Software Development Cost: How Much Does It Cost to Develop Software?

Software development cost estimation ranges vastly, depending on your business needs, requirements and project complexity.

It can cost as little as £39,500 or as much as £237,000+.

Apple iOS paid developers a staggering $253 billion worldwide by January 2023 which has shown massive growth in 2024 and is predicted to continue.

The global revenue for enterprise application software is estimated to reach £378 billion by 2026 and there are many software development statistics impacting the price and demand of software development.

The cost of software development may vary, but the demand continues to grow because software offers businesses the advantage of reaching more customers and improving current processes, ultimately saving money.

Let’s show you what impacts the price of software development to help you make informed decisions.

What Are Software Development Costs?

Software development cost estimation lets you know how much your business pays to develop the desired software programs or tools.

The average price of software development varies, depending on staff, experience, tech stacks, developer’s location, and the app type suitable for your business needs.

You can expect to pay between £39,500 and £198,000 as an average software development cost.

However, system configuration management software development could cost between £79,000 and £237,000.

The cost of software development seems high, but understanding a cost breakdown will shed light.

SaaS Software Development Costs

SaaS software development costs range from £11,800 to £237,000. The price also depends on developer skills, tech stacks, and project requirements. Advanced technologies also impact the SaaS software development costs.

Selling software as a service means you need your software to stand out. It needs custom features and unique tech stacks, key factors that raise the price.

Custom Software Development Costs vs. Off-the-Shelf Software

How much does it cost to build a software product vs off-the-shelf should be fairly straight forward.

Off-the-shelf products promise to cost less, but they can cost more long-term. Ready-made software frameworks often include subscription services and update charges custom software might not have.

Here are examples of off-the-shelf products with definite ongoing subscriptions during maintenance:

• Microsoft Office Suite – £47 to £63 per year
• Sage Accounting – £470 to £1273 per year
• Zoho CRM – £11 to £190 per year

Meanwhile, let’s look at the Oracle price list, another popular off-the-shelf choice. the Oracle Times Ten In-Memory Database costs £8,262 for an upgrade and license.

You’ll also pay £2,767 for the secure backup license and £37,557 for a processor license. In addition, you’ll pay £13,837 and £86,185 for integration products and £37,557 for a blockchain processor license.

Ready-to-go software isn’t always the solution. Instead, examine what factors will impact the development price to understand a custom software development cost.

Read more about off-the-shelf vs. custom software development before strategising a budget.

Pulsion Technology Custom Software Development

Our custom software development structures a price, depending on your needs. Speak to one of our digital strategy consultants today, or contact us to discuss your project needs.

Some of our clients include The Data Lab, Innovate UK, NHS Scotland, and OneSearch Direct. Learn more about us to understand how we customise software solutions to fit your budget and needs.

Alternatively, discover the factors that change the price of software development before reaching out.

Types of Software Development Project Costs

A software development cost relates to multiple types of software development projects.

Here are some types of software development to consider before calculating the software costs:

• API development
• Backend development
• Database development
• E-Commerce websites
• E-Learning Platforms
• Embedded systems development
• Frontend development
• Hybrid App development
• Mobile app development
• React Native mobile software
• Software tools development
• Video game development
• Web application development

Software Development Cost Breakdown

The key components of the cost of software development break the bottom line into smaller, understandable fragments.

The £120,000 price tag for software seems insurmountable and questionable, but understanding how this figure develops will make a less doubtful investment.

First, let’s focus on the main factors affecting the price of software development before diving into a software development cost breakdown to show you what impacts a software development budget.

5 Key Cost Factors Related to Software Development

Multiple key cost factors determine how much software development costs. Here are some key factors that influence the price of your intended software development project:

• App type and software complexity or project complexity
• User interface (UI) and user experience (UX) design sophistication
• The hiring model
• The collaboration model
• The pricing model

Let’s dive deeper into why certain factors influence software development expenses more than others.

Factor 1: App Type and Complexity

The app type and complexity costs differ between a minimum viable product (MVP) and a full-fledged multi-platform app.

