Custom software development is an imperative need for modern businesses and they prioritize it in order to achieve effortless, high-performing and optimal applications. For businesses, they have two primary options while deciding to develop software- Off-the-shelf application development and custom-build software development. Off-the-shelf applications or Packaged apps are ready-made apps that are used by various users as per their predefined needs and let’s understand what custom-build apps mean to businesses.

Table of Content

  1. What is Custom Build Software?
  2. How can I Create my Own Software?
  3. Factors that Affect Software Development Cost
  4. Different Payment Models of Custom Software Development
  5. How much does Custom software cost in India?
  6. How is Cost Estimation done for Software Development Projects?
  7. Final Words

1. What is Custom Build Software?

Custom build software- it is a process of developing a tailor-made application as per the business needs that simplifies the process and offers lucrative benefits.  

Most of the businesses may have had a plethora of questions revolving around developing a custom software application and none of them had a definite answer yet. Let’s start with some of the obvious questions that keep appearing in our minds when thinking about developing a custom application. 

  • What does a basic customized software cost?
  • Can I create my own custom software application, how much will it cost in the UK?
  • How can I create my own custom software?
  • What are the methods of payment in custom software development?
  • Is it good to choose custom software outsourcing development?
  • Is software depreciated or expensed?
  • How much does custom software development cost in India?

This list might get endless with overwhelming questions, but this blog is meant to answer all your questions and give you a concrete solution on the price, cost estimations, payment models, and similar granular details. Let’s start with how to develop you.

2. How can I Create my Own Software?

Creating a custom software application is an integrated process, it needs a strategic plan where everything has to be planned and created. Here are some of the important steps for established businesses or individual business owners should take to create or outsource custom software development services:

1. Understand Your Existing Business Needs
Typically when businesses decide to create software on their own or outsource services, they get so deep into the process of custom software development that they forget to integrate it with their existing business. For instance, POS software will work best for the retail industry but if a company from the eCommerce industry tries to imitate the same software, it might not work well for them. Thus, it is extremely important to understand the existing business process deeply in order to plan software for your existing business. Ask necessary questions like:

  • Why do you want this custom software?
  • What change will it bring in the business process?
  • Will the spent be equivalent to profit? Take a suggestion from subject matter experts and then start to sketch your plan of developing software.

2. Define Future Needs
Here you need to drop down all your custom software development needs including the technology stack, number of resources required for the development of the application, the cost that needs to be invested and so on and further. So, you need to make a checklist for your future needs. Now it’s time to outline the plan.

3. Select the Right Software Development Troop
When your plan is ready, it is now time to develop the software. In order to develop the desired custom software, you need the right set of resource pools. These resources are not just Software developers but your internal IT team, project managers, technical experts, and custom software development companies.

4. Plan to Achieve Realistic Targets
As per the plan, the go-ahead to develop the software. For each upcoming sprint add new features that add enhancement to your product and make your app worthy. Start with setting realistic and achievable targets, it is okay to progress slowly. Review all the changes before you deploy the new or latest changes because it may have an impact on other resources.

5. Keep an Iterative Approach While Testing
With an iterative approach, we need to constantly test the developed application to check it integrates well with other apps. You can do two types of testing- Usability Testing and Technical testing.

6. Documentation is Must
Multiple factors contribute towards enhancing the software and making it the best out of the league. You can remember one thing but not everything, so it is advisable to document everything in the software development life-cycle.

3. Factors that Affect Software Development Cost

Undoubtedly, when you develop custom software there can be countless factors that are fundamentally involved in software development for any specific business or enterprise. If you have to develop a multi-feature application then there need to be multiple resources involved and hence the cost will be as per the features and development.

1. The functionality of the Software and User
The more functionalities or features that need to be induced in the application decide the cost of the software. With the additional functionalities and larger user base, the price of development may increase depending on the number of modules, device compatibility, and screens. Adding more functionality to your application will increase your project cost. That will require more developers from the service provider for additional features.

2. Complexity
Another essential factor that plays a major role in cost is the complexity of the project. The main aspect is the logic or the method that is used behind developing the application. Suppose if the application needs to be tweaked or there are some quirky steps to be taken to develop the software then the custom software development team or the outsourcing team may charge extra depending on the complexity of the desired project. So, if the business goes out of the way to develop unique and innovative products, the cost may increase in such cases.

As per the development needs, businesses can have the complexity of features, or there can be design complexity or technology concerns or architectural or database integration concerns.

3. Technology Platform for Development
During the process of developing technology, challenges are the barriers that happen to occur during development. The method or technology used can be old or the features might work well on technology rather than others. For instance, integrating a database using SQLite is convenient and real-time while if you use any other database connector then it may not work as seamlessly as this one.

4. Integration- Internal & external
Integration with internal applications and third-party applications is an important consideration and can affect the price of the development. Since you are just developing the application, you might not know how this would interact with other hardware or software that are going to work together.

For example, if you’re a retail or eCommerce business, then POS software is a significant point of consideration and if you are an eCommerce business then without convenient payment gateways, the app development may not sound complete. Similarly for the banking business payment gateways are vital. So, it is essential to integrate with third-party and internal apps.

