How Much Does Custom Software Development Cost in 2020?

The use of custom software is commonplace across companies the world over. With the explosion of e-commerce, peer to peer industries, and an increasingly globalized market, the drive to conduct business better, faster, and smarter is ever-present, and the stakes will only get higher. As such, the cost of innovative technical solutions must take into account not just the dollars on the balance sheet, but the opportunity cost of forgoing such solutions as well.

Without further adieu, let’s dive into the exciting world of custom software development in 2020.

What is custom software?

Custom software is software that is created with a clearly defined set of requirements for a person or company. The alternative is commercial off-the-shelf software (COTS) that is designed with a broader audience in mind.

Generally, COTS offers lots of ready-made features, though most businesses only utilize a handful of them. The COTS solution might work, but it is bloated and unnecessarily complicated in order to meet the needs of many customers. Custom software targets carefully defined requirements of the business, and is tailor-made to accomplish business goals.

How do I know if I need custom software?

Spend some time narrowing down your business requirements. What workflows do you have that could be made simpler, or even automated, with software? What current processes—specifically around data management and customer service—are key to your business? What makes your company unique? Custom software will work best for you when you have these questions answered.

Be sure to give your requirements clear priorities. For example, an integration with a secure payment gateway, like PayPal, is a must-have, but a trendy website UI is a want-to-have. Knowing what features are vital to the success of your business will help you determine the value of a custom solution.

Our advice? Start pinpointing the inefficiencies in your current setup.

What does custom software cost on average?

The honest answer is that the cost of custom software solutions varies widely. Industry averages range from $50k–$250k, though the full range of a development project spans from a few thousand to multiple millions of dollars. It is all dependant on a variety of factors.

What factors into the cost of custom software?

The project cost of custom software depends heavily on factors such as size, complexity, data migrations, integrations, and the quality of the developers building it. Remember not all software companies are created equal.

The size of the software is a significant factor to consider. If your application is a simple form submission, then it likely only needs around three pages: one page for the form, one page to review the content, and one page to confirm the submission. That is a small software application. More likely than not, the software solution you need is much bigger than that. Each additional screen will increase the cost.

Complexity refers to how business logic is translated into code. If the functionality of your app has a lot of special cases, analysis, or complicated technology (like machine learning), it will likely be more challenging to develop. The more sophisticated software is, the more it will take to develop, test, and maintain it, which in turn will increase the cost.

Data migrations are necessary when you have existing data from an old software solution that you wish to bring into the new application. It can be time-consuming development work to transform the data into a format that is compatible with the new software while making sure not to leave any information behind. If you have data migrations to do, this will likely add to the cost.

Integrations are a big part of what makes custom software so handy. From integrating payment gateways to marketing email handlers, the options are endless. Plus, pulling in applications that your company already uses means not as many of your current processes have to change. However, integrations bring in many new variables. Sometimes using an API to integrate is easy and takes little effort on the part of the developer. Other times, especially when the integration is with an outdated system, it’s nearly impossible. Depending on how many systems you wish to integrate with and how easy it is to work with those systems, the cost may increase.

The technical skills required to build the software you need can also factor in. Software developers that code in common programming languages, like JavaScript, typically come at a cheaper rate than those with more rare or specialized skills, like the ability to code in C. Remember, choosing (or letting the engineer choose) the right tech stack for the job saves on development time and can help prevent bugs.

Time is a huge factor in the cost of software development, both in terms of billable hours by your chosen development team and the overall company resources dedicated to the project. It is essential to think about your must-have-by dates and be realistic with projected timelines for completion. While some solutions can have a set price negotiated after initial scoping, there is always the risk of unforeseen problems, particularly if the developers are inexperienced. Most software development projects take at least a few months to complete.

The quality of development is an often overlooked influence on cost. Look carefully at the reviews of the companies you are considering and their development process. Developers with poor technical prowess will write “spaghetti code,” also known as sloppy code that is nearly impossible to maintain. Custom software is truly a get-what-you-pay-for industry. Choosing seasoned developers over freelancers with a lower hourly rate will save you from headaches later down the road.

Is it worth the cost?

With a wide array of COTS solutions that cover a vast range of industries, COTS is cheaper upfront. The cost of the software is spread among the many customers who use it. However, it’s important to look at the Return On Investment (ROI).

The main reason companies opt for a custom solution boils down to efficiency.

A COTS solution will often overcomplicate what should be a simple solution. Some companies try to solve the problem with custom integrations, but this tends to make the learning curve steep. Whole careers are made out of training people on how to use out-of-the-box software. This training is an additional cost and often time-consuming.

Since custom software is built only for the use of your company, that means you select the features and requirements, and the benefits are easily quantifiable.

Custom software can improve workflows, automate manual labor, and even suggest improvements over time as it learns from your data. Spending a little more upfront on getting software that saves you money is worth the investment in the long run. COTS may meet your basic needs, but custom software will meet your every need and pay for itself in efficiency gains and end-user satisfaction.  

One Zibtek customer, the CEO of a Student-Athlete Development Platform, raved about customer interactions after Zibtek created custom software for them: “Customer satisfaction and use have increased significantly. In 2017, we had 16,000 courses taken. To date, we’ve had 60,000 courses taken, which is an extremely positive indicator for platform use.”

Creating a better end-user experience with custom software delivers results.

What Now?

It’s time to dig into your processes. Where are you hemorrhaging time? How many leads are being lost as a result of inefficient processes? How many new leads can be generated with a tailored and targeted software strategy? How long can you afford to operate inefficiently?Once you have determined your unique business requirements and the corresponding financials, you’re ready to get a clear idea of the cost for your custom software solution. The best part? The hard part (for you) is over. All you have left to do is fill out a quick form to get a free consultation.