An MVP offers the most basic features and functions, acting as a prototype to test the app idea properly before launching an improved model.

Some simpler software projects based on MVPs, like Love Island and MyHaBeats never needed to evolve or improve. Cost-effective apps exist, with some scaling as requirements change.

However, releasing a complex app with multiple operating systems, optional details, every feature listed on the requirements document, and five more tools than a competitor won’t be cost-effective.

For example, social media apps with features like geolocation and mapping will cost more. E-commerce apps with multiple payment options and secure authentication will cost more than game development.

Implementing secure backend protection for user data on e-hailing or e-commerce apps takes time and money. So, the cost of software development rises with the app type and feature complexity.

The table shows a software development cost breakdown related to the complexity of an app:

Furthermore, the platform on which you launch different types of apps also influences the software development budget. The price of developing a mobile application depends on two factors: platform numbers and coding type. An app’s native or hybrid coding and platform choices impact the price.

Developing a single-code hybrid mobile app that works across multiple operating platforms costs less because developers only code the software once.

On the other hand, platform-specific applications could cost more if you launch them across multiple platforms. Native app development costs more on multiple platforms but may cost the same as hybrid development on a single platform.

Factor 2: UX/UI Sophistication

Another factor to consider in the cost of software development relates to developing the user interface (UI) and user experience (UX). Bad UX and UI designs can make users lose interest in your product.

However, sophisticated user interface and user experience designs can increase the costs of software development. The UI includes every graphical aspect of your product, including the following:

• Animations
• Artwork
• Branding
• Buttons
• Colours
• Design
• Fonts
• Icons
• Logos

Meanwhile, the user experience (UX) design includes accessibility and ease of use for customers. These software costs relate to how enjoyable and easy the product will be for customers.

The average UI designer’s salary is £39.31 and the average UX designer’s salary is £41.74 per hour.

Factor 3: Hiring Model

The hiring model, also known as the sourcing model, contributes to the final cost of your software, whether you choose an in-house team, a dedicated freelance developer, or an offshore software development team.

The team you hire is the first part of the model that influences the price of developing software. The development team’s experience, salaries, and benefits also affect the model and cost.

First, here’s an average software development cost for a basic-to-average project for different sourcing models:

The software developer’s geolocation-based UK location and source type are primary factors that influence development prices. So, it helps to understand some benefits of using any specific source.

Here are some pros and cons of an in-house development team:

Here are some pros and cons of local UK development teams:

Here are some pros and cons of freelance developers:

Read more about our thoughts on outsourcing vs. in-house software development.

Factor 4: Collaboration Model

The collaboration model refers to the development team you choose to work with, which extends beyond what type of team you hire. It also refers to how much you pay for a developer’s geolocation, experience, and specialist skills.

Various factors impact how much you pay for a dedicated team to work on your software project. The collaboration model you choose, defining the project team’s specific costs, will make or break your software development budget.

First, consider the geolocation of your development team. Here’s a chart to show software developer geolocation average monthly salaries:

A software developer’s geolocation isn’t the only influence on the price of your software project. Developer seniority changes their earnings, regardless of where they’re located.

Here’s an example of monthly earnings by developer seniority:

Developer prices also vary by specialty skills and expert technical abilities, which is especially important to custom software development. Here are average tech specialist monthly salaries:

The size and skills within your development team will alter the cost of software development. However, the software development process isn’t a one-size-fits-all scenario.

Your software development team may require a specialist, while another project might use a dedicated team to develop off-the-shelf products.

Ultimately, software developers come at different prices because of location, seniority, and skills.

Factor 5: Pricing Model

Software development companies or freelance developers often propose a pricing model. Here are some of the most common pricing models offered by developers:

• Competitor-Based Pricing – Developers work with a budget to compete with your top competitors.
• Dedicated Team Model – You pay each team member’s hourly rate when working on the project.
• Fixed-Price Model – The fixed-price model works with a fixed project scope, deadline, and budget.
• Flat Rate Model – Often used for off-the-shelf development to stick to specific budgets.
• Freemium Pricing – A tiered model with regular paid packages and free entry-level functions.
• Hourly Rate Pricing – You pay the average hourly rate of whoever works on the project.
• Penetration Pricing – Offered by new developers looking to build a reputation at a low cost.
• Per-User Pricing – The software product’s users directly determine the project’s price.
• Milestone Pricing – You pay agreed amounts at set intervals during development.
• Time and Material – You pay regularly for time spent and development efforts.

