Estimating Software Development Costs: A Complete Guide

May 22, 2023
Pratik Shivsharan

The average software development cost ranges from $5,000 to $300,000, depending on the type of software because every project has different developers, technology, development strategy, and business goals. The global revenue of the app market, on the other hand, is estimated to reach $641.10 billion by 2027.

While on the monetary side, the outcome is much greater than investments, there’s a catch.

Custom software development requires very detailed, effective planning, strategy building, and process management to ensure the produced outcome is lucrative for an organization. And all of this comes at a cost.

Therefore, software cost estimation is an integral part of the development process. It allows you to manage costs while identifying elements in the development process that could increase the costs. As a result, every software development project requires a software development cost calculator or a team that would see their requirements and gives an estimate.

Custom Software Development Costs

When building custom software, your cost mainly depends on the type of software you are making, such as SaaS, web applications, mobile applications, eCommerce software, content management systems (CMS), and CRM software. Knowing how much it costs to develop software of such types requires an evaluation of different elements involved in the project and the rates of developers.

Be that as it may, the table below includes an average cost of software development for various custom software:

Custom Software Development Costs
Custom SoftwareCosts
SaaS$25,000 to $50,000
Web Application$8,000 to $35,000
Mobile Application$6,000 to $45,000
eCommerce Software$12,000 to 30,000
Content Management Systems (CMS)$10,000 to $45,000
Customer Relationship Management (CRM)$15,000 to $40,000

You should expect this cost range for building basic or standard custom software, but the software development pricing models will vary if you have different or more advanced requirements for yours.

Factors that Affect the Software Development Costs

As mentioned above, multiple factors can determine software development expenses before and during the process. Therefore, you must strategically evaluate every element in the process to estimate, plan, and manage the development costs for your software.

Software Type/Category

The type/category of software you are building determines the overall development costs. Are you making custom software? Are you building a healthcare application? Are you building an e-learning + social media application? Are you creating a SaaS product? Each of these choices requires a different approach since their development costs vary.

For example, an e-learning app needs User Registration, Profile, Available Courses, and Payment Features. However, an advanced e-learning app with social media would require many innovative features like Geolocation, Email/Phone Number Verification, Feed, Chat, Group Chat, File Sharing, and Premium Subscriptions.

Every type and category requires a software development cost analysis for a specific market, target audience, industry giants, and risks associated with the projects. They all allow you to formulate a better development plan and help you estimate the exact development costs for your project.

Software Development Cost Breakdown by Category
App CategoryCosts
SaaS$25,000 to $50,000
CRM$15,000 to $40,000
Web Application$8,000 to $35,000
On-demand Mobile Apps$15,000 to $55,000
Fintech Mobile App$20,000 to $50,000
Mobile Games$15,000 to $45,000
eCommerce App$15,000 to $45,000
NFT Marketplace$25,000 to $55,000
Enterprise App$35,000 to $60,000

Software Complexity

Software complexity depends on the basic or advanced quality features, functionality, and user interface. A basic solution with less complexity (an MVP) has core/fewer features, simple functionality, and a decent user interface. This type of software is ideal for the first version of your product as it allows you to understand the potential of your software in the market and identify flaws in your approach.

Advanced software with high complexity has multiple innovative features, technology like AI and AR/VR, visually appealing UI, and convenient user experience. Such software usually requires more planning, development hours, and a flexible budget. That is why most organizations build advanced software after monitoring the performance of the MVP/basic version.

Software Development Costs by Complexity
MVP/Basic$5,000 to $15,000
Standard$25,000 to $60,000
Advanced$80,000 to 250,000

For better budget planning and management, build MVP software and improve the system from there according to market performance and customer feedback.

Development Type and Platforms

Evaluating the software platforms becomes crucial when building Android and iOS mobile applications. Operating systems like Android, iOS, macOS, and Windows have different requirements and standards. And as a result, the costs of building software for these platforms can vary. Deciding platforms for your app/software can bring either success or failure. Therefore, you must research which platforms your target users use the most or build a cross-platform application.

You have two choices when building an application, Native and Cross-platform. With Native, you create a separate application for every platform, which includes a different codebase for every OS, longer development time, late deployment, and higher software development costs.

With cross-platform, you can use a single codebase, development process, and budget to build an application for all platforms like iOS, Android, and macOS. While some industry experts argue that the performance of a cross-platform app is less superior than Native, it involves fewer development hours, faster deployment, and cost-effective development.

