10 Ways to Reduce Software Development Costs

When it comes to the development of your custom software, you may be wonder how you can save or reduce software development costs. And the truth is that the final price depends on lots of factors, but you can decrease it with a good preparation process and process organization. In this article, we will explain 10 different practices that you can use to fit into your allocated budget.

Why is software so expensive, and can it be cheaper? It can, but you should be wise with decisions you make to cut development costs since there are a lot of risky practices that will allow you to save a little, but they may cost you more in the long run. With the goal of saving you from a crucial mistake with your custom software development costs, we are sharing ten actionable ways to save money without risking the quality of your finished product.

Researching your target market and understanding the potential pain points of your future users is a critical step in product development. The better you cope with this initial stage, the better chance you have of capitalizing labor costs for software development.

Understanding your target market goes hand in hand with your idea validation, which is one more step towards reducing software development costs. Validating your idea through research on your target market and potential users is the best way to make sure that your startup idea is as promising as you hope it will be. To make sure, use the practice-proven economic research methodologies like political, economic, social, and technological analysis (PEST), strengths, weaknesses, opportunities, and threats (SWOT), The Five Forces (number and power of a company’s competitive rivals, potential new market entrants, suppliers, customers, and substitute products), Design Thinking (the cognitive, strategic and practical processes by which design concepts are developed) and focus group surveys.

When analyzing your market and user expectations, you will get an idea of what you have to create to solve their problems in the best possible way. Then you need to translate your requirements as clearly as possible.

Your research will facilitate the initial communication with your vendor, allowing for accurate estimating of software development costs, plus it will allow you to select the best technology to implement your solution. Clear project requirements will facilitate your communication with developers if you create your application using a dedicated team since less confusion about the task will eliminate the likelihood of misunderstandings and the introduction of errors.

How it’s done: Estimating Software Development Projects
A simple thing like the location of your development partner can minimize or significantly inflate your budget. For example, the average cost of software development per hour in the Far East is about $15-20 per hour, while working with high-quality programmers in America can cost you from $150 up to $2,000 an hour. This tenfold programming costs difference will have a significant impact on your budget, so it is best to look for the middle ground between price and quality.

For example, consider outsourcing to Eastern European countries. Ukraine is one of the most popular and effective outsourcing and staff augmentation destinations, as it allows you to get high-quality expertise with a reasonable custom software development pricing. Plus, a difference in mentality and overlapping business hours allow you to conveniently organize the development of your project.

Agile is neither a magic pill nor a cost-cutting method. It is an insurance policy for market changes. By designing your solution according to this methodology, your project remains flexible and is always ready for change.

With this method, you keep your finger on the pulse of a dynamic market and changing user expectations, which means that you can always adapt, change your strategy and create a product that will be in demand by the target audience, even if preferences have changed during the development process.

DevOps is one more way to optimize the development budget of your application. A key DevOps approach is that this practice and its culture allow team members to better interact with each other and the customer.

The software development team and those responsible for the operation of the application share responsibilities clearly, and it helps you avoid shifting responsibilities from one team member to another. DevOps involves the intelligent consolidation of areas of responsibility. Continuous integration and continuous delivery (CI/CD) are the main components of the DevOps strategy.

According to this practice, each module created is gradually integrated into the business processes in order to assess its effectiveness and get feedback. Thus, you can avoid a situation where the application created does not meet the goals and needs of your business.

There are two main types of contracts you can sign when outsourcing your project to a third-party vendor:

Fixed-price contract
Time-and-materials (T&M) contract
The first option may seem like the most attractive option since it seems to leave no room for surprises. All essential conditions regarding time, price, and the anticipated result are negotiated by the parties in advance and are usually not changed. This model of work is suitable for small projects that are developed according to the waterfall methodology step by step, where both the required time and the corresponding price can be estimated more accurately.

However, developing a larger project that needs an Agile methodology can be a failure if the custom software development price is fixed. In this case, the developers will try not to exceed the budget, but the quality of the product will likely suffer. Plus, this approach will not leave room for changes and adaptations, which are one of the key components of Agile. A fixed price model is only suitable for simple and easily predictable projects.

Startups looking for new ways to solve user problems should choose time and materials contract. It allows developing the product from phase to phase, opening new possibilities for getting additional funds during earlier development stages, such as MVP or even POC, and highly enhancing the product’s quality.

Common contracts

Most Common Types of Contracts Fixed Price Time and Materials
Advice on how to capitalize software development costs are part of the Lean development methodology. According to its core principle, you should check, test, and validate an idea before making an investment. Target market research and idea validation are part of the Lean approach.

The Lean approach is a universal methodology that works regardless of the industry involved. What’s more, it works great with the Agile methodology when used correctly. Flexibility is a key principle of Agile, while intelligence and frugality are key principles of Lean. Together, these two methodologies offer excellent opportunities for change and adaptation, provided that each idea is carefully validated before making a final decision to implement them.

With the Lean methodology, the creation of a minimum viable product (MVP) – the first working prototype of your solution – will contain only key functions.

MVP is one of the key milestones of the Lean methodology as it allows you to show your product to the target audience, test it in a real environment, collect feedback and use these insights for further development and improvement. The essence of such a strategy is that you get a real understanding of the market situation and assess the prospects of launching a successful application in real-time with minimal investment. This means that you can avoid a situation where an expensive solution is not wanted by the audience.

Custom software development costs can be high since your developers will create each module and design each element from scratch. This is the best way to come up with something really outstanding, however, if your development budget is limited it is necessary to look for other alternatives.

The semi-custom approach can be one way to go if you want to optimize software pricing and still create a unique product. However, your software development team needs to be smart and tech-savvy since your solution will be partially built using the already existing functionality from other apps in the form of application program interfaces (APIs).

If you know what to use, when to use it, and how it will work for your application, a semi-custom solution will be indistinguishable from a complete custom build, both in terms of functionality and user experience.

Custom Software Development Benefits

You should look for an effective design solution, but always keep the issue of usability in mind. It is impossible to separate design from usability, as the design provides that first visual impression that motivates users to continue exploring the product or close the web page or uninstall the application.

Thus, your design solution should be as balanced as possible by following the best practices in your industry, and it should be in line with modern trends while making your solution user-friendly from the first impression to the target action. Sometimes there is no need to come up with design elements from scratch. You can use already-created pieces and use a semi-custom approach to cut development cost.

The technical implementation of your solution is just a small piece of the puzzle. Adherence to sound principles, budget management, flexibility, and coming up with the right approach to communication between the customer and the vendor are the remaining critical components of the development process.

Our experienced team knows how to balance software cost estimation, and manage software development in order to develop the best possible solution in a given environment. Get in touch with us at learn@cprime.com if your goal is to amortize software development costs, and still get a top-notch solution for your business!