Not all pricing models are good for every software project. For example, skip penetration pricing if you have a complex software development project.

On the other hand, only use per-user pricing if your business analysts can tell you how many users to expect. Also, be careful of the team’s skills in the dedicated team model.

A trusted and experienced software development company typically offers flat-rate, dedicated team, fixed-price, hourly-rate, or milestone pricing models.

More Software Development Costs Breakdown

The development process has multiple costs you can break down to understand the budget better. The primary factors impact your software development budget, but more factors influence the price.

Custom software development costs will be entirely different from off-the-shelf software development costs. However, the breakdown below shows estimated price ranges in different development stages.

Requirements Engineering

Requirements engineering involves business analysts using requirements-gathering and analysis tools to guarantee the software product aligns with your business requirements, needs, and objectives.

An off-the-shelf or custom software project includes a project manager and business analyst in the initial development cost. This team of experts will determine project complexity and project cost.

The average cost of software development business analysts is £34.21 hourly. Meanwhile, the average hourly rate for a project manager is £36.21.

Alternatively, use Requiment, as our pricing includes monthly and annual models to help your in-house team gather and analyse requirements before the start of a development process.

Meanwhile, the price of information architecture should be included in the requirements engineering process. Information architecture is how analysts structure and present the parts of software.

The benefits of using online requirements-gathering tools include a guided process and demo video access. Your in-house development team will have output reports and task-generation tools.

You can sign up for a free trial or book a demo personalised to your business before it costs anything.

Enterprise Resource Planning Systems (ERPs)

ERPs refer to the software solutions that run a successful company, including the tools and functions related to human resources and accounting.

Most corporate-style software development projects start with ERPs, and they’re integral software cost factors for project management and other critical business functions.

An ERP report revealed the average costs of developing software for ERP applications was £7,116 per user. The amount of users, project management team members, and admin will increase the price.

Customer Relationship Management

Customer relationship management (CRM) development is another critical business software tool. A software vision to improve how you and your customers interact and build relationships is instrumental.

CRM software creation adds to the costs of software development, but the tool lets businesses manage and analyse customer experience and relationships. Data analysis designs the software.

Data management experts, including data analysts, may add to the price of a CRM software solution. The average data analyst salary is £29.87 per hour.

A hiring and pricing model determines if CRM development includes the data analyst’s salary. CRM development prices range between £31,627 and £55,348.

However, Forbes suggests CRM pricing per month after development ranges from £20 to £318 per user. You will pay-per-user pricing after development because CRMs use external systems.

External Systems and API

CRM pricing reveals that software requiring external systems and API integration is also costly. Application programming interfaces (APIs) and external systems are advanced features in software engineering.

Using advanced features like mapping and geolocation in software used by external systems works well for most applications, even though you don’t see them in action.

The average software development costs largely depend on your developer’s skillset. For example, the average hourly rate for an API developer is £45.61.

API integrations and costs can also involve hidden prices. Some development companies charge for APIs monthly, while others let businesses run from their APIs.

Technology Stack

The cost of the technology stack differs between products when you develop software. Software development pricing will include the price of the backend tech stack and frontend tech stack.

The overall software development cost includes prices for the backend and frontend stacks. The frontend tech stack may use CSS, HTML, or JavaScript.

• CSS
• HTML
• JavaScript

The average front-end developer salary is an hourly rate of $51.68. Front-end developers are responsible for using web languages to create user access, design elements, and user interaction.

The overall software development cost will also include the backend technology stack. The backend stack is the processes and features keeping your software live on the chosen platforms.

Some examples of backend technology stacks on the server side include the following components:

• Database
• Framework
• Operating system
• Server
• Storage
• User authentication

The average back-end developer salary on an hourly rate is £45.61. Above this hourly rate, you’ll pay for the technology stack developed.

