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How to Estimate and Manage Custom Software Development and Engineering Costs

Replacing outdated or low-performing software—or even building a new customized solution from scratch—can dramatically improve your business processes and increase overall productivity. 

Before you hire a developer, though, you’ll need to consult with your company’s “bean counter” to see if there’s room in your budget for a customized software solution. 

This article will give you at least a ballpark idea of software development pricing and how to estimate it.

Who are we?

We are TATEEDA GLOBAL, experts in custom healthcare software development for U.S.-based healthcare organizations. We offer a wide spectrum of IT services, including full-cycle medical and IoT software system development and project augmentation.

Our projects include:

If you’re interested in a specific estimate for your software development project, please contact us. Otherwise, please move on to the next section and learn more about custom software price factors. 

Factors That Influence the Cost of Software Development

How much does custom software development cost? 

Short answer 

Custom software development can range anywhere from $40,000 to $300,000 or more, depending on a variety of factors. Frankly speaking, it’s hard to predict the upper limit for this type of work—sometimes, software development costs can reach into the millions for large, complicated projects (like enterprise-scale systems). Costs can also rise if a project has been incorrectly planned and therefore faces continuous scope creep, perpetually failed deadlines, and/or other mismanagements. 

How to avoid superfluous costs? 

Before you even talk to a software development company, you should have a fairly specific idea of your proposed solution’s size, scope, functionality, and other factors so the developer can give you an accurate estimate. 

The golden rule is…

The better your vision of your future software product at the beginning, the MORE time, effort, and money you’ll SAVE in the process of software development. 
software development price

Here are a few things to consider:

Factor #1. Size of Your Custom Software Solution

Most software developers bill by the hour, so you can get a ballpark idea of your software development costs based on the size of your project. Depending on the type and size of the software development company you choose, IT consulting rates can range from $35/hr for a freelancer or offshore developer to $300/hr for an enterprise-level software development company. 

  • A small, basic application with limited functionality will take 500-700 hours to develop. 
  • An application with a moderate level of complexity can take 700-1200 hours.
  • An application with complex architecture, high-level security requirements, and a need for multiple integrations is likely to take upwards of 1200+ hours.

How do you define the size of your software? 

There are several methods to measure the size of your software, and one of the most basic is counting the screens to be included in the application.  

Small applications1–10+ screens
Mid-size applications20–40+ screens
Large applicationsover 50 screens

Of course, the number of screens is not the ultimate criterion for defining software size. There are additional factors behind custom software development prices… 

For example, different software screens, despite their numbers, might feature different functionalities with a varying level of interface complexity, including data fields, buttons, graphs, sliders, filters, and other interactive elements. 

With that said, it’s easy to understand that an application with several complicated, professional-grade screens is harder to build than an app with a dozen of simple screens. In other words, the final size of the software cannot be defined by that metric alone.

The concept of software size can encompass a variety of additional factors: 

  • The number of concurrent users or devices that must be connected (is it a single-user application, or a multi-user system with dozens of active users?)
  • The software solution’s capacity. Advanced capacity is required to process large amounts of data and execute high-performance operations (complex, heavyweight operations occupy plenty of system resources and require specific system engineering skills.)
  • The number of code lines to be written and tested by developers and QA engineers. 
  • The number of software modules to be mutually integrated. Assembling numerous system components in a singular mechanism requires thorough development and testing.
Slava K

Slava Khristich

Healthtech CTO

Based in San Diego, Slava knows how to design an efficient software solution for healthcare, including IoT, Cloud, and embedded systems.

Factor #2. The Complexity of the Code 

The cost of software engineering can result in a massive overall project bill. 

However, these investments are entirely justified. 

The more complicated the structure of your future software system, the more potential flaws and weaknesses need to be predicted and eliminated at the design stage. The process also takes more time—and that’s what qualified software architects should be hired for. 

To learn more about software engineering goals, read this article explaining the fundamental principles of good software design.

Complex solutions not only demand extensive design and coding, but also require that the product undergo multiple levels of testing for quality assurance. 

Factors that increase the complexity of software design and thereby lead to escalation of custom software development pricing include: 

Configuration of a range of software modules within a single solution. Programming, network technologies, client-server architecture, and more…and that’s just a small list of the fundamentals covered by software engineers. 

The involvement of sensitive data, like personally identifiable data (PII), protected health records (PHI), and/or financial information creates additional technical obligations. For example, HIPAA compliance is required for medical software products intended for electronic health records. Learn more here: Patient Electronic Data Capture Solution Development.

A combination of software platforms, including web, desktop, mobile, and cloud solutions. This can require additional cross-platform engineering and programming efforts to rectify possible incompatibilities.  

A mixture of different programming languages, frameworks, programming libraries, additional software components, and API integrations. A rich set of resources grants countless opportunities, but only qualified software engineers know how to amalgamate these elements for smooth functioning.  

Managing a multitude of user roles and permissions brings additional engineering challenges. 

Incorporation of hi-end tech components, including AI, machine learning, big data, biometric recognition, IoT, and more.   

Complex logic behind software algorithms and features, which requires more time and skills for planning, development, and testing. 

Migration of existing data. Usually, existing data must be safely moved from previous software systems to the newly developed or upgraded software. The process involves making sure the data is correctly formatted, writing specific scripts for automated migration, and other important database analytics and operations to make sure no data is spoiled or lost. All of these efforts will incur additional complexity and costs.   

