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The software development expenses may vary depending on the request as well as the complexity of the application. Yet, there are certain things you can do to make it cheaper without sacrificing quality. In this article, we’ll tell you how to reduce software development costs leveraging 4 best practices of the project and product management.


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Software development costs look quite high as the upfront investment when you compare it to buying the ready-made product. But with the time saving on such things as support, modification and licensing cost you get the return of the investment and save a significant amount of money. Huge enterprises can prove that companies can reduce software development costs with the help of outsourcing. Still, trying to decide whether to have custom software developed by a service provider or buy the pre-developed one is not that easy. Custom software development services allow companies to modify their day-to-day operations and create apps designed for their unique needs. In comparison to boxed programs, custom software has the uncanny ability to function just as you need it to.

As all companies have their own individual needs, it’s hard for a single product to handle numerous requirements at once. The main benefit of the bespoke product is that you can alter the final price, but each version may be either more expensive or much cheaper than its predecessor. We have already explored where these rates come from in our article Key Factors that Determine Custom Software Development Fees. If you are interested in examining the hourly rates, take a look at our Custom Software Development Fees guide, where you can learn prices for services and specialists in various global locations.


consider vendor's location to reduce software development costsHighly developed countries usually put exaggerated rates on services (including the IT sphere). Let us see the difference between the developers’ rates in various countries depending on their economy. High software development costs impact the rate customers are charged. It’s unfeasible for the average procurement to stimulate the underlying economic aspects that influence vendors’ fees, one of the best ways to reduce software development cost is to look at vendors outside of the big city. 

Non-metropolitan custom software development cost can differ from city rates by as much as 50%. You can get a substantially lowered project price for the same service from a company in a nearby or offshore location. This alternative usually doesn’t have much to do with what the vendor is capable of. Often, “near-shore” or remote vendors can provide the same skill sets, talent, experience, and expertise. Further, remote contracting is ideal for work in the IT sphere. In just about all regards, it hardly matters where the development work is being conducted. That said, some prospective customers might frown at this thought. They may believe that the need to meet face to face is vital. For those individuals, the opportunity to make eye contact and shake hands may be more important than the fact that they can reduce software costs that way.

No matter where they are, many vendors would be happy to have a face to face meeting with the customer (with a slight increase in cost, which would be negligible in comparison to money saved). Many vendors would also be more than happy to incorporate live chat rooms and on-demand video conferencing, which would give you many of the same advantages of meeting in person. If you determine that the money saved from contracting remotely is too important to bypass, then it comes to a question of how remote you are ready to work.


Software project costs depending on the requestSoftware project costs may differ depending on a great variety of factors. According to Clutch a common value to develop an application is $171,450, however, cost of custom software development varies from $200,000 to $350,000 for apps with different functionality. While vendors will make queries in reaction to RFPs, it’s not very common to come across an impactful procurement that thoroughly investigates all the project details. Many times, various project aspects will stay moderately vague, despite the vendor answering a question. When proposals must be prepared, vendors will articulate any outstanding gray areas into specific details about the scope of a contract. For safety’s sake, most vendors will just assume the worst for the reason of feeling content that their own expenses will be paid for in such circumstances. Although this approach might mitigate a vendor’s potential risks, it also means that the customer will obtain more bids, since vendors will be taking more labor than required to achieve the scope of work.

In several cases, the vendor’s assumptions would raise the proposed custom software development cost at least 30%. Further, the difference in cost of software development is usually not in sync with vendors, since each vendor may have assumed a different figure. This generally results in any endeavored comparisons between vendors moving ahead, but with reserved judgment. By correctly interpreting a custom project’s scope, a client can effectively minimize any guesswork from the vendor. Transparent and consumable needs will also decrease the potential ground for misunderstanding. What is necessary is a thorough explanation of the fundamental jobs that every category of user will achieve. With such an approach, each role will get the proper understanding separately, and systematically express the complete scope of relevant functionality. Additionally, it means to consider the impact of purposed data types, business logic, screens, and system behaviors, in addition to regular application functionality (e.g user account administration).

If the job has been performed properly, the result should be a thorough and lengthy list of statements that are functionality-oriented and role-based, joined by a fair amount of supplementary explanation. Effective statements of scope are “user stories”, like this one: “With the role of administrator, I require the need to produce, update, review, and delete user accounts”. With the scope presented in the proper format, you’ll simplify the process for a team, allowing them to give a software development costs estimation for the project accurately. Get some help if this is your first time doing something like this for a project to see how this can decrease development costs and increase revenue. It is a great decision to focus on cost effective software development.


