• # Paul Blake
  • # Software Development
  • # 3 October, 2019

How to Estimate Software Development Cost?

Software Development Cost Estimation Guides

Software companies have to make quick estimates so that they can tell the client what is the logic behind the cost they are telling them. If they come up with inaccurate calculations of software development costs, everything goes into chaos. To calculate the software development cost, the software companies have to look at different things such as the time and effort that is going to go into the project. A company has two types of expenses:

  • Direct Expenses
  • Indirect Expenses

Direct expenses involve the payment that every person in the project is going to receive, the hardware cost, and the expenditure on everything that will be used in the project. If there are any risks involved in the project, the risk assessment, evaluation, and management costs are also indirect expenses.

Indirect expense involves the cost of security, audits, and quality of the project. They are not directly part of any project but they are associated with it.

Factors Involved in Cost Estimation

There are a few factors that are involved in the cost estimation of any project. They will make up the total sum of money that will go into any project.

Size of Project

This is an easy factor to look atIf more resources such as software developers are used in a project, the development of particular software or apps will cost more. If a hundred resources such as software developers, project managers, business analysts, and software testing engineers are to be used in the project development you will need to pay more.

  • Smaller apps & software applications that do not involve excessive coding can cost $5,000 to $10,000.
  • Medium-sized software or applications that mid-level software engineers can develop cost in programming languages such as C, C++, and JAVA cost between $15,000 and $200,000.
  • Bigger software that needs excessive coding in complex programming languages and involves senior software engineers, senior-level software architects, and project managers cost over $250,000.

Complexity of Project

The complexity of the project refers to the coding and testing that is involved in software development. When you improve the design, the complexity of the software also increases. For example, if you add custom fonts or different colors, a designer will be needed for all of these. This cost has to be considered in the total cost.

If you want to integrate your software with any third-party application, it will also increase the cost. For example, you can give your customers the option to have different payment options. Data migration and checking of data to see if everything is working fine also come under complexity.


Nowadays, software developers work in a number of technologies and platforms that include JAVA, .NET, ROS, Python, PHP, Android, and IOS to name a few. Most clients come with the requirement of what technology they want the software to be built-in, the cost of software development also depends on the platform they choose. You cannot convert software made for one platform to a form that is workable on another platform.

Rules for Estimating Project Cost

When estimating the cost of a project, there are a few rules you have to follow. Following these rules of thumb will help you estimate the cost properly.

  1. Your quote must be made after following the reliable methodology for estimation.
  2. Your quote should have all the details of the project.
  3. The quote is developed as the teamwork of the whole development team.
  4. Calculations made in the quote must be verified by all stakeholders.
  5. A similar project experience must be used for making calculations in cost estimation.
  6. Risks involved in any project must be measured properly.

Time Investment in Software Design

In most cases, the software that you have to decide on is the mobile application. Sometimes, web applications are also made. The time invested in the software will help you determine the cost especially if you are paying the team on an hourly basis. According to their complexity, they can be divided into three major categories.

Basic Software Applications

These are the simplest ones and they are easy to build. You can make them quickly but they have limited functionality. For example, an app that adds a white background to Instagram pictures. The amount of time spent on an app like this is 50 to 100 hours.

Moderate Software Applications

This software application has moderate complexity and they have more complicated features as compared to basic apps. For example, a photo or video editing app. An average of 700 to 1200 hours is spent on apps like this.

Complex Applications

Lastly, there are complex software complications. These have complex architecture. Along with functionality, security is also important in the software of such complex architectures. For example, software for a company that maintains user databases. Software developers spend around 50 to 500 per hour on such software applications.

What to ask the Client for Cost Estimation?

Of course, you or your company will be making the software for clients. There are several things that you should definitely ask your clients to get an idea of what they want in the software. This will help you in estimating the cost more accurately as you will have a rough estimate beforehand.


First of all, you have to ask them for the design. If the features in the design are increased, the cost will be too.

List of Features

Secondly, the client must tell you the amount and kind of features they want to have in the software application. With more features, the cost will be higher too. For example, if you are making an app for a cab service, different features can be included such as live tracking, in-app calling, chat with the driver, map, etc. Knowing these requirements help you in figuring out a rough cost before you actually make proper calculations.

A Sample

If the client shows you sample software, from a competitor, that they want their software to be like, it will help you in cost estimation. For example, if the client tells you that they want their cab service app to be something like the Uber app, you will have a clear idea of what features need to be in the software.