“If you can’t describe what you are doing as a process, you don’t know what you’re doing.” – W. Edwards Deming

The software development companies have many leading roles like Business Analyst, Solution Architect and Project Managers. These roles have the responsibility to develop software project estimates and also explain the logic behind the estimates. They also need to factor in a number of variables on which the estimate depends. If some factors remain unpredictable and unaccounted for them they can result in the escalation of the time horizon as well as the overall project cost.

No matter what software development methodology you use – waterfall, Agile or a hybrid one – providing accurate project estimate is a challenge for the technology team and the leader and they need to deal with it carefully. An inaccurate forecast and estimate can create problems for the software development company. Everyone wants to know beforehand when the project will be done and how much it will cost. Hence so many vendors want to know how to determine software cost so that they can better serve their clients.

Therefore, straightaway let’s come to the point of what software development cost is made up of. Actually software development cost estimation is made up of the total time and efforts that are spent on the project. There are several components that make up a total cost. It consists of direct and indirect costs.

Direct costs include the income of every team player, cost of the hardware that is used and the expenses on other things required for the project. It can also include the cost spent on specific risks related to the project. Whereas indirect costs comprise of quality control, audits, security issues and more. In general, the indirect costs are not specific to a single project.

Below are some of the key things that make up a software development cost

• Total efforts that are spent by human resources to complete the project.
• Tangible resources required for completing project related tasks.
• Purchase and maintenance of equipment.
• Purchase of required software and their maintenance.
• Rent of the office, payment of various bills.
• Overall risks related to the project.

Now let’s discuss in detail about the various factors that must be included while calculating the final cost of a software project.

Factors Affecting Software Development Cost

Hence when looking for how much to charge for software development, you can take a look at the below key factors which affect the total software development cost

Size of the Project

This factor can be easily accessed to calculate the cost of the project. More the number of screens or user interfaces you have, the more work will be performed before the release and the more the client have to pay for developing the application. If the number of screens in the app are about 10-20 then the app is considered to be small, if the number of screens are about 25-40 then the app is considered to be medium-sized while if the number of screens in the app are more than 40 then the app is a bigger one.

To understand the screen, you can think of what the user will see after launching the app, Clicking or tapping on any of the elements and more. Remember a screen view with the potential profile and a screen where the user is editing their details are two different screens.

Cost wise – a small app may cost about $10,000 – $15,000, a medium app may be about $15,000-25,0000 and big apps may start from $25,000 and can go even upto $100,000 and more.

Complexity of the Project

When you are looking at the ways to identify software development cost, understand that complexity of the project also affects the cost of the project. For example, type and extent of coding and testing, designing requirements, and whether there is any need to integrate the application with third party apps or systems.

If the app has many forms and involves processing of big blocks of data with lots of details, then it would require more time to develop such an app.

If it needs special designing with custom fonts, images and icons then it will need a separate designer to deal with all of these and we can assume that there will be several iterations and re-design attempts before coming to the final version.

If the app needs to be integrated with third-party apps or system and suppose you need to add payment gateways, then it will become a challenging task to build such an app.

Complexity also comprises data migration needs as you may need to write a simple script to transfer data from one system to another and it may involve lots of details.

Budget of the Project

Most of the projects have a limited budget. Hence the project cost cannot exceed that in any case. If client wants to add a number of features in the project which cost much more than first they need to set the priorities or increase the budget.

You as a developer can make sure that the workflow is going with high productivity and that you are using the right choice of technology and solutions. But you have to know about the budget before the start of the new project.

You should also know if the project doesn’t finish on time or if it needs additional resources then whether the client is ready to pay additional payment or not.

Steps To Take for Better Software Estimation

When you are looking for how to calculate software project cost then there are many ways to estimate the cost and timeline of a software project but the research and past experience say that if the project can be broken into smaller chunks of work, and each chunk is estimated, then the estimates tend to be more accurate and near to reality.

So many organizations have used this approach on hundreds of projects and found it to be working in most of the cases. Here are some more insights on how to go for accurate software estimation.

Involve Business Stakeholders in the Software Estimation Process

It is always better to involve the business stakeholders in the software estimation process early on when you want to measure the software cost as it helps to define more accurately what is important in the software development lifecycle. This ultimately helps both the business leaders and the technology team to reach at a common, shared and mutually agreed development process of the software and it will help to hold everyone involved equally accountable to the initial software cost estimate.

