Custom Software Development Costs in 2024

by Andy Jones ,
September 2, 2020
Custom Software Development

In today's fast-paced digital world, custom software development has become increasingly important for businesses to stay competitive and meet the demands of their customers.

However, the cost of developing custom software can be a significant concern, especially for smaller organizations with limited resources. 

In addition, accurately estimating the costs of custom software development can be challenging as they depend on several factors such as size, complexity, and the type of software being developed.

To address this problem, we have created an in-depth article that explores custom software development costs in 2023. 

We will examine the different factors that impact the costs of custom software development, show you how to get an estimate, and help you plan your software development budget accordingly.

Let’s get started!

How Much Does Custom Software Development Cost on Average?

Providing an exact cost for custom software development is a challenging task due to the numerous factors that impact the project's cost, such as:

  • Software size: The larger your project, the greater the investment required. However, the company size and the purpose the custom software is meant to meet can also influence the software size.
  • Software complexity: As the number of features you want to implement increases so does the complexity of the software, and so does the price.
  • Specific business requirements: Are you looking for a simple custom software solution or a complex cross-platform software?
  • Deadlines: When do you want the app to be ready? If you have a tight deadline, expect a higher cost.
  • Budgets: Upon consideration of the above, allocate funds accordingly. Consider breaking down the budget into smaller phases to ensure that progress is being made on the project as it moves forward.

That said, the average cost of custom software development in 2023 is expected to range from $20,000 for simple software to a high, six-figure price tag for cross-platform solutions with multiple server-side applications.

Average Custom Software Development Cost by Size

The size of the software you’re looking to build is one of the most important factors impacting development costs.

To give you an idea, a small-sized software could be a simple web application such as a website with basic functionalities for a startup or small business, whereas a large project could be enterprise software like Core HR Management System or Enterprise Resource Planning. 

As the size of the software increases, the cost also goes up. 

Here are some average costs depending on the size of the software:

  • Small software projects, which involve developing a simple application or tool, can cost anywhere from $20,000 to $50,000. An example of such software could be a website that provides a platform for users to book appointments with local service providers.
  • Medium-sized software projects, which involve developing a more complex system that may take several months to a year to complete, such as a web-based inventory management system for a small to medium-sized business, typically have a budget of $50,000 to $500,000. 
  • Large software projects, which involve developing a highly complex system or enterprise-level software solution such as a cloud-based enterprise resource planning (ERP) system, may cost $250,000 to $1,000,000 or more.

Average Custom Software Development Cost by Type

Different types of custom software require varying levels of customization and technology requirements, resulting in different custom software development costs. These types of software include Custom Management Systems (CMS), Customer Relationship Management (CRM), websites, eCommerce solutions, SaaS products, and more. 

The following are approximate cost ranges that can provide you with a general idea of the software development expenses based on the software type:

  • Content Management System: $20,000 to $50,000
  • Customer Relationship Management: $100,000 to $600,000
  • Mobile Applications: $20,000 to $200,000
  • Web development: $20,000 to $50,000
  • Software-as-a-Service Solutions(SaaS): $50,000 to $200,000 
  • Supply Chain Management Solutions (SCM): $100,000 to $300,000
  • Learning Management system (LMS): $80,000 to $150,000 
  • eCommerce Solutions: $20,000 - $70,000
  • Enterprise Resource Planning Systems(ERP): $150,000 - $500,000

While taking these average costs into account can provide a general idea of pricing, it is essential to research cost estimates tailored to your specific requirements, financial resources, and business scale to obtain a more precise picture.

9 Key Factors That Determine Software Development Costs

#1. Target Platforms

When it comes to developing software, you have several options to consider, such as web applications and technologies, mobile applications (iOS, Android), and desktop operating systems (Windows, macOS). 

However, the choice of platform should not be arbitrary but based on a thorough analysis of your target audience and common platform usage.

It's important to note that developing web, mobile, and desktop software requires different technologies and resources, leading to varying costs. For instance, Android apps need to be compatible with various device screen sizes, which can take more time and effort to develop than iOS apps, resulting in higher costs.

To avoid overspending, you need to conduct research and analyze your target audience to determine which platform would best serve them. This way, you can minimize costs, optimize resources, and develop software that meets your customers' needs.

