Why is software so expensive

So on the invoice, there are developers for each platform; one for iOS and one for Android. Assuming a developer works 40 hours per week, that translates to 2, hours per year.

I just divided 2, by 12 months to calculate how many hours each developer will work per month. I used Upwork , which is a popular platform for finding developers, designers, agencies, and other professional services around the world. Simple math. In some cases, you will not need a web developer to build an app. But only under rare circumstances. The vast majority of the time, a web developer is absolutely required. Where did you authenticate that user from?

Both the username and password must both be checked against a database, somewhere in the cloud, set up by a web developer. This has to happen to ensure the user and password are both valid. When a user logs in to their profile and sees specific information intended for them. Where did that come from? A web developer creates the backend system for your app.

This person is responsible for making sure the developers are doing a good job. They check for bugs, errors, or everything else to ensure the app runs smoothly. Some work ahead of the developers. They design everything out and then pass it to the developers for implementing it. Other designers can actually implement the design themselves. The project manager keeps the schedule on track to guarantee deadlines are met.

We used those rates to determine how much software development costs per month. To find out the total price of your development project, you need to figure out how long the development process takes. This flowchart starts with the log-in screen and goes to the home page. From the home page, users can access the side menu for navigating to top features and pages. The flow chart includes a settings page and app dashboard as well. Your app will likely have all of these.

The bottom of the flow chart contains the features. Even if your features are different, you can see how this works. To figure out how long it takes for each component of development, I created a spreadsheet template that we can plug numbers into. Sure, that ball has to go into the pocket. But where should the cue ball end up to give the best position for the next shot? If you thought the whole project would take 7 months while the first MVP will need 6, then something is not right.

Your first MVP should probably be about a quarter or less of the total project. Again, the goal is not to create some fixed and rigid rules. Once you have an idea of how long your first MVP will take and a reasonable guess for the whole project, you can start putting together a schedule of costs based on how many people will be needed. Not everybody needs to be a senior expert. Salaries can also change based on your location. Keep reading if you want to know more about outsourcing work overseas.

You can always add that extra complexity to your budget if you want to explore that path. A mid level or senior program manager will also be good to have available for the entire project.

A program manager can help work with the customer to define the MVPs. A quick prototype can also be valuable. We can use a designer for maybe the first 6 months. This role is still useful to the project after the beginning but will probably not be needed full time.

And then a senior tester at the same time or a month later. A lot of mistakes can be avoided by including and getting a test team involved from the beginning. Or at least very close to the beginning. This is not just a demo and then it gets put away. Because this solves a real problem, then people should be wanting to use it right away.

Gather feedback. It will help guide the rest of the project. Each additional MVP release should also be put into use. This also does not include the cost of office space, furniture, computers, software development tools, hiring costs, office supplies, or anything else.

Feel free to adjust it as you think best. This is really just a guess that you can use to get an idea of what a software project will cost over 2 years. Even a dollar lets the store make money. The drink manufacturer has a factory where it mass produces giant tanks of drinks. Sugar is brought in by trains cars in bags we can barely lift.

Everything is done at large scale so the total cost gets spread out over millions of drinks. The cups, lids, straws, and even the machines you use to fill your cup are all made at large scale and the cost gets spread out. Sure, there are manufacturing and distribution costs for software. But these costs are much less than the cost of building the software in the first place. Remember, software can be copied easily.

When you create software, you write it once. In order to lower the cost, you have to be able to sell it to multiple customers. Even one other customer will cut the cost in half. Maybe you can spread the cost between a lot customers. In other words, going from 1 customer to 2 customers divides the cost in half. While going from customers to customers barely changes the cost at all. When you want to create custom designed software, having a few other customers or partners who are willing to share the cost can be very effective in lowering the cost for everybody.

This is similar to the previous method of lowering the price. It can be very profitable for the software developer to offer a customer a lower price in exchange for the right to sell the software later to other customers. You figure out the MVP and go through all the budgeting and guess that the total cost will be over 3 million dollars. So far, this is just like the earlier example.

When the customer calms down from the shock, you offer an alternative. The customer gets everything they need at a third of the cost. And by companies with a culture of keeping things to themselves. The best way to save money is to make use of mass produced savings yourself. What I mean is this. Instead of writing everything yourself, look for pieces that might already be available for sale. You might have to pay a lot of money. At least a lot of money as we might think when compared to our personal finances.

But not a lot of money when compared to a 3 million dollar software budget. That might seem like a lot until you consider that it should be well thought out by experts who have been working on that piece of software for years.

Even if you could write it for the same cost in salary, would yours be as good? The one cost that I outlined above was salaries. And I mentioned that salary costs can change depending on your location. What if you hire employees to work in a different office in a different location where the normal salary is much less? Countries like India, Russia, and the Philippines have highly trained software engineers ready to work on your projects.

And the cost is much less. And it probably is half when you add in taxes and other benefits. The point is that you can drastically cut down on your salary costs by hiring experienced software developers from other countries. How will you even begin the interview process? Where will they work? Do you think they will want to work for you like this? Probably not. Most talent will be available through agencies that work with you and have their own employees that they make available to help with your projects.

The problem is that you need to specify everything. You might only have a couple hours each day where both teams are available and that usually means somebody has to work late. It is possible to get good results. I recommend that you carefully choose the tasks that you outsource. Some tasks are better than others. A really good candidate is when you have to do something multiple times with only slight differences. Do one yourself and work out all the details.

This can then be followed with fewer misunderstandings. There is a cost. Despite that fact, put it down in your budget. You can even sell the idea first. Bill Gates or Steve Jobs sold their products before they even had them produced. Make a room in your budget spreadsheet for the outbound and inbound marketing activities. Build a list of your prospect and reach out to them with a proposal for using beta or alpha version of your product. Still, remember that marketing requires investing time and money and be ready for it.

The costs of maintaining a physical office can smother your entire project. Forget about it! Remote work has become a natural model of business collaboration.

On the contrary, this labor model opens more business possibilities than if we had a rented office. We took a closer look at it in our previous article. You will need to allocate financial resources in each stage:. Building your own team dedicated to spending long hours on exploring the market, will be more expensive than hiring a freelancer or an outside firm. As we mentioned earlier, your software project will not resonate without a decent UX designer.

This stage will split into:. What you need to fire away, is to find outside, FinTech company to conduct the audit. This partner has to verify the security settings regarding the server and the application itself. These services are rather pricey.