What drives software development cost and how to reduce it

Companies create tailor-made software solutions to address business-specific challenges, from automating paper-based workflows to digitizing processes to overcome the COVID-19 crisis. If you decide to make a website or application, you should know how to reduce software development cost while preserving quality.

In this article, we will consider the best ways to cut the price of building a software product. You will learn what factors affect the final budget and what things worth investment to succeed in the market. Let’s get started!

Top 6 factors that affect software development cost

1. The number and complexity of features

The number of features and their complexity is one of the main factors that affect the mobile and web application development cost. The less time and effort you need to build a digital product, the lower the price will be.

Websites and applications could be divided into 3 categories:

• A simple software product includes 1-2 basic features, maximum of 5 screens or web pages, and no third-party integrations. Examples are a mobile task planner or messaging application. The approximate time to build a simple project is 3-5 months.

• A medium-sized project generally contains 3-6 features, for instance, a user profile, chat, data search, payment functionality, and integration with 1-2 APIs (application programming interfaces).

  Types of projects for this category are an online booking platform, event planning app, online delivery service, and a customer loyalty program.

  An e-commerce website of medium complexity can contain a user profile, shopping cart, user authorization, payment gateway (e.g., Stripe or PayPal), multiple pages ("About us", "Payment and delivery", etc.), and an admin panel.

  The approximate time to develop a medium-sized project varies between 6-9 months.

• A large software product involves over 6 features, complex backend, and integration with third-party services. Considering a video streaming service like Netflix , it will have comprehensive functionality that can include audio and video processing, real-time synchronization, multi-language support, and personalized content recommendations.

  A highly-complex e-commerce website can contain an artificial intelligence-based chatbot, review and ratings, as well as a cashback service besides basic features. Complex projects can have dozens of screens and employ cutting-edge technologies like machine learning, natural language processing, or augmented reality.

  To create a complex software system with many features and integrations, an IT service vendor generally needs at least 9 months.

Note: If you aim to launch a complex project to solve business challenges but have a limited budget, you should start with building the key functionality. By prioritizing features, you will reduce software development cost and receive a working product that performs the most important task. Below, we will consider this approach in detail.

2. Operating systems

The application development cost depends on the type and number of operating systems (OS): iOS, Android, Windows, Linux, etc. For example, building a native mobile solution for iOS only will be less costly than for iOS and Android.

Native means that the product codebase is written for a single OS. As a result, users won’t be able to install a native app for iPhones on Android devices. To choose the right platform, you should define the target audience.

If your potential or existing customers mainly use laptops or personal computers, make a website or web application. In case you aim to reach consumers via smartphones, create a mobile application for iOS or/and Android according to their needs.

Note: iOS app development generally requires about 10%–20% less time in comparison with Android, since there is a significantly higher number of devices that run on Android OS. Software engineers have to ensure support for many OS versions and provide consistency across all screen sizes. Therefore, testing also consumes more time.

3. UI and UX design

UI and UX design is an important software development stage you should focus on. Customers decide whether to use the product or not depending on how it looks. However, software design is not only about visual representation (UI design) but ensuring the app/website is easy and enjoyable to use (UX).

The user interface comprises everything people see on screens and interact with. User experience is about feelings and convenience: content and functionality should be organized in such a way that people can quickly find the desired information or do the required action even without thinking.

Design size and complexity directly affect the budget for building a software project. The more screens, pages, complex animations, handcrafted elements, etc. the product has, the more time this stage will take.

Note: If you are asking if there are possible ways to reduce the software design cost, the answer is yes. For instance, you can choose a design template for the future website and tailor it to your needs. However, the market is full of similar templates, which are used by thousands of companies. Thus, it is very challenging to create a unique branding theme.

4. Quality assurance

Testing is the process of checking the system for bugs, errors, and compliance with the project specification. A QA engineer verifies that the app or website performs as intended in different scenarios, for example, with or without Internet connectivity.

Another task of this stage is to make sure a software solution provides a consistent user experience on all devices and platforms.

The amount of time for QA depends on the product objective, size, and complexity. The team will need more hours if it has many pages and features while supporting different operating systems. As a consequence, the final price will increase.

However, you will save money and improve customer loyalty due to high quality: the app won’t receive multiple negative reviews because of some glitches, maintenance will take less effort.

5. Third-party API integration

When creating a software product, you may need to integrate third-party services to enable some functionality instead of making it on your own. The use of APIs enables engineers to save time while clients reduce software development cost.

You can integrate your digital solution with various APIs depending on business tasks, for example, Yahoo Finance, Skyscanner, Open Weather Map, CoinMarketCap, Investors Exchange (IEX) Trading, PayPal, Braintree, etc. To engage users, you can allow them to share files, posts, and messages by integrating the system with social networks, for instance, Instagram, Twitter, Facebook, or LinkedIn.

Note: It is much faster to integrate an API if its vendor provides detailed quality documentation or if it comes with a native software development kit (SDK). This task also consumes less time if engineers have already worked with the necessary API.