#2. Software Complexity

The costs of custom software development are also determined by the software complexity, which is in turn influenced by several factors including workflow, process deployment, and the number of screens. As the number of features and logic increases, the software becomes more complex and the development cost rises.

It's also crucial to note that innovative functionality in terms of the user interface can also increase the cost of custom software development. The user experience is a significant aspect to consider when developing software, which means that any advanced features or unique UI elements will require more investment.

The final cost of the software will mostly depend on the number of features or functionalities needed, as well as the complexity of the code required to implement them. 

To reduce development costs, it's important to prioritize features and functions based on their importance and eliminate any unnecessary or secondary ones. 

#3. Size and Scale

The size and scale of a product also have a significant impact on the cost of custom software development. The larger and more complex the product, the more time, effort, and resources it will require to develop.

Scaling a product for a larger audience is bound to increase the cost of development, as the system may require additional infrastructure, such as servers and databases, to handle the increased user load.

So what affects the size and scale of custom software development? Primarily, it’s a company’s specific needs and requirements.

For example, a big, financial services firm that wants to create a new trading platform to manage investments across multiple asset classes and global markets, will require a more complex custom software solution. 

On the other hand, a small local retailer that wants to develop a simple e-commerce platform to sell its products online can go with a smaller, less expensive custom software.

Companies can also consider developing an MVP (Minimum Viable Product) first, which allows for testing and validation of the product's features and functionalities before committing to a full-scale custom software development project.

#4. Waterfall Vs. Agile

Waterfall and Agile are the two primary project management methodologies developers employ when developing custom software that can affect the cost of development.

Waterfall is a linear approach where the team breaks down the project into isolated phases that flow into each other in sequence. Then, they complete each project phase before proceeding to the next. They establish the goals and outcomes from the onset and must meet the deliverables of each phase, before moving on to the next. For this reason, Waterfall is a hands-off approach with limited flexibility. 

In contrast, Agile is a more fluid methodology. The team breaks the project into phases but, unlike the Waterfall approach, they work on different phases concurrently, often setting short-term goals. 

With Agile, there’s room to change the project's direction and implement new ideas. That’s sometimes vital because software development is a process that can take several months to complete and during which a lot could change, necessitating a turn of direction. 

The choice between Waterfall and Agile methodologies depends on the type of custom software you need. While Agile may be costlier, it can be more suitable for complex projects with ever-changing requirements such as:

On the other hand, Waterfall may be the better option for projects with well-defined requirements, where the project can be planned and executed in a linear sequence such as:

  • Enterprise Resource Planning Systems (ERP)
  • Point-Of-Sale Systems
  • Government Systems

#5. Infrastructure and Connected APIs  

Infrastructure and Connected Application Programming Interfaces (APIs) are critical components of custom software development. 

Infrastructure refers to the hardware, software, and systems that support the application, including servers, databases, operating systems, and network infrastructure. It must be carefully designed and optimized to ensure optimal performance and scalability.

Connected APIs, on the other hand, allow software applications to communicate and share data, enabling developers to integrate the software they develop with third-party applications, adding value to the software product.

The design and implementation of infrastructure and APIs can significantly impact the cost and time it takes to develop custom software. Careful planning and consideration are essential to ensure scalability and compatibility with future growth.

For example, when integrating a custom software application with third-party APIs, the development team must evaluate the APIs to ensure suitability and compatibility with the software's requirements. Customization can increase development time and cost.

Similarly, the infrastructure design and implementation can significantly impact software performance and scalability. Optimization is crucial to avoid slow performance, downtime, or other issues that negatively impact the user experience.

#6. Number of Integrations 

The number of integrations in custom software development refers to the process of connecting different software applications to work together seamlessly. Integrations can enhance the functionality of the software and provide additional value to the end user.

However, the number of integrations needed for custom software can significantly impact the cost of the project. Each integration requires additional development time and resources, including third-party APIs or software licenses.

When considering the number of integrations needed for a custom software project, it's essential to take into account specific business requirements, such as:

  • Business goals: What are the goals of the software and what integrations are necessary to achieve those goals?
  • Existing software systems: What software systems are currently in place, and which of those systems need to be integrated?
  • Data requirements: What data needs to be shared between systems, and how often?
  • User requirements: What are the requirements of the end-users, and how will the integrations impact the user experience?

