How much does software development cost? In-depth guide for 2025

Nowadays, software development isn’t a luxury, it’s a necessity.

But, the costs involved are the most common obstacle if you want to start building software.

And if you’re from a non-technical background, it can be difficult to understand where they come from and how they add up.

Luckily, you’re in the right place.

Here, we’ll discuss how much software development typically costs and take a closer look at the key factors that drive those costs.

Also, we’ll show you how to accurately estimate your development budget and share a few practical tips to help you reduce development costs.

Let’s dive in!

How much does software development cost on average?

We’ll start with the big question – how much does software development cost, on average?

Now, software development costs vary wildly.

So, there’s no one-size-fits-all answer to this question. But, we can give a broad range based on complexity:

• Simple software – $60,000-$90,000
• Medium complexity software – $90,000-$250,000
• Complex software – $250,000+

This is the range you can expect if you’re building a standard software product.

But, if you’re building enterprise software, the costs can be significantly higher because of the added complexity. Here’s what you can expect:

• Small-scale enterprise software – $100,000-$250,000
• Medium-scale enterprise software – $250,000-$500,000
• Large-scale enterprise software – $500,000+

So, software development costs can range anywhere from $60,000 for a simple software product all the way to $500,000+ for complex enterprise solutions.

Next, we’ll show you how to estimate these costs.

How to accurately estimate software development costs

Accurately estimating costs is key to successful software development.

So, we’ll share a slightly simplified version of our cost estimation process.

Let’s say you’re building a cross-platform e-commerce mobile app and you have a team of 2 Flutter developers and 2 backend developers.

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First, you divide the work into Agile epics based on the app’s core features.

An Agile epic is a collection of user stories and is used to structure your backlog. Each epic forms the basis for one or more sprints/iterations during development.

In our e-commerce app example, the Agile epics can be:

• User authentication and account management
• Product catalog and browsing
• Shopping cart and checkout
• Order management
• Inventory and vendor management
• Customer support

Once you’ve defined your epics, you divide each into individual features and estimate the number of work days needed to build the UI and backend for each feature.

Then, you add them up to get the number of work days needed to complete the epic.

But, how do you get the cost from this?

Here’s the formula: 

Quick note: you multiply the work days by 8 to get the total number of work hours involved.

So, let’s say an epic takes your team of 4 developers 30 total work days to complete and their hourly rate is $55. The total cost for that epic would be:

Once you’ve repeated this process for each epic, you just have to add them up and voila! You now have a solid estimate of your software development costs.

But, to get your calculations right, you need to understand the underlying factors behind it, which we’ll discuss next.

Key factors influencing the cost of software development

Here, we’ll go over the main factors driving software development costs in more detail.

Type and complexity of your project

Bar none, the most important cost factor in software development is the type and complexity of your project.

The level of complexity directly impacts both the time and resources required.

The first thing that will determine the cost of your project are the platforms you’re targeting, like:

• Android
• iOS
• Cross-platform mobile
• Web
• Desktop

It should go without saying that the more platforms you target, the more expensive your project will be.

The second thing is your software’s complexity, i.e. how many features and functionalities it has.

So, like we mentioned earlier, complex enterprise software will cost a lot more than a simple mobile app.

Understanding your project’s type and complexity will help you accurately estimate the total costs involved.

And that’s key to successful development.

UX/UI design complexity

The complexity of your UX/UI design is another important cost factor.

A visually appealing, intuitive interface will help you give your users a good experience and stand out from the crowd.

A poor experience will quickly drive users away – 86% of consumers will leave a brand they trust after only 2 poor experiences.

So, investing in UX is a worthwhile investment. In fact, for every $1 you invest in UX, you get $100 in return – that’s an ROI of 9,900%!

source: UX Collective

But, creating a great UX/UI design takes time, skill, and resources.

And the more complex it is, the more it will cost you. 

A simple design with a basic layout will be much cheaper than a custom design with lots of animations and interactive elements.

Here’s just a few factors that influence its complexity:

• Number of screens and user flows
• Interactive elements like animations and transitions
• The level of customization required
• Compatibility with different devices and screen sizes
• Accessibility standards
• Data visualization elements

So, to drive costs down, you should keep it as simple as possible.

This will resonate with your users, too.

Development team size and composition

The size and composition of your development team significantly influence software development costs. 

Larger teams will work faster, but they cost more. And smaller teams will be cheaper, but they’ll take longer to build your software.

So, balancing team structure with project requirements is crucial.

Seniority plays a huge role in the total costs involved.