6. Additional project requirements

Additional requirements also affect web or mobile application development cost. For instance, if one of the key objectives is to leverage enterprise-grade security and ensure compliance with standards like HIPAA, GDPR, etc., QA engineers will pay special attention to security testing to prevent data breaches, viruses, hacker attacks, malware, and other threats.

In case the future system is intended to serve thousands of users and process large amounts of data, software developers will have to spend more time on ensuring its scalability, resilience, and high performance even during peak loads.

How to reduce software development cost

1. Cooperate with an IT outsourcing company

IT outsourcing is one of the best ways to reduce the cost of creating a digital product. Delegating a software project to a third-party IT service provider, you can receive access to a pool of talents with wages that are lower than in your country.

This software development approach has gained high popularity recently. According to Statista, the global outsourcing market size was valued at $92.5 billion in 2019 while IT outsourcing accounted for $66.5 billion .

Analysts at Clutch, a trusted B2B review and rating platform, surveyed nearly 530 small companies in the United States to learn why they choose this practice. They found that business owners outsource to:

• increase efficiency (24%)
• collaborate with experts (18%)
• raise flexibility (16%)
• relieve in-house employees from performing certain tasks and allow them to focus on other activities (15%)
• improve the availability of resources (12%)
• cut operating costs (12%)

It’s worth noting that cost reduction was only the 6th reason for outsourcing while it may seem to be the most important advantage, especially for small business. Therefore, delegating a software project, you not only save money but can increase quality.

2. Build a minimum viable product

MVP development is a great way to not only reduce the cost of building a software project but also faster receive a working solution. This approach is widely used to test ideas, attract investors, and improve time-to-market.

• First, you develop a minimum set of features for performing the required tasks.
• Second, you launch the product and collect user feedback.
• Third, you learn from their reaction. By scaling and enhancing it according to the audience needs, you fill a niche in the market and earn a profit.

Let’s consider an MVP of an online food delivery service like Uber Eatsfound . The top-priority objective is to let users order food via their smartphones. Therefore, you need to enable food/restaurant search, payments, order tracking, reviews and ratings. You should also add user authorization in the system and push notifications.

At Arateg, we can deliver this functionality within 3 months.

After release, you will be able to estimate how the app meets customer expectations, how well it addresses business challenges. For instance, if your company will be overwhelmed with numerous requests, you can incorporate an artificial intelligence-enabled chatbot to process user messages 24/7.

In addition, it can recommend cafes based on customer preferences. However, if you build this functionality in the first app version, you may not require it at all. This is how MVP development allows you to save money.

3. Choose cross-platform development

If you want to launch a mobile application, you should think about making a cross-platform solution for iOS and Android. In native app development, programmers have to write 2 separate codebases for each platform while in cross-platform development they create only one app that runs on both. As you don't have to hire two teams, you cut down expenses.

Some customers are afraid of lower quality. Yes, 4-5 years ago cross-platform provided decreased performance and not such great user experience in comparison with native smartphone solutions. However, today the market offers various technologies such as React Native that help IT companies to build great applications faster and with less effort.

Cross-platform development will perfectly suit your requirements if:

• you have a limited budget but need to receive a working solution
• the product is intended to have a small audience
• the application will be used for addressing internal business challenges

Note: If the primary objective is to create a mobile application for millions of users that will include rich functionality and provide an amazing experience, native development will become the best choice.

4. Employ the Agile software development approach

At Arateg, we employ Agile to set up effective cooperation with the customer and improve time-to-market. Dividing the process into short-term iterations, we manage to deliver new functionality every 2-4 weeks. At the end of each stage, our software engineers show the outcome to the client.

Since the customer can easily control software project development, it can alter the requirements and estimate the results of each task. As a consequence, the client gets the app or website that fully meets business needs much faster.

5. Use continuous integration and continuous deployment

By leveraging a CI/CD pipeline (continuous integration + continuous deployment), you can reduce both software development time and costs while getting the product of a higher quality.

Continuous integration enables software engineers to automate the assembly of apps due to fast code changes and error detection. Programmers put their code into a shared repository where each check-in is verified. As a result, developers almost instantly find and fix bugs.

Employing continuous deployment, IT service vendors speed up the process of product updates. Every change in the code passes automated tests to assemble builds. Then, they are moved to production (release stage) through numerous deploys.

This approach allows the customer to improve time-to-market, cut down expenses, and software quality. At Arateg, we use CI/CD to deliver the best outcomes.

6. Partner with a trusted IT service provider

Working with an unreliable IT service vendor, you are likely to receive the product of poor quality. Multiple bugs, slow page load speed, performance issues are those problems that you can encounter. In the worst case, some system parts simply don’t work while you have already wasted several months and thousands of dollars.

To avoid these cases and build a great solution, you need to partner with a trusted contractor that will help you address business issues.

We recommend that you check out the company’s profiles on B2B review and rating platforms such as Clutch , GoodFirms , AppFutura , Techreviewer , and WADLINE . Here you will find client testimonials, vendor ratings, and lists of the best firms in various categories.

Since it may be difficult to control the process of building software when an IT outsourcing company is located abroad, make sure it ensures workflow transparency, from frequent meetings to constant reporting.

Learn how Arateg provides transparency of the software development process, so that you can easily control the project and faster get the product that aligns with expectations.