For example, cloud hosting prices are higher than traditional server prices because you don’t need the infrastructure required for regular on-site servers. On-site infrastructure may cost more in the long run.

Check out our AWS vs. Azure vs. Google Cloud platform comparison to learn more about them. Ultimately, here are some examples of common tech stack pricing per month to guide your budget:

• CDP – £95 to £1,582
• CRM – £13 to £36
• Data Enrichment Tools – £26 to £44
• Email Software – £10 to £30
• Marketing Automation Tools – £59 to £945

Advanced Technologies

Advanced technologies in your tech stack will increase the price of developing custom software or adding them to existing software products. Blockchain app technology is the ideal example.

For example, adding blockchain technology to your stack increases the price because coding skills for blockchain are in high demand. The average blockchain developer’s salary on an hourly rate is £55.59.

Blockchain app development could range from £4,000 to over £159,000. The cost of technological innovation is high and requires developers with specific skills or rare experiences.

However, innovation lets you advance your software, business, and projects. Our digital strategy consultants can discuss innovative ideas and suggest you hire dedicated developers with the skills.

Quality Assurance and Software Testing

Quality assurance should be a part of the entire software development life cycle (SDLC). It starts with requirements gathering and lasts into the maintenance phase of developing software.

The number of software testing techniques alters the price of development and maintenance, but your product needs quality assurance throughout the SDLC. Here are some testing techniques used:

• Acceptance testing – Verifies whether the system satisfies the business requirements.
• Agile testing – Incremental tests to check the reliability of finished software parts.
• Backend testing – Checks for structural defects in the backend technology stack.
• Compatibility testing – Determines if the software is compatible with all the desired hardware.
• Integration testing – Checks if the whole product or a group of software tools functions together.
• Functional testing – Verifies a system and operational requirements match before development.
• Load testing – Determines how the system behaves with multiple same-time users.
• Performance testing – Checks how the system performs under different workloads.
• Security testing – Reveals the software’s vulnerabilities and potential threats.
• System testing – Tests if the entire system meets functional and non-functional requirements.
• Unit testing – Breaks the software’s code into small fragments to test each unit.
• User testing – Gathers feedback from actual users interacting with the system.

Developers could also implement test automation tools, which saves on development costs and reduces the time needed to test multiple development features in the SDLC.

Software Deployment

Software deployment costs are another influence on the total development price. Software engineers must install the necessary hardware, create user guidelines, and possibly train users on the system.

Fortunately, the average software trainer’s salary per hour is £26.23. However, training costs will depend on the employees and users within your company.

Software Support and Maintenance

Our team offers support and maintenance after software launches. Avoid any developer who won’t present an annual plan to help you maintain the software and offer support.

Support and maintenance include the original developers or a dedicated support team. The team will repair bugs, software defects, and errors on a contract basis, typically with an annual fee.

Moreover, the team will continue to analyse and change requirements for the software as you scale to identify the tiniest improvements they can make.

They will terminate unused capacity, track unused services, and close security gaps that arise. Use the original development team because they developed the code.

However, cloud platforms and other subscription services can also impact the price. We are the AWS partner and Microsoft Azure partner in Scotland, aiming to provide competitive maintenance costs.

Software Licenses

Software license prices impact your development budget, too. Every technology used could have a license, but your software will have its own operational license.

One example of a software license comes from Frontline Systems pricing types licenses. The licenses cost between £695 and £790 a year, depending on how many years you buy the license upfront.

Ultimately, you’ll pay subscription licenses for software integration with external systems and the software license for your product, which will be ongoing during maintenance and support.

Software Reliability

Software reliability impacts the software development price because valid coding, robustness, consistency, and sophisticated designs take more time and effort than a quick software fix.

Developers who spend more time perfecting the code, validating the functions, and testing your product will provide a reliable result. Low-cost development often signifies poor reliability.

Sample of Software Development Project Costs

Here’s a sample of software development project costs to summarise the factors with measurable figures in this article. It doesn’t account for total development costs.

