Custom Software Development Costs: Market Average, Factors, and Our Approach

Updated Mar 29, 2023

Businesses are different, and so is the software they want to build to achieve their objectives. Small business owners may need a simple app that requires neither complex tools nor a large team of developers. At the same time, a big enterprise will most likely be interested in creating a multifunctional solution for a variety of platforms and gadgets. 

By all means, the final costs of these two examples won’t be the same. Read on to get a better understanding of how custom software development costs are commonly defined.

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Average Cost of Software Development

According to SaM Solutions’ experience, the costs of software development projects mostly vary from $45,000 to $1,500,000. Of course, this is quite a huge ballpark range. To evaluate precise costs, business consultants need to define each project’s specifics and assess various workloads and tasks.

There are no identical custom projects, but let’s look at the typical factors that can affect the costs of development.

Key Factors Affecting Software Development Costs

Size of a Software Project

All software development projects vary in size. As a rule, engineers define the following four types of project scopes:

  1. Small-sized. This type of project implies the introduction of small alterations to the existing software. For example, it can be just bug fixing, adjustments to the UI, or minor tuning of certain features or a piece of software.
  1. Mid-sized. Such projects require more work and may involve security and functionality enhancement or development of mobile or web frontend for already existing backends.
  1. Large-sized. This project scale often implies from-scratch custom solution development that includes the implementation of both a front end and a backend.
  1. Enterprise-level. Projects of this type usually involve the development of elaborate solutions that are eventually integrated with the rest of the ecosystem.

Leverage SaM Solutions’ decades-long expertise in IT to develop high-quality custom software for your business.

Types of Software Projects

Mobile and Web Apps

The cost of custom web or mobile app development will start from about $25,000-$45,000. But the final price depends on a chosen technology approach. Relying on the React technology, for example, can help you reuse the code for both web and mobile solutions, thus letting you almost double the savings. And if you’re developing only mobile apps, opting for cross-platform development instead of native will minimize your expenses as well. 

Content Management Systems

A CMS is a popular tool for creating and managing content. While clients can opt for custom web-based software development of a unique CMS to fit their individual needs, it’s more common to rely on ready-made solutions like Umbraco, Sitecore, and WordPress. The prices of platform-based CMS projects start from $20,000-$50,000.

Ecommerce and CX Solutions

When powered by such popular platforms as Magento, Hybris (SAP Commerce Cloud), or Salesforce Commerce, ecommerce software helps to cost-effectively automate workflows, streamline communication with clients, and personalize customer journeys. The implementation costs heavily depend on the level of customization and the number of necessary integrations, but usually start from $20,000-$70,000.

Supply Chain Management Solutions

With SCM, companies can massively optimize their custom logistics processes. SCM systems cater to the needs of many parties involved, including manufacturers, suppliers, distributors, and retailers. Often, the pricing of such projects starts from $100,000 but the costs increase when supply chains are more sophisticated.

Internet of Things Solutions

IoT solutions allow the network of connected devices to collect and exchange data via the cloud. А proof of concept (PoC) project in IoT starts from about $30,000. But if we’re speaking about the costs of a full-fledged IoT development project for a large enterprise that deals with huge amounts of data, the costs may exceed $400,000.

ERP Software

ERP software is aimed at efficient and daily management of routine procedures. The exact cost of ERP development depends on the size of the company and the set of features a company needs. In SaM Solutions’ expertise, the costs of custom ERP implementation usually start from $400,000. 

Size of a Development Team

If a company has a limited budget, the team will be small and some members will have more responsibilities, compensating for the absence of a dedicated expert. Mind, however, that the smaller the team, the longer it takes to deliver a project – and the higher the software cost. It’s often cheaper to hire more experts and wrap up faster than pay a small team for 2 years or more. 

The recommended software development teams usually include:

  • Business analysts – analyze business needs and formulate high-level requirements.
  • Solution architect – designs software architecture.
  • Product or Project managers – overlook the entire project and shape the requirements.
  • Project Scrum Master / Team Lead – plans and assigns the tasks to the team members.
  • UI/UX designers – create UX wireframes and design UI mockups.
  • Backend software developers – deliver the code for the server-side of the solution.
  • Frontend software engineers – write the code for the client-side of the solution.
  • QA specialists – run manual and automated tests and log test results.
  • DevOps engineers – build CI/CD processes.

Another important factor that defines the costs is the level of team members’ experience. The services of junior specialists cost the least but such talents can usually handle only the basic tasks. The services of middle and senior experts will cost more but will also guarantee quality results in projects of various complexity levels. 

Development Team Location

Physical location of teams can also affect the final costs of a software development project. Development teams that are based in the US or EU can charge several times more than a team in any other location. 

Freelance specialists from other locations can be hired for specific tasks to optimize costs. However, the drawbacks of working with freelancers include the need for direct management and work monitoring. The task becomes especially daunting in the case of collaboration with many freelancers. 

Offshore outsourcing may be a great alternative to other typical software development engagements. It guarantees cost optimization, high-quality services, and great cooperation thanks to account managers, who maintain effective communication between the client and team. 

Software Complexity

Three major cost factors correlate with how complex the software is: 

  • Level of necessary customization
  • The number of planned features 
  • Feature sophistication

Needless to say, heavyweight apps that carry out comprehensive data analysis in real-time and have multilevel security need more time than simple apps with quizzes or recipes. The level of complexity also influences the preferable mode of cooperation: many freelancers can customize WordPress, but with Sitecore or SAP Hybris, you’ll require a professional team’s help. 


The importance of great visuals can not be overestimated. Attractive designs and quality UX can lead to increased customer engagement, which is especially vital for ecommerce apps and mobile- or web-based digital products. 

However, not all types of software require an intricate and unique design. SCM, ERP, and CMS solutions can do great with just customized templates. This can help minimize the costs of UI/UX design services and allocate the budget to feature development instead. 

How We Estimate Software Development Costs at SaM Solutions

To find out the costs of the project, SaM Solutions follows several stages of estimation:

  1. Our business analysts explore your requirements, including the necessary features, preferred technologies, and the desired delivery date.
  1. To finalize the project scope, we schedule meetings or video calls with your product owners or project managers and discuss their vision of the final software. 
  1. Together with our software architects and lead developers, we create a proposal document that contains all key information on the project.
  1. Based on the information in the proposal, we prepare a quote with the estimated costs and offer optimization strategies (e.g. another development methodology, different technology stack, alternative team composition). 


The cost of software development services varies depending on many factors, including the project scope and complexity, software type, UX/UI design, development team’s location, and the experts’ experience level. To know the exact price of your project, feel free to schedule a consultation with SaM Solutions’ team. With our decades of experience in custom software development, we will be glad to help you achieve your ambitions.

How much does custom software development cost?

The exact pricing depends on lots of factors, including the geographical location of the software engineers you decide to work with. In the US, a senior expert’s hourly rate is $120. In Central and Eastern Europe and Southern Asia, a senior developer’s rates can be anywhere between $45-$70.

How is software development cost calculated?

Software development costs are usually based on the salary rates of the staff involved, the planned amount of work hours, and the cost of tools and materials necessary for the project.

How is the software development cost paid for?

You can choose from several pricing models: fixed price model, time and material, hybrid, dedicated team fee, and staff augmentation fee.

Leave a comment
  • Judging from my experience, the location where you decide to hire your development team, really matters. I had experience with both teams from Western Europe and Central Europe. The latter was more affordable, and the quality of services was the same.

  • I agree that it’s hard to estimate the usual price without the data on specific details such as project scope, team size, etc. Nobody would be able to tell it without this information.

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