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Custom Software Cost: What Determines the Final Pricing?

6 minutes read - April 13, 2022 - by Yondu Team
Different companies have different needs, including software. Get an idea of how much custom software costs to help you accelerate business growth in the digital world.
custom software cost

Enterprises and organizations with unique business models and processes may not be satisfied with commercial off-the-shelf (COTS) software, as this type of software may not suit the complexities of their operations. COTS software may be unable to keep up with the business’s day-to-day requirements, unlike custom software. Then again, custom software cost is a primary concern for business leaders or managers.

You may have your sights set on digitalizing your business but suddenly find yourself stopping because you don’t fully understand how custom software pricing works. 

Here are a few cost-related factors you may want to consider as you look to develop custom software. This can help cement your place in the digital business landscape once you’ve developed the best software for your needs.

6 Factors That Affect Custom Software Development Cost

1. Software size

Software size is one of the main factors determining custom software costs. The bigger the software size is, the more you’ll have to invest. You can choose from various sizes, from small to enterprise-level software sizes, with each one offering custom solutions to fit your organization’s needs. 

For most start-ups, the go-to software size is a small minimum viable product (MVP) development approach. This level of development only has the bare minimum of features and can only support a small user-base. Small-sized software usually deals with minor bug fixes and improvements to the user interface. Meanwhile, medium-sized software allows integration with an existing system using a single data source.

Large projects may have several requirements, including multi-system integration, security and logging, module-based design, and database components. Combining this with scalability considerations, enterprises with complex processes and internal systems may require larger development teams, thus driving up the cost.

2. Complexity

The complexity of the software encompasses the number of screens, workflows, required automation, intertwining processes, paths, and the like. The increasing number of databases included in the software will also be more complex. Think about the scope of your custom software. If you want to include more functionalities and features, the more it’s going to cost you.

For example, you may be developing a mobile application with many features such as profile creation and customization or different payment methods, including e-wallets. This can make your application more complex since it has to handle more processes. 

Other features like the complexity of the user interface design, data migration, integration for third parties, bulk of data analysis, cybersecurity features, and the number of iterations may also add to the pricing. 

As you keep adding more complex logic and outcomes, you’ll naturally need more time and budget for custom software costs.

3. App Integrations

Another factor that may cause your custom software costs to increase is its ability to be integrated into third-party applications. Besides giving users a seamless experience, app integrations can enable your business to improve its operational and workflow efficiency. As such, it is vital to have software with integrations to third-party apps, APIs, and even legacy apps.

Again, this feature can make your software more complex, requiring additional time for your development team to complete all installation and integration tasks. You’ll also need to pay a fee when integrating your software into your preferred third-party application or API. 

Nevertheless, taking this route may be relatively cheaper than integrating your new custom software with your existing legacy systems. In any case, you can expect to see additional costs.

4. Software testing and QA

Quality assurance (QA) is an integral part of any project workflow, and building custom software is no exception. Conducting software QA testing ensures that your custom software is void of bugs that may compromise product quality.

A thorough and streamlined testing process minimizes disruptions once it’s time to shift your day-to-day operations from a legacy system to the new software. This can accumulate costs since you’ll spend more time and effort addressing bugs and improvements.

5. Data migration

A lot goes on when migrating existing data from an old database to a new one. Besides backing up the data, you also have to consider security requirements to protect sensitive customer and business data from potential and existing vulnerabilities.

On top of this, it takes time to clean, validate, and convert your data to a format compatible with your custom software. Additional costs can also come if you want to incorporate features like data analysis and profiling to make it easily searchable.

6. Ongoing app maintenance

Developing custom software doesn’t stop once it’s launched. You have to continually upgrade and improve its functionalities upon deployment. 

Technology is ever-changing. Not having your software optimized with the latest versions can lead to software failure due to changing platform requirements. You can avoid this by constantly upgrading your software to make it compatible with new releases and keep it in tip-top shape. 

Is Custom Software a Worthy Investment Considering its Cost?

Potential for a great return on investment

Having your own software is a great investment in the long run, making the initial cost of custom software rather negligible as it has the potential to have a high return on investment (ROI) when implemented successfully. Here, ROI is calculated using the reduced cost added with the increased revenue and then divided by the project cost multiplied by 100. 

Since custom software can streamline workflows and make them more efficient, it makes the overall system and the employees more productive. This, in turn, translates to cost-savings in the long run.

Moreover, the software may be instrumental in building the company’s capacity to expand its customer base and reach new markets, thus increasing revenues significantly. All these benefits improve the company’s bottom line and prove the investment for the custom software project has been worthwhile.

Tailored to your business’s workflow

Custom software allows you to continuously update and improve it anytime you want or need to, unlike off-the-shelf software. With commercial software, you’re dependent on the upgrades of the developer you purchased the app from. This leaves you at a disadvantage whenever there are new innovations that you want to implement immediately. 

On top of this, using commercial software limits you to the features included in the app. This may restrict your use of the software, as it might not have the exact features you need. You may have to look for another third-party software to fill the gap, which will increase your expenses.

By contrast, custom software will only cost you for one application as you can simply add other features along the way. This enables your business operations to proceed as smoothly and seamlessly as possible. 

Increased productivity and profits

Since custom software provides you with additional features that off-the-shelf software doesn’t, you can increase employee productivity. If you’re shifting from multiple systems to custom software, you can collate all data from different siloes into one single database, making extracting information quick and easy.

Aside from that, custom software allows you to integrate it into other third-party applications. You can have a seamless experience and reduce the time it takes to process and analyze information. This increase in productivity can translate to bigger profits, as employees can do more tasks with their freed-up time.

More secure against external threats

With the increasing cases of data breaches, it’s important to have a robust security system in place. This is especially true for organizations that handle sensitive customer data, including their contact information, credit or debit card numbers, etc. But, off-the-shelf commercial software is more vulnerable to malicious cyberattacks if it lands in the wrong hands. 

In this case, developing custom software can be the safer option. Here, you can be part of the development process every step of the way and ensure strong data security. You can also quickly respond to these threats since you’ll have control over the software’s security. This approach can discourage hackers from targeting your organization since they’re aware you’re using specialized software.

Highly scalable 

Every business aims to accelerate its growth and stay on top of the competition. However, technology continues to evolve and shake up the business landscape, challenging organizations of all sizes to innovate and adapt to these changes.

As such, it’s crucial to have the right set of tools, and developing custom software specially built for your business’s purpose and objectives can give you the competitive edge.

Custom software created with scalability in mind can help you adapt to the ever-changing business climate. So, if you’re going to shift to custom software, one vital factor you should consider is having the right tech partner that will help you maximize its benefits for your business. 

Partnering with reliable tech companies skilled in mobile app developments like Yondu can enable your business to stand out in your industry.

Customizable Software for Your Needs

Knowing the factors that drive the pricing of custom software is essential when planning your organization’s shift to digitalization. This will help you create a plan that suits your business needs and resources, including the budget. 

If you’re looking for the most reliable partner and app developer, Yondu’s experts can help you with your custom software needs. Schedule a consultation with our experts today, and jumpstart your journey into the digital world.

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