Factors That Affect the Cost of Custom Software Development
One of the most frequently asked questions companies have when planning a tech project is: “How much does it cost to develop custom software?” The answer isn’t simple, because the cost varies based on multiple technical, functional, and strategic factors.
In this article, we explain the main elements that influence the cost of custom software development, so you can better plan your budget and make informed decisions.
1. Project scope and complexity
The functional size of the system is the most important factor. Developing a simple order-taking app is not the same as creating a full ERP system with multiple modules.
- How many features does it include?
- How many types of users will the system have?
- Does it require complex workflows or advanced business logic?
Tip: Divide the project into phases or an MVP (minimum viable product) to reduce risks and facilitate staggered investment.
2. Technology stack used
The tech stack (languages, frameworks, databases, cloud services, etc.) also impacts the budget.
- Will it use common technology (like React or Laravel)?
- Does it require specialized tools (like artificial intelligence or blockchain)?
- Is it a traditional architecture or microservices-based?
Newer or more complex technologies usually require more expensive technical profiles.
3. Integrations with other systems
Connecting the software with external platforms (APIs, ERPs, payment gateways, CRMs, etc.) can significantly increase the cost if the integrations are poorly documented or require additional development.
Example: integrating with a well-documented API like Stripe is cheaper than connecting with a legacy or proprietary system.
4. UI/UX design
An attractive visual design with an intuitive user experience may require greater investment in wireframes, prototypes, and usability testing.
- Do you need a custom design or will you use templates?
- Will the interface be accessible via web, mobile, or both?
- Does it require responsive design or brand customization?
5. Security level and compliance
If the software handles sensitive information (personal, financial, medical data), it will need additional security protocols (encryption, roles, audits, backups, etc.).
In addition, compliance with regulations like GDPR, HIPAA, or PCI DSS may involve extra development time, legal review, and documentation.
6. Development team location
The country or region of the software provider can impact the hourly development rate. For example:
- U.S. or Western Europe: $80 – $150 USD/hour
- Latin America or Eastern Europe: $30 – $80 USD/hour
- India or other Asian countries: $15 – $50 USD/hour
However, it’s not just about price—you should also assess quality, experience, communication, and support.
7. Required delivery time
Do you need the project ready in 3 months or 8? The shorter the deadline, the higher the cost, as it requires more personnel, higher work intensity, and less room for error.
8. Maintenance and support
Once development is complete, many companies forget to account for the costs of:
- Post-launch technical support
- Bug fixes
- Updates and enhancements
- Scalability or migrations
This can represent between 15% and 25% of the annual budget.
9. Documentation and testing
A professional development process should include:
- User manual
- Technical documentation
- Unit and functional tests
- Staging/test environment
If not considered from the beginning, adding them at the end can be more expensive.
10. Code ownership and licenses
Will your company fully own the source code? Will commercial-licensed components be used?
These factors must be clearly defined in the contract and can influence the price.
How much does custom software development cost?
Although each project is unique, in general terms:
- Basic MVP: $8,000 – $20,000 USD
- Medium enterprise platform: $20,000 – $60,000 USD
- Complex solution with multiple integrations: +$100,000 USD
Keep in mind these amounts may vary based on country, provider, hiring model, and project scope.
