Software Development Costs : Challenges and Ready-Made Estimations!

You are involved in a software project and want to know software development costing. It is usually difficult to be sure of the cost without knowing the exact requirements. However, you can take into account some factors to get an approximate software cost, which we will discuss in this article. In this article, you will learn several factors that determine the cost of a software product and the typical steps for estimating the cost of software development.

Important criteria when assessing cost

Transparency of logging hours and billing

The contractor must provide you with all of his calculations. You should at any time have access to the reports on the work of each employee in order to know what the time was spent on, for which you are paying.

Development culture

When an IT company develops a development culture and uses test-driven development, or microservices, it spends less time debugging, refactoring, and other overhead. In the long term, this is beneficial for the customer: the project will not get bogged down in fixing bugs.

A high development culture and in-house team also means that the team is interested in improving all production processes.

Team transparency

The contractor must show you the whole team (at least present in the general chats) so that there are no “dead souls” on the project. The number and qualifications of developers must match what you see on the invoices.

Different approaches to requirements

If the companies are balanced in terms of the cost of an hour, does it mean that the customer can send the technical specification and compare the number of hours? What if one team will do faster than the other? Here another nuance will await you.

A multi-fold difference in appraisal hardly means that contractors appraised the same thing. Chances are, you see different approaches to fulfilling your wishes with different assumptions about the risks.

The customer expects that this is the price for the same amount of work and the same performance. But in fact it is a choice between implementation A and implementation B. They differ:

• We consider the scope of work and the result of the task to be strict execution of what has been read or take into account the necessary adjustments in the process of work;
• The number of accounted risks;
• Availability (and in the overwhelming majority absence) of unit-, integration, API-functional tests.

Additional work

This part of the job, as well as regular technical support, greatly affects software development cost estimation. Unlike the prime cost, which is approximately the same for all contractors, the list of additional options they offer. jobs can vary significantly. For example, development with automated testing will cost more than without it. Autotests increase the development culture, but they take more time and, accordingly, increase the check.

In this case, the customer, of course, has the right to refuse to cover the code with autotests. It’s everyone’s choice: what state should the project be in a year from now? Is it acceptable for a client-side team to spend significant time fixing bugs on a consistent basis by abandoning regression prevention best practices?

What price is considered acceptable?

It is incorrect to estimate the development cost in absolute terms. Let’s take an example of why.

Do you think $ 100,000 for developing an e-Commerce project is expensive? In the abstract, this is an impressive amount. Other data may also be known:

We are talking about a giant network, where the online store generates 20% of the number of all customers in the offline stores of the network with an annual revenue of $ 540 million;

The online store’s own annual turnover is over $ 40 million.

$ 100,000 does not seem like a big amount any more, because 0.04% increase in conversion pays for the entire project in a month.