With the right team and strategy, you can build a high-performance cross-platform app to save costs and excessive effort.

Software/Application Development Cost by Platforms
Android (Native)$45,000 to $80,000
iOS (Native)$40,000 to $80,000
Web$15,000 to $60,000
Cross-platform Development (Android, iOS, Web, macOS)$20,000 to $40,000

Choose Native if you have a flexible budget and a requirement for a high-performance app with a great user experience.

Choose Cross-platform if you have a limited budget and have to build a stable or high-performance app with a decent user experience.

UX/UI Design

Something you will often hear in the software building industry is the significant role of the user interface and experience in the success of any software. The UI/UX determines the visual experience and the ease of use of your software. For example, your software has a bad interface if it has random color combinations/graphics, longer loading time, complex features, and confusing navigability.

It has a good interface if the color combination/graphics are personalized and customizable, the loading time is short/fast, and the software has innovative yet simple features and highly convenient navigability.

Another example would be the buying experience in any food delivery or e-commerce app. How quickly users can Open the App, Find the Product, Purchase the Product, Share their Location, and Make the Payment determines the good or bad the user experience of an application.

You can never compromise the quality of the user interface and experience since it can lead to customer defection and decreased user acquisition. However, the costs for software design can increase significantly without proper budget planning and project timeline management.

Software Design Cost
Software DesignCost
Basic$5000 to $10,000
Standard$12,000 to 15,000
Complex$18,000 to $25,000

Third-party APIs

Third-party APIs are services you can incorporate into your software by paying for and acquiring them from a third party. Some examples are –

Google Maps APILocation

Twilio Conversation APIChat

Onesignal REST APIPush Notifications

Auth0 API – Social Login and Authentication

Third-party APIs are necessary for software to improve the user experience by including advanced functionality like location tracking, live chat, and social login. They help you ensure a convenient user experience in your software, which can increase user acquisition and retention.

While not all software requires APIs, you must evaluate their need in your software from the beginning to understand how they affect the development process and costs. Most APIs are free-to-use for developers, but some require monthly or yearly payments.

For example, Twilio conversation API for chat is a paid API, and you check its pricing to see how it will affect the development costs.

Location of Developers

Software development costing more than necessary is usually due to the location of developers since teams from various countries have different rates. You can hire an in-house team, or freelancers, or outsource to developers from your country or another. But depending on your country, you may want to compare some prices from other countries before hiring any development team. Because depending on where you are, you may find top-tier solutions from developers in another country at much lower prices than yours.

For example, developers from the US will cost you significantly higher than a software development company from a country like India or Ukraine, while providing quality-driven solutions.

Software Developer Cost per Hour
CountryJunior DevelopersSenior Developers
USA$45 to $60$80 to $100
UK$40 to $55$75 to $90
Ukraine$35 to $40$45 to $50
India$25 to $30$35 to $40

Overall software development cost estimation based on the location of developers.

Standard Software Development Costs
USA$75,000 to $120,000
UK$70,000 to $100,000
Ukraine$36,000 to $45,000
India$25,000 to $40,000

Outsourcing to software developers from India is an option you must consider before trying other options since developers from the US and UK are costly and they can damage your budget and financial stability if you choose an unsuitable team. On the other hand, outsourcing software development lowers costs when you hire a capable team from India or Ukraine.


Estimating software development costs is a straightforward and easily manageable process if you prepare the budget for planned and unexpected elements in the project. The rest is an evaluation of your project requirements, developers, software complexity, necessary resources, and project timelines to determine the exact development costs.

However, reducing the software cost estimation throughout the development journey is necessary for most startups; and compared to other strategies, Agile software development costs are considerably lower and easier to manage than others. Industry experts recommend the development methodology for accelerating development, increasing collaboration, improving product quality, and reducing development costs.

Frequently Asked Questions

How much does software development cost in the US?

In the US, software development costs for a standard system can range from $50,000 to $200,000.

How much does software development cost in India?

In India, software development costs for a standard system can range from $25,000 to $150,000.

Why is developing software expensive?

It is not expensive. The software development costs always depend on business goals, software complexity, UI/UX design, development strategy, and the location of software developers. So, the rates can be lower or higher depending on these factors, but the development cost is always what it is supposed to be according to your requirements and business goals.

What is the biggest cost of software development?

Application testing and UI/UX are two major cost drivers in software development. And the biggest software development costs can range from $300,000 to $450,000 or higher based on requirements.

Most Popular