How to Define and Cut off the Software Development Cost?

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Estimating the software development cost is the most crucial operation. Sometimes the cost exceeds the budget, and you have to cut down the additional requirements, impacting the final product.

However, you must thoroughly evaluate every aspect while calculating the budget and create a precise plan to reduce software development costs. By reading further, you will understand which factors you must consider for accurately defining and lowering the software development cost.

Factors adding up to the software development cost

In the initial stages of any software project, one of the primary tasks is to evaluate the overall expenses to estimate software development costs.

It helps the organizations to have a clear insight into the budget required for application creation and maintenance. For analyzing the budget, you should assess the following aspects.

  • Software Complexity

If you want your software to provide unique features to every stakeholder and personalize each web page, it can increase the development complexity.

In addition, creating software for different platforms also magnifies the software developer’s effort. Complexity plays a vital role in determining the project cost, as for integrating more components, you will require to hire more people. Besides this, if you plan to hire fewer people, they have to work for more hours to complete all the tasks.

Hence, by focusing on complexity, you can calculate the expenses of human resources.

  • Timeline and Risks

Generating an accurate project schedule is still a challenging task for many IT firms, as unexpected risks and changes in regulations can highly impact it.

For analyzing the software development cost, you should first create a Gantt chart with all the subtasks and required human resources to complete them.

As a result, you will know how much time you have to employ the engineers on a project. Moreover, you must figure out the risks you can face during the development, as it will help you determine the cost for essential resources to mitigate them.

  • Technology

Every technology has its requirement of hardware and software elements. Also, you have to hire professionals for every particular web technology.

For instance, if you have to build a JavaScript-based application, you have to hire a Frontend and a Backend developer. And, if your requirement is for cloud infrastructure, you also have to employ a Cloud engineer for its configuration. As a result, technology is a top-priority aspect contributing to the software development cost.

  • Post-Development Services

Constant support for maintaining the solution is a vital software development life cycle task, which adds to the overall project cost.

Most IT firms provide maintenance and support services within their development engagement model, saving the expenses. However, if you have to hire support services from an external company, it can extend your estimated software development cost.

How to reduce software development cost: A software developer’s advice

You can align your project with the below-listed points to reduce the software development cost.

  • Collaborate with an outsourcing company

By joining forces with an offshore, onshore, or nearshore outsourcing company, you can reduce the overall project cost by 25% to 35%.

For instance, if your enterprise is in Canada and the cost of creating software is US$2000 in your country. And an IT firm in Singapore is providing the same services for under US$13000.

Then, you can collaborate with a company in Singapore and save your expenses and have a quality business solution. Likewise, you can find similar options within your country, in another province, in a nearby country, or on another continent.

  • Have simple and sleek designs

Cutting down the additional requirements can also help you minimize the expenses, reducing the developer’s effort and timeline.

As a result, you have to employ only limited human resources for a short period and pay them accordingly. In addition, you will require only significant resources for the solution fabrication, saving additive expenditures.

  • Prefer cloud services

Embedding the cloud as the backend for your business application can lead you to save a lot of disbursements. It will aid in saving maintenance costs of on-premises servers, security systems, and up-gradation of IT infrastructure. Moreover, it allows paying every month based on resource utilization.

Also, if your application requires some additional assets to handle user traffic, it will automatically scale up to assure accurate execution of every user request. Besides this, you can opt for automated testing and deployment through cloud features for hiring and paying a small team.

  • Finalize a reliable engagement model

Finalizing the collaboration with an outsourcing company with an authentic pricing model can help cut high costs. According to your comfort, you can select a fixed price model, time and resource-based model, dedicated staff model, or hybrid model.

Every engagement model will support you in managing the expenses, as in a fixed model, you have to pay a one-time amount for all the services.

In resource and time-based, you have to pay as per the amount of time you are using the assets of the outsourcing company. And, in dedicated staff, you can hire professionals for the long-term to complete as many tasks as you want. Additionally, you can merge two or more engagement models in a hybrid model to bring down the software development budget.

Concluding up

Whether defining the development cost or reducing it, both involve multiple factors on which a software developer has to focus upon.

Application complexity, engineer’s effort, timeline, and technology. These elements play a vital role in determining the estimated software development cost. And, if you want to minimize it, you can consider being an ally of an outsourcing company and initiating your project after selecting an efficient engagement model.

Consequently, to magnify or reduce the expenses, you have to control your business requirements, which will surely help you during the feasibility study.


Jemin Desai is a Technical Product Manager and tech-savvy at Positiwise Software Pvt Ltd, having experience of more than 20 years of implementing the latest technologies in designing top-notch products for multiple clients. He can do all with perfection, from market research to feasibility analysis and aligning the project with accurate methodology. By turning his writing hobby into a passion, he's been providing scholarly articles to various audiences.

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