In the U.S., the median salary for a junior software engineer is $130,000/year while for a senior engineer it climbs up to $214,000/year.

And specialists cost even more – the average salary for a senior AI engineer is $272,000/year.

So, how can you keep these costs in check?

Here’s what you can do:

• Hire for the right roles – Match roles to project needs. For a simple project, a couple of full-stack engineers could be enough but for complex projects, you’ll need backed and frontend specialists.
• Scale gradually – Start with a core team during early phases and add members as the project grows in complexity.
• Outsource specialists to fill skill gaps – Hire specialists, like data scientists or cloud engineers, on a temporary basis instead of keeping them on staff full-time

This all under the assumption that you’re building an in-house team – the best way to cut these costs is outsourcing development.

But, where they are in the world will have the biggest impact on your costs, which we’ll cover next.

Team location

Where your team is located is another major cost factor when it comes to software development.

Hourly rates vary wildly across different regions and countries and this has a huge impact on your total development costs.

Here’s a comparison of the average hourly rates by role and region:

Average hourly development rates by role and region

If you’re based in North America or Western Europe, the average hourly rates you’ll pay are much higher compared to the rest of the world.

For example, if you’re based in the U.S. and hire an offshore team from Eastern Europe, you’ll spend 3-4x less on labor costs alone.

And you won’t have to deal with additional costs like:

• Recruitment and onboarding costs
• Employee benefits
• Administrative overhead
• Higher rent and office maintenance costs

And that’s why outsourcing development is so popular.

Third-party integrations

Third-party integrations are essential for many modern software applications. 

They add functionality without requiring developers to build features from scratch. 

Here’s a few of the most common types and examples of third-party integrations:

• Payment processing – Stripe, PayPal, or Square
• Cloud services – AWS, Google Cloud, or Microsoft Azure
• Social media APIs – Facebook, Instagram, X
• Analytics platforms – Google Analytics, Mixpanel
• CRM and ERP tools – Hubspot, SAP, Salesforce

But, integrating external services or APIs will impact costs, timelines, and technical complexity.

And the more integrations you need, the higher the development cost. 

On top of that, each integration involves setup, customization, and testing to ensure seamless performance. 

Plus, if you have to integrate with legacy systems that don’t have APIs or data access layers, you’ll have to build them from scratch.

source: ModLogix

All of these things can significantly drive costs up.

So, you need to make sure the third-party integrations you go for actually provide value.

Maintenance and updates

Software development doesn’t end with deployment. 

Regular maintenance and updates are essential to ensure your software remains functional, secure, and relevant. 

Maintenance involves fixing bugs, updating features, adapting to new technologies, and addressing evolving user needs.

Neglecting it leads to security vulnerabilities and costly fixes down the line.

And it’s a major cost factor in software development. Over your software’s lifetime, maintenance will account for over 50% of your total cost of ownership (TCO):

source: LinkedIn

There are 4 types of software maintenance you should know about:

• Corrective maintenance – Finding bugs and errors post-launch
• Adaptive maintenance – Updating your product to work with new hardware and software environments
• Perfective maintenance – Improving features and performance based on user feedback
• Preventive maintenance – Updating security measures and optimizing code

As a rule of thumb, you should budget 20% of your initial development cost for maintenance annually.

This sounds like a lot but maintenance and updates are long-term investments that will keep your software reliable, secure, and adaptable.

And that’s exactly what you need for long-term success.

The pricing model

If you outsource development, the pricing model you agree on significantly impacts the total cost of development.

It determines how you pay your development team and influences the project’s flexibility, timeline, and final expenses. 

You have 2 options to choose from – time and materials and fixed price. Here’s a quick comparison between the two:

While the fixed price model is a good choice for small, well-defined projects, the time and materials is overall the better choice.

If you go for a fixed price model it means you’d spend a lot of time and energy on making sure the contract is respected. You’d be in a constant tug of war with the agency instead of doing more important things.

Marko Strizic, DECODE co-founder and CEO

It matches the actual resources used during development, so it’s the fairest model for everyone involved.

Also, unlike with the fixed price model, if requirements change it won’t cost you extra.

And that’s why it’s the best choice.

5 simple tips to cut software development costs

Finally, we’ll give you some practical keeps to help you keep development costs low.

Write clear requirements at the start

Clear, detailed requirements are key to every successful software development project.

Ambiguous or incomplete requirements lead to misunderstandings, delays, and costly rework.

In fact, 37% of projects fail because of wrong or unclear requirements, so you can’t afford to miss the mark here.

And setting a strong foundation will save you time and money in the long run.

