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7 Ways To Reduce Your Software Development Budget

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Andrew Zola
Senior Contributor

Digital nomad and storyteller

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The cost of software development is always a sensitive subject. Regardless of how large your budget is, you don’t want it to exceed the estimated business value of your software product. On the other hand, you don’t want to sacrifice its quality by being too stringent. Planning a software development budget is a tricky balancing act, that’s why it’s best to approach it with careful consideration.

Just how big your software development cost will turn out depends on a lot of factors. Your software size, its overall complexity as well as the complexity of UI design, its integration with external systems and the necessity of data migration will determine the eventual budget. The uniqueness of an application will also dictate its price: something niche and complex will usually require hiring skilled developers who cost more.

On average, the cost of a robust custom software project will range between $50,000 and $250,000, although some sources say the price of a hypothetical mobile app built by a large development company may reach $1,000,000. The price for powerful enterprise web apps may even exceed $1,000,000, although a lot will depend on a development company: larger companies will usually charge more. In general, small apps tend to cost $10,000-50,000, medium apps are around $50,000-200,000 and the cost of large enterprise applications usually exceeds $250,000.

Lately, though, a survey published by Harvard Business Review revealed that each 6th software dev project ends up with almost 200% cost overrun: an eye-opening figure that should stress the importance of careful budgeting.

How to reduce software development expenses

Even if you’re up to building something enterprise-scale and complex, with lots of numbers to crunch and data to process, there are ways to lower software development expenses. A list below should give you some actionable tips.

  1. Don’t reinvent the wheel

Although all apps are different, they do have similarities: parts of code performing particular functions tend to stay unchanged through many applications and can be reused if necessary. That’s what code libraries are for. Why reinvent the wheel and pay developers for hours of work instead of using a widget or a component they could easily download from a code repository like GitHub? Parts of your app may just as well have to be built from scratch, but using code libraries for its less unique functions is a sure way to reduce expenses and save time.

  1. Develop in iterations

Some of the most massive software project cost overruns happen because of the need to introduce changes into a finished product, which is usually time-consuming and expensive. Developing in iterations, getting a certain portion of your app approved and moving on is a better practice, which secures you from cost overruns. Tweaking a small fragment of an app is much easier than processing large portions of code to make necessary changes.

  1. Outsource to a lower-cost destination

Outsourcing your software development to a lower-cost location to benefit from price arbitrage is a widespread business practice. Even IT tycoons like Google, Apple, Microsoft and Amazon leverage outsourcing and have offshore development centers in countries like Ukraine, India, China and South America. For Western markets experiencing severe IT talent shortages, outsourcing is one of the ways to fill existing vacancies and make up for the scarcity of local talent.

Outsourcing 4.0: From Cost Arbitrage To New Untapped Opportunities

Choosing an IT outsourcing provider that would be right for your company will require a thorough approach; but then again: this road has been traveled many times, and the ones who have succeeded have left explicit guidelines.

  1. Hire freelancers

With online marketplaces like Upwork featuring thousands of freelancers’ profiles, there’s high probability you could find some inexpensive and talented freelance developers for your project. Do be careful, though, not to fall into the trap of scams who will claim non-existent expertise, accept payment and disappear into the thin air. The scams are the ones most likely to spam you with unsolicited emails offering conditions which are simply too good to be true: low prices, unrealistic deadlines, etc.

Hiring Dedicated Software Engineers vs Freelance Developers: Pros and Cons

  1. Combine your onshore and offshore resources

You may already have a software development team and need to enhance it with a few more experienced developers to make your project a success. Normally, such developers would command substantial salaries, but if you look for devs with the same skill sets offshore, the costs will be different. Most of the offshore outsourcing providers will offer you a team augmentation model enabling you to combine your onshore and offshore resources and concentrate on your core business goals while letting your ITO partner take care of recruiting, infrastructure and operational management.

  1. Allocate workloads to leverage junior staff

Using your expensive senior staff to handle routine tasks doesn’t seem like a wise allocation of resources. Think about how much non-business-critical work you can trust to juniors instead. It may turn out you don’t have to employ that many high-cost senior specialists and keep your app cost within a reasonable budget.

When It Makes Sense To Hire Junior Software Developers

  1. Use DevOps, Cloud and AI automation

Again, you’re not the only company out there trying to figure out ways to minimize costs. Businesses have been struggling with software dev budget reduction for years. This, along with the demand for fast time-to-value, has set the stage for the emergence of the DevOps methodology, the growing use of Cloud-based development platforms, and the proliferation of AI tools streamlining application development. These tools and approaches have proved to reduce software dev costs and, on top of that, ensure faster time-to-value.

How To Scale Your Business With DevOps Outsourcing: 4 Tips From Practitioners

All in all, a clearly outlined software specification (the cornerstone of development methodologies based on Agile principles), with a clear vision of an MVP product and its core features will help your development team focus on what’s important. Also, some software solutions can be custom-tailored to fit within the budget. Of course, you will have to prioritize some features over others and agree to introduce others later, in the form of updates. A general rule of thumb, though, is to stay flexible: use code libraries and AI automation whenever you can, develop in iterations and test on the go, combine your onshore and offshore resources and partner with a reliable outsourcing company to benefit from reasonable pricing and access to high-quality global talent.

Do you need help building a dedicated/extended Team or getting ad-hoc resources for your software development project fast and cost-effectively?