Reduce software development cost by prioritizing software featuresDuring the start of a custom software project, stakeholders are generally excited, and their imaginations are limitless. At some point, reality will set in, and those involved will see that that the budget won’t accommodate their dreams and the software development costs can be higher than they’ve expected. When it comes to projects, be aware that a completely proper solution might not come right away. This shouldn’t discourage anyone from giving up on those dreams, though. It simply means that we need to scrutinize every aspect that has to be customized, taking into consideration every factor.

Elements that are frivolous should be the first ones to be removed from the scope of the project. A surplus of such items can be discovered in supportive services that come with a majority of development contracts. Users can engage in some short video training (not live training). If the product is developed for usability, this approach could be effective, and it would also be a nice step to reduce software costs. If the project is too robust to squeeze into the budget after removing what wasn’t necessary, priority should be given to the numerous points of desired functionality.

Begin with a small amount of custom product that will meet the most basic business requirements. When the product ends up being valuable and useful, subsequent extensions of the current functionality will be justified. As a matter of course, the Agile tactic describes the development of an artifact known as the “Product Backlog,” which permits the simple prioritization of desired solution features based on complexity and requirements (reducing creation costs).

Afterward, the Agile development team sends out these features in increments, assuming the client wants to have the development initiatives sustained. If the customer is unhappy with the project’s state, they can have work stopped immediately, or they can have it paused and have it resumed a time of their choosing. It is worthwhile for a client to collaborate with a qualified vendor to assess priorities before an RFP is released. The qualified vendor’s professional insight can be beneficial in finding subtle efficiencies so that the greatest value can be delivered for the amount of money spent.


Make the right software development costs estimations for the futureThe application you develop today will most likely look different tomorrow. It is typical to see customers asking for more modifications and new features right after their “completed” projects are released. While tailor-made software can be adjusted as per customer request, the developer must have an idea of what kind of modifications to expect. This allows the developer to create a product that simplifies the implementation of inevitable alterations, which will become one of the main ways to reduce software costs in the future. At the very least, ensure that your custom software development services provider knows that you seek solutions that are extensible, and when possible, advise them to use “loosely coupled” components. Such a technical directive tells the software architect that the program should be developed to allow elements of the program to be easily replaced, swapped out, altered, and upgraded.

Treating the vendor as a member of your team will also help you to reduce software development cost. Take some time to provide the vendor with an organizational context. Let the contractor know about your company’s objective, and advise them of any long and short-term goals. Further, ensure they know how the company’s vision for the future with regards to the development of the product. By following these steps, you’ll present the vendor with a chance to assess things before jumping into the work and decrease development costs for the new versions and features.

Although this won’t result in short-term cost savings, with some time invested on your end, it will allow the vendor to make proper choices, and perhaps even allow them to offer suggestions and guidance that will save money, time, and work down the road. This can have a huge impact on TCO (Total Cost of Ownership) for big STRATEGY projects.


When the relevant structure for a project has been set in the procurement process, the cost of software development can be lower than you think. During procurements, if key choices were made, the concept of “vendor lock-in” will hardly be a concern if you need a custom solution. If the vendor you selected is using open and appropriate development methods that adhere to the relevant standards, there won’t be an issue finding other service providers, if that becomes necessary. Most companies also find it beneficial to hire a “product owner” who is qualified (i.e. the technical representative who stays cognizant of the complete scope of future project plans).

It’s totally all right to treat the custom software development company like a valued business partner. By hiring a vendor with professional integrity, offering assistance, involving them in coordination, bypassing conflicting negotiations, and providing positive advice when appropriate, you will practically lay the foundation for a lengthy and mutually beneficial relationship. This will prolong your customization budget to levels that exceed what you initially thought possible in terms of pricing.

These are four simple steps that help to figure out how to reduce software development costs and bring simplicity to the overall process. Of course, there are even more of various tricks out there. You can always get in touch with us to discuss how you can get the best possible price for the development of your upcoming or even running projects. Visit our Custom Software Development Services Page to read more about our capabilities. What techniques do you use to decrease development costs? We will appreciate all your comments on this blog in the comments section below.

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