The complexity and specific system development samples better capture the total costs, but the other factors remind you of cost impacts.

Examples of Well-Known Development Costs

Some products are familiar to show you how much their development cost.

Tips to Reduce Software Development Costs

Custom software development prices can climb, depending on your needs and software vision. However, use our top tips to reduce the costs or understand them better throughout development.

Tip 1: Use Agile Project Management

Request the Agile methodology to use incremental payments as the development progresses. Agile project management lets businesses manage and budget for specific steps.

Also, developers use this method to anticipate flexibility. Discover the iterative approach in our article, What is Agile Software Development Process Methodology?

Tip 2: Break Tasks Into Smaller Actions

Request that developers break tasks into smaller actions to show you how many hours they spend on each task. Here’s an example of how they can break the tasks down for a cost breakdown:

Tip 3: Give Clear Expectations and Ask Questions

Two-way communication ensures a reliable, successful, and innovative software project. You could contact us at any point to discuss your software budget.

We also encourage you to set clear expectations during the discovery phase to ensure we know your business needs. Moreover, we will produce visual representations for sign-off before development.

Here are some questions to ask before you develop custom software or off-the-shelf applications:

• Is the software a new idea that requires advanced technology and top-notch logic patterns?
• Are all the requisite tools available, or must you use subscription services like AWS or Azure?
• Does the development team understand every requirement thoroughly?

Also, see our top 10 questions to ask a software development company.

Tip 4: Keep Tabs on Extra or Hidden Software Prices

Hidden software development costs include functions often overlooked, such as:

• Web hosting services
• Domain name
• An SSL certificate
• Email subscription services
• Further user experience modifications
• Developer’s tech support
• Off-site and on-site search engine optimisation (SEO)
• Content sales funnels
• Social media marketing (SMM)
• Software marketing

Avoid hidden software costs in your software project. Trusted developers are transparent enough to mention the software development price inclusive of hidden tools and functions.

Tip 5: Hire Dedicated Developers

Hire dedicated developers for quality assurance and optimal results. You can also hire ReactJS developers to create bespoke applications at cost-effective rates.

Offshore development teams offer a wider talent pool from a single agency. For example, meet our team to understand how many different types of engineers and experts we provide for our clients.

Tip 6: Start With a Minimum Viable Product (MVP)

A minimum viable product (MVP) is ideal for businesses with a smaller budget. It lets us test the acceptability of your application idea with a basic model and minimal features.

If the software gathers good feedback, we scale it to help your software evolve into a larger application. The development process is similar to a larger product but focuses on the necessities before putting more money into an end product.

Summing Up the Cost of Software Development

Software development costs depend on your business requirements, the sourcing model you use, developer experience or location, and multiple other factors.

However, custom software development prices are worthwhile because you pay for precisely what you need. Not all off-the-shelf products fit every business. Contact us today for a custom solution.

Development Costs Frequently Asked Questions

What Are Software Development Costs?

The cost of software development refers to the prices involved in requirements engineering, technology stacks, developer rates, expertise behind advanced features, the number of platforms, and licensing. The average software development price ranges from £39,500 to £237,000.

How Much Does Mobile App Development Cost?

Mobile software development prices can range from £3,000 to over £1 million in the UK, depending on the size, complexity, features, tools, mapping, and platform choices. Read more about how much it costs to develop an app in the UK.

How Much Does Custom Software Development Cost?

Custom software development prices can be less than off-the-shelf alternatives. For example, the Oracle price list shows the off-the-shelf option can charge up to £86,185 just for integration products. On the other hand, our custom software development won’t break legs with integration charges alone.

How Much Does Software Development Cost in the UK?

Developing software in the UK will carry different price tags. Use our cost estimate for custom software development projects to estimate the UK software development prices by factor. For example, software complexity and the technology stacks for backend and frontend development change the prices.

Why Does a Software Development Project Cost So Much?

Instead, ask yourself if you want software developed by entry-level designers or prefer experts with over 30 years of experience. If you prefer the latter, meet our team of experts, with software engineers and dedicated developers. Contact us today to discover how our professionals can help.