It’s a question I run into a lot. “How much does custom software cost?” Since I work for a custom software company, people generally assume I have a ballpark answer. I didn’t, so I dove into my usual “research everything until I find the answer” mode. Here’s what happened:
To start with, I made a couple of assumptions. First, I already know I need software. Second, I know the out-of-the-box options aren’t right for me, so I actually need custom software.
So then I started with a Google search (obviously). I was hoping for a quick, clear answer. Not so much. Apparently, software can cost anywhere from $10,000 to $800,000+, depending on which website you look at.
How could I possibly create a reasonable budget with a range like that? There’s no way I can come up with a budget for custom software that accommodates a $790,000 flux.
Clearly that answer wouldn’t cut it. Because if I were the boss in charge of my own budget, that would be a nightmare. (I don’t have 800k, and I still have no information.)
If I were not the boss, I wouldn’t be in charge of my own budget, and that’s even worse. I would look like a straight up imbecile if I went to my boss and said, “Oh, it will be somewhere between $10,000 and $800,000.” That’s a good way to never get software. Ever.
So back to Google. Maybe I missed something? I could see plenty of links that say “click here to get your really fast cost estimate!” Which made me wonder why it’s so hard to nail down a price. Smells fishy.
And there were plenty more links that said, “Hey, your software could cost any amount from here to a million. We can build it for you!” Seems legit…
The more I read, the more confused I was (and I’m supposed to know about this stuff…). Requirements, estimations, best practices, price structures, hidden costs… I had 18 browser tabs open and 4 Quora threads and I still had no idea how much custom software should cost. Not good.
I needed help.
Finding the Real Answer
It was time to take the bull by the horns.
I talked to an actual senior-level custom software developer. You’re welcome.
His name is Hass. He’s been writing “the codes” for about 20 years, so he knows all the things. He’s the go-to guy in the company when we need to know how much it will cost for us to create a piece of custom software. He also loves Reese’s Cups, so we know he’s trustworthy.
I told him about some of the things I’d read online about the cost of custom software and he laughed a little. He said some of it is kind of accurate, and some of it is just crazy.
He did agree with the internet on one thing: custom software is custom. AKA, it’s nonstandard, meaning it has a nonstandard price.
Don’t worry, that’s not my final answer. Don’t stop reading yet.
But this is a good time to reframe the question. Because we don’t actually want to know how much custom software costs, right? We already knew it was custom, so of course the cost would vary.
The Real Question
What we’re all really asking is, “How can I be confident that the price I’m being quoted for my custom software is what it should cost?”
That is a question with a more useful answer.
The Real Answer
So here is Hass’s Cost-Divination Process:
It all starts with a discovery session. We sit down with you as the potential client and talk through why you need custom software and what it actually needs to do. Hass calls this “finding pain points.”
From there we powwow and figure out what type of software you need. Sometimes we say, “You don’t actually need software—try this thing that will help you.” Yes, we do that.
Hass says he’s done that multiple times this year.
But if custom software really is the solution, then we do the deep-dive. We figure out the best solution to the problem. Then Hass (or another senior developer) sits down and figures out how that software should be created.
If you’ve read MVP in all your Google searching, that’s where it comes in. We figure out what the “minimum viable product” would take, plus any extra things you absolutely want in the first version.
We consider what type of team would be the best fit for the project—one or multiple developers, senior or less-senior, etc. We figure out the timeline.
Then we dump all that into a risk simulation program.
Why? Because with that program, we can tell you how confident we are that we can get the project done for a certain amount of money.
So, you say to us, “I have X money to spend and Y time.” And we say, “based on your MVP and our internal costs, we are 90% sure we can get your project done for X amount of money in Y time.” And every variation of that conversation.
Then we hand you all those numbers, along with our plan for your software and mock-up screens showing how it would work. And you’re free to take all of that information to other companies and price compare (if you were getting new brakes on your car you’d probably call around—it’s the same concept here. It’s smart to make sure you’re not getting stiffed).
Does that sound like a long process? It kind of is. That’s the thing about custom software—it isn’t something you can just grab off the shelf.
But in reality, you want it to take some time. If a company throws out a cost estimate for your custom software really quickly, you should run. Fast.
Because if a company goes through that process for you (and you feel like the solution they present actually addresses your pain-point), you can be reasonably confident that they’ve quoted you a fair price for your software.
If they don’t go through that process, well, they don’t really know your problem or the best solution. Whether they quote you a “great” price or not, it won’t be the solution you need in the end, so it’s not worth any money you spend.
The Bottom Line
I started with, “How much should my custom software cost?”
Then I changed the question to the real question, “How can I be confident that the price I’m being quoted for my custom software is what it should cost?”
And the answer is, “The company quoting you the price has done their homework, gotten to know your problem, and proposed a solution that you’re happy with.”
It’s really all about trust. Is the company intentional about building your trust? Are they honest about where the money is going? Do they have reasonable explanations about why a non-custom solution won’t work well?
That’s the company you want working for you. You’ll get your custom software at a reasonable cost to you, and you’ll be confident in both the software and the cost because you’re confident in the company.
Still feeling a little worried? Regardless of the amount, custom software is an investment. Here’s a checklist to consider when talking to custom software companies to make sure you’re getting a good price:
It doesn’t sound too good to be true.
Software is just like anything else in life. If it sounds too good to be true, it probably is. Or it’s from India. Which causes another whole host of issues.
It doesn’t sound whacky-doodle.
Yes, I just said whacky-doodle. Basically, if a company is telling you your MVP will cost you $800,000, that would be whacky-doodle. Get a second opinion on that one.
It makes sense based on the timeframe and the team working, and it allows for reasonable profit for the software company.
Do the proposed timelines fit with the work to be done? The company should explain that to you in at least a little detail. Does the cost make sense based on the team doing the work? And if there’s no room for the company to make any money, you should be concerned. If they’re doing it for nothing, they either lowballed it and you’ll end up paying way more, or they didn’t manage the estimate well, in which case you’ll still end up paying more. It’s a business. If they’re not making any money you should probably start asking questions.
The solution solves your problem.
This is self-explanatory. If the solution doesn’t solve your problem, it’s not the solution you want to pay for.
You have a sense of trust with the people you’re working with at the software company.
This is the most important piece (aside from a workable solution). If you don’t trust the people making your software, you might get a good price, but you won’t feel confident about it. Make sure you’re working with people you can trust. It makes all the difference.