touch with a potential contractor, you should do your homework, and we will help you with that!

Validate your idea first

Outsourcing website development to teams of graphic designers, developers and testers is quite an expensive adventure. Especially, when it’s your first project and you believe that a great idea is everything and that success is guaranteed.

You don’t need to bear huge costs in order to verify your idea. You do not have to hire a market research agency or wait for the programming team to complete your website.

First of all, establish who your target audience is. Who is going to be your recipient – children, young women or seniors? From small or big cities? What is their financial situation? Are they technologically advanced or not?

Introduce your idea to your friends and family, preferably individuals close to your target group. Find out if they are willing to buy your service.

These are the three most common mistakes people who are designing their first start-up make:

  • no verification of the business idea,
  • the desire to add to many unnecessary functionalities to the project,
  • releasing the product to the market too late.

How much does it cost to release another Facebook?

We very often get requests from clients who show us existing web pages and ask us: “how much does it cost to release this kind of website”?

Everything you see when looking at someone’s website is usually only the tip of the iceberg. You only see the graphic designer and front-end developer’s work. You are not able to see the back-end developer’s effort because it’s all hidden behind the beautiful layout. And there may be many other aspects of complexity to the website that you can’t see. This can include:

  • Features, especially those that are not visible at first glance. These can be administrative panels, management functions for the owner of the website or complex integration with external systems.
  • Technology platform, on which the website is built.
  • The volume of traffic supported on the site and the type of server infrastructure on which the website is hosted + maintenance cost.
  • Tests the website passed.

What do you think? How much does it cost to release a second Facebook?

  • 5 thousand dollars?
  • 1 million dollars?
  • 100 million dollars?

The truth is that all answers are correct. How is this possible? It depends on what is “a second Facebook” for you. Do you want to create just a simple website where everyone can add a single photo that is displayed on a public wall for a few friends? Or do you also want to add the possibility of creating user accounts, advanced private settings and video support? Or maybe you want to add the assumption that there may be one hundred million users at the same time?

No software house can know what it is about a certain website that you want to emulate, what is important in this project for you and what business goals you have. This kind of information is what you should collect beforehand and try to describe in the request for a quotation.

On the other hand, gathering all functions of a given website is often a necessity to perform an audit, which requires both specialist knowledge and a large amount of time to be spent. Especially in the case of B2B websites, this may not be fully possible – most of the functions will be hidden and available only to a group of verified users.

We have also received inquiries about the implementation of websites we have already worked on or supported in some way. We will not respond to such queries with a specific amount. First of all – each website has its own unique business assumptions and know-how which are confidential information. Secondly – it would be unfair to clients who have done business with us in good faith.

These are reasons why every self-respecting software house doesn’t create similar website applications. Even if they operate in the same industry, every website would be different.

So if you want to create another website that “helps you to contact other people around the world and provide them with various information and materials”, then write in the offer inquiry, what exactly do you understand by this and how does it work?

Set your budget

By budget, we mean amounts that you are able to spend on the website development, both before and after its implementation.

You should have fixed amounts you are able to spend, both for the “start” process and the next year ahead (for maintaining the website and its development).

  • economical amount – this is a minimal amount you want to spend on website development. It means you will need to work with a cheaper contractor with less experience. You don’t mind website simplifications, little errors and a smaller range of support.
  • optimum amount – this amount is very comfortable for you and it doesn’t strain your budget.
  • maximum amount – if project development turns out to be more complicated or you would like to add more components or if you just want to choose the more expensive contractor – you push your budget to the maximum.

Is it worth disclosing your budget right away?

In our opinion – definitely yes. The biggest advantage of this approach is saving time – both yours and that of the software house you are negotiating with.

The interview process is usually very engaging on both sides. It requires getting to know each other and building mutual trust in the first place. Then you must at least generally determine the scope of work. There are often a lot of questions and long answers, both ways.

Determining your budget in advance can shorten and simplify conversations. The software house will be able to determine immediately whether it is able to take on your project at all. You will get back a list of much more specific questions that will allow you to prepare an offer tailored to your budget.

Website functions or budget – where to start?

The preparation of the offer by the software house may go from the budget or from the list of requirements. Both approaches are good and it’s up to you which suits you better.

If you have a strictly defined budget that is not flexible, the software house will be able to adjust the services to fit the budget.

It will design the most important elements so that the cost of their implementation does not exceed the assumed amount. You will know in advance what can’t be done.