Understand Why Do So Many Software Estimate Projects Fail?

When you will try to understand why do so many of the software estimate projects fail then you will find that this happens mainly due to poor project requirements and weak business leaders who do not clearly understand what they want out of the project. The technology alone is mostly not the cause of project failure. Great technology and developers will fail without good requirements and great leadership. Hence beware of the business leaders who cannot explain the end goals of developing the business software during the estimating sessions with the project team.

Clearly developers can’t write the quality code if the requirements are not clear or well defined. Whenever the developers have some questions or they face some roadblocks then the business leader or the owner need to make quick decision and help in finding the answers to the questions. Otherwise, the project timeline and budget will go into jeopardy.

In cases when the development team doesn’t have clear requirements and when the business leaders are not available to answer questions then the software estimation must include the plans about how to resolve the uncertainty in the software development lifecycle. Hence it is always better to discuss about these issues during the estimation process itself.

Break the Requirements to Increase the Accuracy in Software Estimation

When you go deeper into the software development cost estimation techniques then you will find that how much useful is the top-down approach. You just start by breaking the requirements down into smaller tasks so that each requirement can be built in a short time period by a single developer or a team of developers. If you find any requirements which cannot be broken down in smaller parts, then it cannot be well understood and well developed and therefore cannot be accurately estimated.

This process will help the stakeholders to understand the reality of developing the software. Although demanding more details of the requirements may look to increase time to project estimation but eventually it shortens the software estimation, improves quality and make the stakeholders better understand the software process.

Breaking down the requirements will also allow the teams to set milestones and fulfill them in timely manner to increase chances of project estimation success.

Understand Why to Create a Right Team

You have to create a right team with many other members than just developers as there is a need of good supporting members who understand very well all of the requirements of the project and are accountable for them. The project will be able to be valuable for the business only if the users will be able to use it effectively. Therefore, the project team must have good business analysts (BA) who can write good requirements to drive efficient and effective development. Other than developers and BA there is also an important role for designers. Designers play a key role in providing the amazing user experience through the software which is not only pleasant but also leads to meaningful user flow.

Another area which is mostly ignored is the quality assurance testing. Hence QA Engineers must be included while building a team to develop the software project. This QA team will be ready with a QA testing plan to test and verify each and everything early on in the project using a thorough and repeatable process. They identify the problems with the application early on when the code is just written. Therefore, the code can easily be modified and rectified to get the desired end results of the project. QA team makes sure that the delivered code fulfills all of the project requirements.

Hence it is very clear now that in order to determine the final cost of software project a team must be created consisting of Business Analyst, developers, designers and QA Engineers. A single BA can work on many projects with many developers as he has just to write the requirements. Similarly, A QA team can work on many projects.
Creating such a versatile team will help in creating good and quality code that meets all of the requirements, budget and timeline.

Understand the Importance of Software Product Owner

Everyone related to the development of the project must understand that the software product owner is the most important person of the project. A well informed and intelligent product owner can focus on the project and make the important decisions. The product owner provides the requirements, clears the differences between the business and technology and prioritizes the work and allow/enable team to deliver business value as quickly as possible.

A too busy product owner who can’t devote enough time to the project is not much useful. Hence if it is evident just in the start of the project that the product owner does not have the clear authority and time to dedicate to the project then the estimated cost of the project will be higher. You can make this clear to all of the concerned people at the earliest.

Conclusion

Estimating the timeline and the cost of software development is a vast process and it needs inputs from many stakeholders like developers, designers, QA engineers, business analysts and business leaders. When technical team works and functions around the process which has been calibrated using product owners’ requirements, the project will align more closely with the initial estimates and projections.

In today’s competitive market, businesses pick up the development company that offers best value for money i.e. which can complete and deliver their project with least cost estimation. Businesses can also hire developers on freelancing basis but they have to make sure that these developers have a full-fledged team to work on the project.

Other popular trend is to hire dedicated Software developers as they provide high quality development work at cost effective rates. Businesses can even hire a coder who is an expert if he has got good reputation and lots of experience behind him. The goal is to go for experience, expertise, quality, team work and cost effectiveness.