What is the price of custom software development?

Different pricing models exist for custom software development. There are instances when varied quotes are made for the same software development price. It is recommended to gain a concise idea of the structuring of these costs for complete transparency. Planning of costs in advance and mitigation of risks, play great roles in defining a suitable pricing model and ensuring a smooth service delivery process.

Experienced software development vendors generally follow these pricing models:

Time and Material Model: In this, the process of custom software development is priced specifically on the time spent as well as the technological resources used by a software development company for the project. This model is flexible and helps to change project specifications at any step of implementation.

Pros Cons
Negotiable budget that may be altered depending on specific requirements. Costs of risks are not included
Step by step method help avoid any confusion at earlier stages No specific start and end time for a project. Hence, it is not easy to schedule activities.
Best for immediate projects as specific software will be developed quickly no time will be spent on negotiating Additional feature requests may result in increased investment and postponed release date. More resources and time may be required to deliver the project
 Client’s control over any stage of a project, adding necessary features when required  


Fixed Price Model: This is suitable for small or medium scale projects with requirements decided in advance. Clients or businesses with software development requirements can discuss the scope of work and timeline in advance to accurately comprehend the pricing structure even before a project starts. There will be no dissatisfaction or need for worry in later stages.

Pros Cons
Fixed budget and timeframe before the project start Requirements should be defined precisely including approval criteria and schedule. It may not be possible always as requirements may keep changing and resources may not be available for sudden projects.
    An almost accurate estimate (nearly 90%) can be quoted for a specific software development project as the specifications are clearly defined Any minor change or modification required in the software after the signing of the signing of an agreement will imply additional costs.
Discussion of requirements beforehand and a defined cost structure reduces the need for client supervision by a huge margin.  Negotiation before signing a contract involves lots of face-to-face meetings with project and account managers for a more accurate estimation  


Dedicated Team Model:A client may have a broad vision on the software that needs to be developed and may be preparing future plans. Such requirements would require the availability of skilled resources at the ‘nth’ hour. In such cases, a custom software development company allots a dedicated team for a specific client. A periodical remuneration is paid for each member for the team and in return, the client gets required resources for a project with the right of total control and management of the process, work plan well as human resources.

Pros Cons
Budget is mostly predictable, despite workload changes and requirements updates Requires efficient task planning of all the team members to ensure the delivered product is worth every penny
Dedication of time completely for a particular project making its development more productive Limited or no scope at all for team members to develop their expertise outside the project area
Increased product quality as the entire team concentrates together on one software product Required continuous efforts to keep the client engaged in management, communication and negotiation
Total control over management, selection helps ensure efficient delivery of the end product  


SGS Technologie is an established custom software development firm with over 15 years of experience in the domain. We offer all three pricing models and let you take the decision on what you feel is best suited for your business’ requirements. Feel free to contact us now.