So, what should you include in your requirements? And how should you write them?

Here’s what your software requirements specification (SRS) document should include:

You can adjust these categories to your needs. Depending on the project, you might not need everything listed above in your SRS.

But, just make sure to define your functional and non-functional requirements – they are non-negotiable.

Now, to write clear requirements, you should:

• Use simple language – Avoid technical jargon unless necessary. Make it accessible to both technical and non-technical stakeholders.
• Prioritize requirements based on value – Prioritizing critical requirements will make it easier for your team to understand which features they’ll need to build first.
• Collaborate with stakeholders – Involve stakeholders in requirements gathering to align your project with business goals.
• Use visual aids – Include wireframes, flowcharts, or mockups for complex requirements to make them easier to understand.

In short, clear requirements aren’t just a checklist – they’re a blueprint for your project’s success. 

By investing time in them at the start, you’ll pave the way for a smooth development process with no surprises.

And that’s exactly what you should want.

Prioritize developing an MVP

Developing a minimum viable product (MVP) is one of the most effective ways to reduce software development costs. 

MVPs are significantly cheaper to build than fully-featured products.

An MVP focuses on delivering only the core features necessary to solve a problem or validate an idea. 

source: Relia Software

By skipping unnecessary features, you can launch in a fraction of the time.

This saves time, reduces risk, and helps you gather feedback early.

Here’s how you build an effective MVP:

• Validate your idea – Do user research to gauge interest and make sure your idea is worth pursuing
• Identify core features – Use feature prioritization frameworks to rank and prioritize features based on their value and impact
• Keep it simple – Avoid adding any and all unnecessary features or customizations
• Launch quickly – Aim to deliver your MVP in 3-6 months to start gathering feedback as soon as possible
• Set up a feedback loop and iterate – Set up a feedback loop to continuously gather user feedback after launch and iterate based on the feedback you receive

Here’s the main takeaway from all of this – an MVP isn’t just about cost savings.

Sure, you will cut development costs, but you’ll also validate your idea and build a user-centric product.

And that’s key for long-term success.

Implement Agile methodologies

Adopting Agile methodologies in software development can significantly cut costs while also improving efficiency. 

But, why is that the case?

An Agile methodology like Scrum breaks the project into smaller, manageable parts called sprints.

Each sprint is like a mini-development cycle and includes all the phases in the software development process, from planning to launch. 

This lets your team focus on delivering value incrementally – and this comes with a lot of benefits, like:

• Faster time to market – Agile methodologies prioritize delivering a functional product early. This shortens development timelines and reduces costs.
• Efficient resource use – With Agile, your team will focus on high-priority tasks, ensuring no time or budget is wasted on low-value features.
• Reduced risk – Frequent testing and feedback loops catch bugs and defects early, which saves a lot of time and money in the long run.
• Flexibility – If your team is Agile, they can easily adapt to changing requirements without derailing the project.

In a nutshell, Agile methodologies minimize wasted effort and help you address issues early.

And that’s essential for cost-effective development.

Use open-source tools

Using open-source tools and templates is a cost-effective strategy in software development. 

Open-source solutions offer pre-built frameworks, libraries, and templates that reduce development time and effort, helping you save on costs without compromising quality.

According to the Linux Foundation, if you use open-source software, you can cut your development costs by up to 55%.

Open-source tools allow developers to use existing solutions rather than building features from scratch. 

And that’s just the start. Here are a few of the other benefits of using open-source software:

source: Senla

Some of the most widely used tools in software development are open-source, like:

• Development frameworks – React, Django, Ruby on Rails
• Integrated development environments (IDEs) – Eclipse, Visual Studio Code
• Databases – PostgreSQL, MySQL
• Testing tools – Selenium, Appium, Playwright

Of course, not all open-source software is created equal, so you do need to be mindful of the risks involved.

But, open-source software is a cornerstone of software development and you should use it.

Integrate QA from the start

Integrating quality assurance (QA) from the start is one of the best ways to reduce software development costs. 

That’s because poor software quality is a major driver of development costs. Just in the U.S., it costs companies $2.42 trillion every year.

But, if you start testing from the get-go, you’ll avoid becoming a part of that statistic

Catching bugs early on in the development process will save you a lot of time and money. 

Fixing bugs and defects after deployment can be up to 100x more expensive than fixing them right at the start: 

So, it’s a mistake to think of QA as an extra cost – rather, think of it as an investment in quality.

If you prioritize it from the start, you’ll save money in the long run and protect your reputation.

And you’ll set your software up for success.

Software development costs: FAQs

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