On cost vs value: is custom software development worth it?

Posted Jul 16, 2024

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So-called personalized software applications are designed to meet business-specific objectives and processes. While requiring greater time-to-market and investment, these provide desired functionality and performance, flexibility, scalability, and security.

Today’s leaders are going for custom software development rather than buying commercial software products. But with the expenses for bespoke software development, it’s critical to weigh the benefits against investment before committing.

So, let’s find out, are custom software development and consulting worth the higher expenditure?

The cost of custom software development: key factors

“How much does custom software cost?” – to answer this question, you’d have to assess multiple factors:

Project scope

The scope typically comprises project objectives, deliverables, activities, deadlines, costs, and requirements. The broader the scope and higher the complexity, the bigger the investment.

The factors to consider:

• Project size – projects involving extensive deliverables and components will require more resources
• Project requirements – highly detailed and industry-specific project requirements are resource-intense
• Complex functionality – advanced functionalities naturally require greater expertise and effort
• System integration:
  • Further integration with other existing systems, third-party services, and older legacy systems
  • Complex integrations – real-time synchronization, deep interdependencies, and more
• Team composition and expertise – broader scopes might require specialized knowledge and expertise 
• Ongoing support and maintenance – larger scopes might require ongoing support and maintenance 

Software complexity

The complexity might depend on various project characteristics, heavily influencing the overall project budget. The harder the coding and tiring the testing, the greater the expenses.  

The factors to evaluate:

• More effort – complex projects will require more time and cost to implement advanced functionality
• Detailed planning – complex projects also require extensive planning, architecture design, and analysis
• Specialized expertise – software developers, which possess domain-specific knowledge and expertise, typically command higher salaries
• Bug fixing – identifying and resolving issues in more complex applications can be more challenging
• Detailed coordination – complicated projects also require aligned collaboration and communication
• Risk management – the harder the project, the higher the risk of unforeseen, complex challenges

Technology stack

A factor that’s affecting your custom software development contract budget – the chosen technology stack. Overall time-to-market, community support, security and compatibility features, performance requirements, and other related factors will impact your investment.

Team composition

Another factor that’s impacting your custom software development contract expenses – team composition. Geographical location, team expertise, industry-specific knowledge and experience, project management – these factors might contribute to their project’s success but also significantly increase overall investment.

The cost of custom software development: understanding outsourcing 

Geographical location

Choosing outsourcing, you’ll encounter that your project budget is dependent on your contractor’s location. Economic landscape, industry-specific standards, tax policies, government regulations, and many other factors are shaping the local information and technology segment, thus impacting the rates.

The cost of custom software development in 2024 across regions:

Data provided by Clutch

As found by Deloitte:

• The global business spending on outsourcing hit estimated $731 billion in 2023
• Breaking down by segment, IT outsourcing has reached $519 billion in 2023

Team composition

Another determinant having impact on your project’s budget and success – the prospective team composition. Before involving third-party contractors, business leaders should determine their needs – project objectives, skillset, technology, team dynamics, core competencies, and more. 

The salary of on-demand software specialists in the United States:

Data provided by Indeed

But remember, as found by Pendharkar and Rodger, team size doesn’t directly correlate with project budget. Poor coordination may increase overall investment, and, conversely, efficient communication and collaboration might decrease long-term expenses even after team expansion. 

Is bespoke software development the strategy for you?

With custom software engineering, you harness market differentiation, aggravated competitiveness, and more. But given the time-to-market and cost, as well as challenges toward integration, ongoing updates and patches, is custom software what you need?

When weighing potential benefits against investment, business leaders should consider several factors:

• Business needs – to begin, an organization should determine the specific business needs to address
• Commercial alternatives – next step, the company should explore the existing commercial alternatives
• Required costs – moving further, the executives should calculate upfront costs, ongoing expenses (technical support and maintenance, updates, patches), and common hidden costs
• Expected return-on-investment – now, finally, the leaders can estimate potential return-on-investment
• Resource constraints – another thing, any organization should evaluate its capabilities and restraints 
• Stakeholder involvement – and lastly, mature companies should prioritize stakeholder involvement, thereby ensuring the strategy will align with overall business objectives and capabilities

Is custom software development worth it?

On-demand functionality

To begin, ready-made software includes features that might not perfectly align with business-specific objectives. In contrast, bespoke software provides functionality, precisely tailored to accommodate specific requirements, no matter the industry – healthcare, retail, finance & banking, construction.

Business productivity

Moving further, off-the-shelf solutions include features typically designed around standard business workflows. And conversely, custom solutions provide functionalities that acknowledge unique processes and workflows, which means seamless integration, flexibility, scalability, and productivity.

Increased scalability

General-purpose software comes with database limitations, monolithic architecture, and other common issues. Custom-built solutions, on the other hand, can incorporate modern features to enable on-demand scalability.

Enhanced security

Off-the-shelf software might cause system vulnerability, for example, data breaches and other common issues. Personalized solutions, on the other side, can integrate modern-day mechanisms to ensure robust security.

How we can help

Abto Software is your strategic partner to design enterprise products meeting your business-specific objectives. Discovery phase, requirement documentation, design, engineering, quality assurance, product deployment – our engineers can cover every stage. 

Partner with Abto Software, Microsoft Gold Certified Partner serving large Fortune Global 200 corporations. Let us enable data-driven insights and decision-making, increase efficiency, decrease challenges, and more.

Our services:

• .NET development
• ASP.NET development
• Web app development
• Mobile app development
• Cloud services
• Full-cycle, custom software development

Our expertise:

• Artificial intelligence
• Computer vision

How much does custom software development cost when partnering with Abto Software?

Contact us to get a free project estimate.