How much does software development cost?

Software development is bloody expensive – or is it? It certainly is, if you set about implementing a software development project ‘blind’ without proper specification, design and prioritization of the components, functionalities and requirements to be implemented in the software.

In such cases, the software is likely to be an expense rather than an investment. Whether the cost of software development is high or not is therefore determined right from the start of the project. Software can only be a worthwhile investment if it does what it is intended to do.

The impact of design on the cost of software development

A well-planned and well-executed software project can deliver significant savings and a competitive advantage. Usually, a specific budget – or at least a budget range – is set aside for a software development project. Without adequate planning, the budget may be spent on irrelevant matters.

For this reason, careful specification, planning and prioritization of requirements in a software development project are important, so that the budget allocated to the project can be used efficiently for software development work, enabling the implementation of the most important value-adding functionalities without compromising on quality. Irrelevant and less important features can then be deferred, for example, to be implemented in subsequent development phases.

Before a single line of code has been written, the requirements specification lays the cornerstone for the entire software project, and its importance cannot be overstated. On top of a solid foundation, it is possible to build software that meets the objectives without breaking the bank.

Read more: User journeys and AI – how to build a user-centric and intelligent service experience

Hourly rate for software development

In our view, the hourly rate for software development varies between €70 and €135 per hour plus VAT, depending on the software company. Companies that outsource software development abroad, small businesses and freelance developers with low overheads can also offer software development at rates below this hourly rate. For new companies, however, a lower price may be due to the pressure to secure the right kind of project references that will help secure new projects in the future.

At Hurja, the hourly rate for standard software development starts at €95/h + VAT. However, we always provide our clients with a custom quote, taking into account factors such as the size of the project, the schedule, the duration, the requirements set for the team, and the appropriate project methodology (e.g. the agile software development methodology).

The hourly-billed model is therefore not the only option we offer. For example, we often offer websites built on the WordPress platform at a fixed price, as the amount of time required for website projects is fairly easy to estimate in advance. A fixed price is best suited to short and relatively simple projects.

What factors make up the total cost of a software project?

Broadly speaking, the total cost of a software project is made up of the following components:

• Preliminary studies and requirements specification
  • As noted at the outset, a thorough preliminary study and requirements specification form the cornerstone of the entire software project and are, in part, already part of the tendering phase. Without a clear understanding of what the software is intended to achieve and how, it is impossible to put a price on the project as if it were an off-the-shelf product. At least not when it comes to any software project of any significant scale. The preliminary study and specification phase can account for, say, 5–10 percent of the total project costs.
• Technical design
  • Technical design includes, for example, technology selection, architecture, and the design of databases and interfaces. Technical design often accounts for around 5–10 percent of the total cost of a software development project.
• User Experience (UX) and User Interface (UI) Design
  • UX and UI design are crucial to the success of any website, mobile app or other software, as usability is one of the most important features of any website, service or software.
  • User experience (UX) and user interface (UI) design design ensure that the graphical appearance of the user interface is both visually and technically effective, and that the software meets the objectives set for it. Depending on the project, these may account for, for example, 10–20 percent of the total cost of a software development project.
• Software Development
  • The proportion of the total cost of a software project accounted for by the actual coding is influenced, among other things, by the scope and complexity of the project. Furthermore, the cost of software development and the overall project costs are also influenced by the size and experience of the team working on the project. The proportion of the total cost accounted for by the actual software development can, for example, range from 45–70 percent.
• Project Management
  • Project management includes, among other things, communication during the project and meetings relating to the project. Project management is one of the most significant factors in the success of a software project and thus also affects the cost of software development, as it ensures the project progresses as planned and that all parties are kept informed of the current status. It accounts for approximately 5–15 percent of the costs.

It should be borne in mind, however, that every software project is unique and the working time required is always distributed differently across the various areas. The percentages mentioned above are estimates based on our experience and may vary considerably from one project to another. Nowadays, for example, the use of artificial intelligence at different stages of a project can also lead to significant cost savings.

Read more: AI-enhanced system modernization brings speed and cost efficiency

The cost of software development and pricing models

In this section, we’ll tell you more about the pricing models we use for software projects here at Hurja, as well as their pros and cons. Depending on the type of software project, we implement projects using different pricing models, as the right pricing model streamlines collaboration and makes it easier, for example, to adapt to changes that occur during the project.

When estimating the cost of software development, maintenance and further development should also be taken into account

No software is ever ‘finished’, so to speak; instead, software requires technical maintenance, updates and further development, as the technical and functional requirements of software change in line with the world’s constant evolution.

When considering the cost of a software project, it is worth taking into account its entire life cycle, including maintenance and further development. Software maintenance may consist of, among other things, hosting services, capacity services that scale as required, and any support services, all of which are generally services billed on an ongoing basis. In addition, maintenance services may also include, for example, an agreed number of hours of further development each month.

From a budgeting perspective, a rule of thumb is that the total of the above items will amount to around 10–20 percent of the software development cost each year. In other words, if software development has cost €100k, the annual cost of the maintenance phase could, for example, range from €10k to €20k.

When planning the budget for software development, it is also important not to overlook marketing, which is usually a very significant part of the overall costs. A sufficient financial investment in marketing activities is usually essential when, for example, you want to raise awareness of a new app or online service among new users.

At Hurja, we’ll continue to be there to support you. Once your web service or software project has been completed, we’ll provide you with reliable maintenance services that meet your required service levels. At Hurja, we aim to be your long-term partner, and we’ll tailor maintenance solutions to suit your specific needs.

Investing in high-quality software development is a strategic choice

Investing in high-quality software development is much more than just an expense – it is a strategic choice that creates lasting value and provides a competitive advantage. At Hurja, we believe that quality pays off, and we are prepared to invest in it so that we can offer our customers the best possible software development.

Quality doesn’t happen by chance. We steer well clear of quick fixes and makeshift solutions. We write exceptionally clean code that both we and our clients can be proud of. High-quality code means long-term savings, better performance and fewer maintenance issues in the future. It’s an investment that pays for itself many times over.

Technical debt and quality assurance

The concept of technical debt is central to software development and refers to decisions that lead to short-term solutions but cause problems and incur additional costs in the long term. Technical debt can arise from code written in a hurry, inadequate documentation, the use of outdated technologies or insufficient testing. At Hurja, we adhere to high standards of quality, which reflect our professional pride.

So, when making decisions about your company’s software development, remember that high-quality design, development and testing are critical elements that are well worth investing in financially right from the start. Not only is this efficient, but it also prevents the accumulation of significant technical debt and the additional costs that come with it.

So don’t cut corners at the expense of your business. “It works for now” isn’t enough to ensure long-term success. Code that’s been rushed and put together on the cheap may be a workable solution today, but its durability and scalability could be at risk in the future.

Read more: Are you cutting corners at the expense of your business? Cutting corners in software development creates technical debt

Our aim is to have satisfied customers

Now you know what the cost of software development tends to be for different types of projects, and what kind of pricing models we at Hurja use. However, it’s always worth asking us for a quote tailored to your specific situation, so that we can take into account factors such as the use of artificial intelligence. Our software development always starts with our clients’ needs, and we develop even large-scale software projects in an agile way, listening to you every step of the way. Our goal is satisfied clients and code we can be proud of.

We are committed to long-term partnerships with our clients. This means that we continue to support software maintenance and further development even after a project has been completed. Responsibility is part of our day-to-day operations – we want to ensure that our software stands the test of time and serves our clients in the long term.

Get in touch with us today and make sure your next software project is an investment that will pay dividends well into the future.