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How Much Does It Cost to Outsource Software Development

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Ready-made software is great for simple needs. But now, people want software that fits their specific needs. This means the usual software isn’t as useful as it used to be. So, making your software is becoming popular to stay competitive and have more control.

But here’s a heads-up, about 45% of these projects end up costing more than expected, and that’s a big concern. The big question is: How can we make good software that’s worth the cost and does what we need?

Building software is a big investment and affects your business’s money. Costs like paying your team and setting up the right tools are things you can’t skip. Plus, there are often extra costs you might not see at first. To nail down how much your custom software will cost, you need to think about all these things. This article is here to help you with that.

Factors Influencing Software Development Outsourcing Costs

Project Complexity and Size

  • Small projects: These are usually small changes or making a basic version of the software (MVP). They can cost from $3,000 to $50,000. For example, changing software might be $3,000 to $10,000, and simple web projects could be $10,000 to $30,000.
  • Medium to large projects: These have more complex parts and features. Costs jump up here, from $20,000 to more than $150,000. Like, a medium web project might cost $20,000 to $60,000, and really big projects can go over $150,000.
  • Enterprise projects: These are the biggest and most complex, with lots of parts and advanced features. They start at $100,000 and can go beyond $250,000, depending on what you need.

What makes projects complex?

  • Feature complexity: More complex features mean higher costs. Adding things like live analytics, AI, or complicated databases can increase the price.
  • Technology used: The kind of technology (like advanced tools or languages) also makes it more complex and expensive. New or specialized tech usually costs more.
  • Integration needs: If you need to mix the new software with existing systems or services from other companies, it gets more complex and costly. For example, adding new software to old systems can be tough and expensive.
Project SizeComplexity levelEstimated cost rangeEstimated timeframe
Small projectsBasic functionality$3,000 – $50,0001-2 weeks to 3-6 weeks
Software modification$3,000 – $10,0001-2 weeks
Basic web development$10,000 – $30,0003-6 weeks
Medium projectsModerate complexity$20,000 – $150,0002-6 weeks to 6-18 months
Medium web development$20,000 – $60,0004-8 weeks
Software integration$15,000 – $40,0002-6 weeks
Large projectsHigh complexity$50,000 – $250,000+3-8 months to 18+ months
Large web development$60,000 – $150,0006-18 months
Complex software$100,000 – $250,0006-18 months
Enterprise projectsVery high complexity$100,000 – $600,000+4+ months to several years

Type of Software Development

When planning your software development budget, it’s important to know how different types of projects can affect the cost. Let’s break it down.

Type of developmentCost factorsEstimated cost rangeTimeframe
New software developmentComplexity, technology stack, custom features$50,000 – $250,000+Several months to over a year
Software modificationsExtent of modifications, complexity of existing software$3,000 – $50,000A few weeks to a few months
Software integrationsComplexity of integration, system compatibility$15,000 – $75,000+A few weeks to several months
Web developmentComplexity, design uniqueness, backend infrastructureBasic: $10,000 – $30,000; Medium: $20,000 – $60,000; Large: $60,000 – $150,000A few weeks to over a year

So, think about what kind you need and how that fits with your budget and timeline. Each type has its price range and time needed to get it done.

Geographic Location

Where your outsourcing team is located matters for how much you’ll pay. Different places around the world charge differently because of their economy, job market, and how many skilled people they have. Let’s look at how location changes the cost:

RegionEstimated cost range (per hour)Key factors
North America$100 – $180High living standards and operational costs
Western Europe$70 – $120Strong economies, high living costs, well-established tech industry
Eastern Europe$25 – $50Skilled developer pool, lower living costs
Asia$15 – $40Large supply of developers, significantly lower living costs
South America$30 – $50Growing tech hubs, reasonable cost of living
Australia$100 – $150High living standards, developed economy

So, when you’re picking a place to outsource your software work, think about how much you can spend and what kind of quality you need. North America and Western Europe are great for top-quality work but cost more. Eastern Europe and Asia are more budget-friendly, and South America is right in the middle. Choose the place that fits your project’s needs and your wallet.

Technology Stack

The technology stack chosen for software development significantly impacts the overall cost. It changes how much you’ll spend. Common programming languages like JavaScript, Python, and Java usually don’t cost as much. They’re popular and lots of people know how to use them. But, if you add in trendy frameworks like React or Django, the price goes up because they’re in high demand.

More unique languages like Scala or Rust cost more. Not as many people know them, so they’re harder to find and more expensive. Older languages also cost more because you need someone who knows these special skills to work on them.

Choosing between open-source and proprietary software also makes a difference in cost. Open-source is usually cheaper at first but might need more custom work, which takes time and can add to the cost. Proprietary software often has higher fees for using it, but you get more complete solutions and support.

Lastly, tech that’s easy to scale and maintain can save you money in the long run. Even if it’s pricier to start with, it might be cheaper over time. Finding the right balance between what you pay now and what you’ll pay later is key to picking the best tech for your project.

Team Size and Experience

When you’re figuring out the cost of a software project, the team’s size and experience make a difference.

A bigger team means more people to pay, so your costs go up. They might work faster, but it’s more expensive because you’ve got more salaries to cover. On the flip side, a smaller team won’t hit your wallet as hard, but they might take longer, especially with complex projects.

Now, experience counts a lot too. Developers who’ve been around the block and know their stuff usually cost more. They’re quick to solve problems and deliver top-notch work, but you’re paying for that expertise. Less experienced devs might have lower rates, but they could take longer to get things right. Sometimes, this means you might end up paying more in the long run if there’s a lot of tweaking needed.

So, when you’re planning, think about how many people you need and how skilled they are. It’s all about balancing your budget with getting the job done well.

Comparing Different Software Types and Their Costs

Different kinds of software have different prices. It all depends on how tricky they are to make, what they do, and what special stuff they need. Let’s check out some examples:

  • Customer Relationship Management Systems (CRMS): Building CRMS can be a big job. You’re handling customer info, keeping track of what they do, and analyzing data. The price? It can be anywhere from $150,000 to $600,000. If you throw in really smart features like AI or deep analytics, expect to pay at the top end.
  • eCommerce Software: This is all about online shops – like showing products, shopping carts, and taking payments. How much it costs depends on how fancy and flexible you want it. Normally, it’s between $30,000 and $80,000. But if you want cool extras like AI tips for shoppers or selling on different platforms, it’ll cost you more.
  • Human Resource Planning Systems (HRMS): HRMS is another complex one. It deals with paying people, keeping track of employee details, and hiring. The cost? It’s between $90,000 and $550,000. The fancier it is, like auto-hiring or serious data crunching, the pricier it gets.
  • SaaS Software: These apps work on a subscription basis. Prices vary a lot here. Simple versions start around $30,000. But if you need heavy-duty backend stuff or special features like cloud stuff, it might go over $90,000.
  • Supply Chain Management Software: Super important for managing how goods move, keeping an eye on stock, working with suppliers, and planning how to move stuff. This can set you back between $170,000 and $400,000, depending on how complex and connected it needs to be.

Remember the cost depends on what it needs to do, how tricky it is to build, and any special features you want.

Conclusion

Starting to make new software or updating old one is a big money decision for any business. It can be tough to figure out everything you need. It’s important to start with a plan to set clear goals and what you want your software to do. This way, you know exactly what you need and can tell your development team what to do.

In the end, how much it costs depends on how many people work on it, how long they work, and how complex the tech is. If you need help, come to EZtek. We know our stuff and won’t break the bank. We’ll make sure you get great software that’s worth what you pay.

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