For instance, a retail business developing a custom e-commerce platform may need to integrate with its inventory management system, payment gateway, CRM software, and shipping software.

As the number of integrations increases, so does the complexity of the development process and associated costs. The development team must evaluate each integration to ensure feasibility and cost-effectiveness for the business.

#7. Updates and Maintenance 

Updates refer to improvements and bug fixes made to the software after its initial installation, while maintenance involves ongoing support and upkeep to ensure the software continues to operate effectively.

The frequency and scope of updates and maintenance required will vary based on several factors, such as the complexity of the software, the technologies used, and the size of the user base. Generally, more complex software will require more updates and maintenance to keep it running optimally, which will reflect in the cost too.

To ensure that the cost of updates and maintenance are factored into the overall project budget, it's important to estimate the number of updates that will be required and the level of support that will be needed over the software's lifetime. By doing so, you can avoid unexpected expenses and ensure that your custom software remains functional and up-to-date.

#8. Hiring Model

Another factor that’s closely associated with the cost of custom software development is how you’ll hire the custom software development team. Generally, there are three hiring models a company can choose:


Outsourcing custom software development involves hiring a third-party vendor or development company to handle the development process. The cost of outsourcing can vary greatly depending on the vendor, the scope of the project, and the technology stack. 

Generally, outsourcing can be more cost-effective than hiring an in-house team, as it reduces overhead costs such as monthly salaries, benefits, and office space. 

In-house Team 

Hiring an in-house team for custom software development involves hiring employees to work on the project full-time or part-time. The cost of an in-house team can be high, as it involves giving the in-house development team salaries, benefits, and office space. 

On the upside, though, having a dedicated team on-site can provide you with greater control over the development process and easier communication. 


Hiring freelance developers for custom software development involves contracting individual developers or development teams to work on the project temporarily. The cost of hiring freelancers can vary greatly depending on the freelancer's experience and pay rate.

Overall, freelancers can be a more cost-effective option for short-term or one-time projects and can provide greater flexibility in terms of skill sets and availability.

Before selecting a hiring model for custom software development, companies should conduct a comprehensive assessment of their hiring requirements and budget constraints. This includes evaluating each option based on its potential advantages, disadvantages, and costs, and selecting the one that best aligns with their project goals and resources.

#9. Timeline

How soon do you want your software ready? If you’re in a hurry, you can expect a higher price tag. 

Timelines greatly impact custom software development costs. A realistic timeline reduces costs through efficient resource allocation and manageable deadlines. However, unrealistic timelines can lead to additional costs, requiring more resources or overtime. 

Get a Custom Software Development Cost Estimate

Custom software development can increase your customer base and help you grow. 

At Make It Simple, we have over 15 years of experience creating web and mobile applications. If you’re a small to medium-sized business seeking to enhance your customers’ user experience, contact us. We can also help you create a SaaS to market better to your existing and future customer base.  

Here’s why we stand out:  

  • We have the unique ability to bring ideas to life. So if you’re unsure about your software development idea, leave it to us and watch it come alive. 
  • We have experience building solid digital products that grow a customer base. Having built and sold several products of our own, we know what it takes to succeed. 
  • We have years of experience in the digital product space and are passionate about developing software. Now that sounds like something anyone would say, but we enjoy creating incredible products and love it when our clients succeed.    

Key Takeaways

So how much does custom software development cost? The costs can range anywhere from $20,000 to $50,000. Just keep in mind the following: 

  • It’s impossible to give an exact number because business objectives, requirements, timelines, budget, and other factors differ from company to company. 
  • Factors like the number of platforms, software complexity, software size and scale, hiring methodology, and the number of integrations influence the cost. 
  • Be careful about selecting a software developer. Anyone marketing themselves can claim to do a good job, but you want a team with expertise and experience. And don’t just take their word for it. In our case, we’ve built several successful applications.
  • Developing software is costly, but if done right, the results are well worth it. It can get complex, and a lot is at stake, but you can leave all the heavy lifting to us, and we’ll deliver an excellent product that fits your budget.

Related Articles: 

Custom Software Vs Off-The-Shelf Software - What to Choose?
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