At TATEEDA GLOBAL, we are experts in secure HIPAA-compliant medical software development of any complexity level. Thanks to our expertise and HQ location (we’re based in San Diego, CA), we offer onshore project development and augmentation services that meet the highest standards of the U.S. healthcare industry.

Contact us for free healthcare software project consulting and estimates.      

Factor #3. Overall Aesthetic Design and User Experience 

Well-designed software solutions offer a better user experience (UX). This translates into higher productivity, saving you money in the long run. Anyone who has been forced to work with a cumbersome system with poor navigation will attest to its negative impact on employee morale and productivity. 

Good software UX/UI design doesn’t come cheap or fast. It requires hiring a professional user interface designer capable of planning and modeling a consistent, convenient user interface for all software screens.

Additionally, it’s crucial to decide if the software product requires any kind of artistic design (maybe a funny mascot or engaging artistic elements and illustrations). If the answer is yes, an electronic artist or visual designer with proper illustration skills should be invited to your custom software development team.  

Can custom software prices be optimized?

Sure. When you deal with full-cycle software design and development partners like TATEEDA GLOBAL, you get a turnkey customer service experience with everything you need: software architecture, UI/UX design, a good development process, and QA. 

This will help you to alleviate software development costs, optimize time, and keep project quality under tight control. Learn more: The Benefits of Healthcare IT Outsourcing for Your Medical Facility.

Factor #4. Budgetary Limitations 

A small budget set in stone will pretty much define the size and functionality of your software solution. You can try to save money by hiring a freelancer, but be ready to get what you pay for. Your best bet is to find a small to medium-sized professional development agency with moderate rates that can guarantee their work and stand behind the quality of your end product. Learn more: How to Find and Hire Healthcare Software Developers for Your Medical Projects.

Factor #5. Scalability 

Here’s where you can save some money. A well-thought-out software solution should be scalable to meet the needs of your growing business. With that said, if your budget is limited, you can start with minimal functionality and add new elements over time. Even if you have a massive budget to build your dream product, you still want it to be flexible enough to scale in order to allow for advances in technology and changing market demand. 

price of software development

Read Also: Building Custom Pharmacy Management Software: Cost, Benefits, Features

Factor #6. Onshore Development vs. Offshore Development 

Offshore software development costs are lower than onshore development. At the same time, offshore software outsourcing comes with more risk and difficulties.  

A better-balanced option is nearshore development. Find a brief comparison between onshore, offshore, and nearshore outsourcing models in this article.

TATEEDA GLOBAL is an onshore software development company based in San Diego, California. We offer all the benefits of offshore/nearshore programming, including more favorable pricing for custom software development outsourcing. 

Custom Software Development Pricing Estimate

You’re probably thinking, Well, that’s a lot of information with many factors to consider. Yet could you give me a ballpark estimate for those services?

Sure, but please NOTE that the figures below are just rough estimates. If you need a more accurate quote based on specific custom software development rates, please contact your vendor or contact TATEEDA GLOBAL for a free consultation

Software development cost defined by software size:

Software size/complexityEstimated price of development 
Small applications$40-70K 
Medium applications$70-200K 
Large applicationsOver $200K 

Read also: The 7 Best Healthcare Software Development Companies in California for 2022.

Custom Healthcare Solutions

See how we can engineer healthcare software, validate your ideas, and manage project costs for you.


Before You Contact a Developer

Many businesses have a general idea of what they need their software to do, but if you bring a concrete list of requirements to the table, you can save time and money while speeding up the development process. Before meeting with representatives of custom software development companies, you should have a clear vision for your software along with the big picture of what your software will do and how it will impact the market. 

Use this checklist to parse out your solution’s main requirements: 

  • ✓ Define your users in terms of their role in your company, the types of tasks they will perform with your solution, and the level of training they will need to master your new software application.
  • ✓ List the steps each user will perform and the tasks they will accomplish while using your software: for example, login, password entry, data entry, computations, data analysis, tracking shipments, processing payments, etc. 
  • ✓ Define how your users will access the platform. Will it be from an in-office desktop, a remote laptop or mobile device, via mobile or desktop application, or by some other means of access? 
  • ✓ Decide on the level of security you will need to protect sensitive data and limit user access.

Read also: How to Maintain and Support Healthcare Software: The Complete Guide

how much does software development cost
  • ✓ Determine if your new software will need to be integrated with existing systems, or if you will need to migrate data from your old system to your new solution. 
  • ✓ Define any industry-specific compliance requirements, like HIPAA for healthcare solutions or FISMA for government agencies.
  • ✓ Consider the need for ongoing maintenance and upgrades, hosting requirements, technology preferences, and other miscellaneous requirements that the software development team will need to be aware of before starting work on your project. 
  • ✓ Allocate dedicated resources to your project to ensure proper communication with developers. Your team’s involvement accounts for at least 50% of the success of your project.  

Read also: The 7 Best Software Developers in San Diego, California

The Cost of Software Engineering at TATEEDA GLOBAL

If you want a high-quality custom business software solution at an affordable price, contact the professionals at TATEEDA GLOBAL. Our close-knit team of software engineers takes a client-centered approach to software development to ensure that your requirements are met with 100% satisfaction. 

Call or email TATEEDA GLOBAL today to share your vision for your custom software solution. Let’s get your project started!

Written by

Slava Khristich


Expert in Healthtech projects. Contact me for a free consultation!

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