5. Design Complexity
With the aim of developing a user-centric, interactive, feature-rich and compact application, there can be many hurdles faced by the software development company or software developers. These complexities can be solved by strong and in-depth front-end capabilities. This plays an important factor in cost estimations.

6. Migration and Maintenance
Migration is all about custom scripts that can be removed, dust off and retrieved from your old system so that it can work into your new system. Technology keeps evolving with time and when you want to develop an application that needs to be updated with time, it might cost a little extra. And, if your developed application is non-upgradeable or migration is not possible then it could result in spending some extra dollars from your pocket.

7. Software Development Timeline
The development progress of the projected software must coincide with the planned timeline to market the product on time for the users. As per the immediate requirement of the application, the cost may vary for businesses but that will give instant profitability since you are developing an app that users demand.

8. In-house Team vs Outsourced Project
Now, this is the most debatable point, as most of the users may choose to first try to develop products in-house and then later if they fail they might outsource. Speaking from a neutral perspective, if we look at this from a cost perspective, Software Outsourcing can save costs while developing it in-house can be skeptical in terms of application failure and also the cost invested in time, infrastructure and employment of the skilled workforce.

4. Different Payment Models of Custom Software Development

All the trustworthy technology pioneers have discovered a set way to engage with businesses. Enterprises have broken the relationship models into three groups, based on financial factors and necessary circumstances.

1. Fixed cost
The fixed price model goes according to the name, which involves addressing the needs, scale, deadlines, and expense of the project, all at scratch. This strategy will work like a magic wand if you have a blueprint for your market since a fixed price model works on the basics of initial preparation, estimate, and analysis.

2. Dedicated Team
Most of the companies choose dedicated team type of payment method to partner with software outsourcing businesses for their medium and/or large-scale tasks of varying sizes. The main reason is the flexibility and convenience that it offers to the clients for their software development programs, organisations with dedicated criteria use this form.

3. Time and Material Model
The time and material outsourcing model is easy, where organizations just have to pay according to the time spent and the material used in the production process. This style of the model makes it possible for you to pay every month according to the use of materials and time spent.

5. How much does Custom Software Cost in India?

The Indian IT Services and Business market to reach US$14.2 Billion by December 2020; predicts, IDC India Reports- System Integrators and leading in growth.

The cost estimation in India compared to other countries is extremely economical and that is the sole reason why the Indian market is skyrocketing. As per the reports from Time Doctor, the top countries preferred based on the cost factor for outsourcing are

  1. India
  2. Mexico
  3. Malaysia
  4. Philippines
  5. Bulgaria
  6. Brazil
  7. Ukraine

The cost in India ranges from $14000 annually while it is $94000 when compared to price in the USA. The talented and diligent resources of India is unquestionable. Certain unavoidable benefits apart from cost benefits that the Indian Outsourcing market offers are

  • Talented workforce new-edge IT companies
  • Humongous Software size
  • 24*7 Customer support
  • Supportive government and rules
  • Reliable and trustworthy established companies

6. How is cost Estimation done for Software Development Projects?

Since we have talked about the cost factor so much in the blog, it’s now time to understand how this cost is decided. How do development companies and software developers decide a price for a product? You can plan according to technology, margin, project and other essential factors. There are five types of estimations:

1. Bottom-Up Estimating

If you have a huge project, you can first split down the project into smaller assignments. Then schedule smaller sprints of larger projects is considered a framework for job breakdowns. The latter is important not only for the calculation of time and expense but for many other activities of project management. You will get the overall cost of the project by adding the hourly rate by summing up those granular time estimates. Bottom-up estimation is one of the common practices.

2. Top-down Estimating

When there is a fixed budget for a project, top-down estimation is typically used. A budget based on historical data about similar projects or input from experts can be provided by top-level management. The estimation process in this case is the determination of the scope of the project that fits the budget specified. This explains, in other words, what you can do with the money you have.

3. Analogous

This is a simpler way of measurement which depends on the previously completed tasks of the same project and making an estimation regarding the same.

4. Parametric

Parametric Estimation is a process that enables the total work expense to be calculated based on scaling the features of other tasks from well-known programs.

5. Three-point Estimating

This method is based on a triangular estimation method where the values are profitable estimates, Loss-based negative estimates and random estimates. If we were to take it by equation then it would be:

E= (P+N+ES) / 3

P- Positive estimate
N- Negative estimate and
ES- A random assumption based on the market price

7. Final Words

Cost questions have been the most disputable search and in recent times and it has been observed the prevalence of this type of question is just increasing. So, to clear this hustle of evaluating the cost factor, we decide to do elaborative research and give some insightful information on how the cost factor impacts custom software development. We hope that this blog brings light to all your questions and you can have a ballpark cost estimation of the software development process and can make the right decision.

Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.


  • Leave a message...

    1. Urja

      I think this article explained very well about custom software and different factors that affect the cost of software. But I think the size of software also plays a major role in the cost of any software product. There are some non-technical factors that could also affect the cost of an app or software.

    2. Ajru Copperman

      As far as I know, geographical location may also impact the cost of developing software. Some regions like India and China where you can get software built for a much lower rate without compromising the quality as compared to the USA and UK.