If your budget is flexible and you have a long list of requirements, let the house software value the project. Remember, however, that if you get a price 10 times higher than you expected, it does not mean that the final offer has to look like that. Many offers can be adjusted to a given budget simply by changing assumptions and requirements.

The interview process can also help you determine which features of your website are necessary immediately and which can be left for the next stages of development. Then you can finance further functions at a later date, perhaps generated from the money earned from your new service.

Submitting a query that sounds short; “I want to be able to do this and this and I do not want to spend more than that,” will allow you to get a satisfying answer much faster.

Analytical process – the first cost to bear

A software house likes to immediately get a complete list of requirements and assumptions, preferably with mock-ups and visualizations and with technical documentation.

The analytical process will also make you aware of additional dependencies and requirements of your project that you might not have known before. It will also allow you to benefit from the software house experience, which will advise you on how to best realize your vision.

It is worth devoting at least a few thousand dollars to the analytical process. The final result of the analysis can at the same time be the basis for the next, much more precise valuation. What’s more – it will allow you to compare the offers of different companies more easily.

However, do not overdo it with analytics. The project which, for example, stumbles for a year in the analytical phase because “we want to have everything prepared perfectly”, risks falling behind the competition and even legitimate assumptions will become outdated after some time.

Time horizon and the cost of implementation

The level of complexity of the project and the budget are two very important variables. But there is also a third, equally important variable – time.

It is well known, no one likes to wait, but it’s best if you set your schedule. Are you able to pay extra for the priority implementation, which requires the contractor to engage in additional, often more expensive procedures?

Or maybe you can wait longer and thanks to this negotiate a better rate or add additional elements within the same budget? Programming companies may, from time to time, release resources, for example due to delays in other projects, and at this point they will be more willing to perform other pending orders.

If you do not know whether a given time horizon is short or long for a given project, just ask the question. Software houses will answer you based on their experience, for example, that the implementation of a particular online store usually takes 3 to 6 months.

If the delivery time is too long and you do not want to increase your budget then you need to decrease the list of requirements or simplify the assumptions. This will allow the website to be released to the market faster. You can determine the direction of further developments of the service with the software house after its launch.

And where is the marketing?

The times when the launch of a site and its appearance in Google search results guaranteed success, have long gone.

The new website carries not only the cost of its implementation and maintenance but also it’s also marketing and promotion. Make sure you have reserved resources for this, especially during the start-up period.

Internet marketing currently plays an important role in the promotion of any business, regardless of the industry. More and more is being said about the need for specialization in a given field, finding your niche and building the position of an expert.

Marketing supports sales, especially content marketing, i.e. promoting the brand through the creation of high-quality content related to the business is very important. It may be creating specialist articles for a company blog, tutorials, recording podcasts, videos explaining complex issues related to your industry, or showing the backstage area of your activities. All these actions will increase the credibility of the company and help build a closer relationship with potential clients.

If there is a lot of competition in your industry, and each company offers the same high-level product, then the company’s image and the community involved around it can outweigh the success of your brand.

How much does cost the website after implementation?

Your new, online store has just been launched publicly and you have paid the last invoice for it. Now all you have to do is wait for a stream of payments from satisfied users, and you can go on a well-deserved holiday…

Unfortunately, it is very likely that it will not be so rosy. Launching the website is the end of one stage, but the beginning of the next. Ongoing website maintenance both generates costs and requires care.

The service after commissioning consists of the following elements:

  • Maintenance of server infrastructure – applies to both server lease and computing power in the cloud, as well as administrative care of these services.
  • Website modifications and development – when the website starts becoming more and more popular, it can turn out that some of your assumptions were wrong. The implementation of changes will therefore incur additional costs.
  • Software house service – the response time to irregularities, technical support and handling your requests. The cost can be included in the price of the main service, but it can also be broken down into later periods.

A summary

We hope that we have managed to bring you closer to the process of website valuation and the preparation of an offer for it. This knowledge can allow you to get a much higher quality service and can also cut unnecessary costs. Before spending a few dozen or even thousands of dollars, it’s worth getting ready for such an investment. Feel free to comment and ask questions.

Do you have an idea for a website?

If you are interested in the differences between the two models of cooperation in the matter of settlements for the work done – fixed price versus time and materials, be sure to read this article 👇

Fixed price vs time&materials – pricing models in software houses

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