How To Reduce Software Development Costs by@sergey.valuy-smartym

How To Reduce Software Development Costs

The cost of software development depends on the size and complexity of the solution, operating systems it is built for, the type of an IT service provider, and the location of the IT company. The more simple product you need to launch, the lower price is. The 6 best ways to reduce software development costs are to delegate your project to a third-party contractor located abroad. The world’s outsourcing market reached $92.5 billion in 2019 while information technology outsourcing generated $66.5billion.
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Sergey Valuy

Co-founder and CTO at a software development company located in Eastern Europe.

Mobile and web applications are worth investment as their use can help you achieve various goals, for instance, improve customer service, increase the conversion rate, provide security of sensitive data, automate manual, routine, and repetitive activities.

The main task is to clearly define the project objective, your target audience, and requirements to the future system.

If you have decided to build a software product for solving business-specific challenges, common questions are “What budget will you need?” and “How to reduce software development costs?”.

Although it may seem that by saving money you can lose in quality, there are many ways that help not only create a great product but also cut expenses.

How much does it cost to build a software product?

The cost of software project development depends on various factors that include the solution’s size and complexity level, operating systems it is built for, the type of an IT service provider, and location of an IT company.

Let’s consider the cost of a mobile app as an example. 

According to the Clutch survey “Cost to build a mobile app”, the median cost of making a smartphone application ranges between $37,912 and $171,450 if engineers work at $150 per hour. The more simple product you need to launch, the lower price is.

The median cost of making an iOS application at $100 per hour is $25,275-$114,300. Sometimes the project cost can be $500,000 or even higher, for instance, when you develop a complex system that consists of a multi-page website and native mobile apps for iOS and Android.

Analysts at Clutch found that the maximum price varies between $485,000 and $727,500 at high hourly rates—$100/hour and $150/hour respectively.

Since the final application development cost can be too high, there are lots of ways to reduce it. For instance, you can outsource your project to the country where software engineers work at $25-$49 per hour (e.g., Belarus or Ukraine located in Eastern Europe), not at $100-$150 as it is in the United States and Canada.

I have been the CTO at a custom mobile app development company for almost 8 years and can say that sometimes the product price is $20,000 or even less if your solution is simple and you delegate it to a third-party IT service provider. The lowest complexity level means that it has 1-2 features, up to 5 screens, and no third-party integrations.

The 6 best ways to reduce software development costs

1. Outsource your software project

IT outsourcing is a practice of delegating technical challenges to a third-party contractor located abroad. This approach allows companies to reduce software development costs as you can always find a partner with lower salaries than in your country. 

This method of building software has become very popular over the past several years. As Statista reports, the world’s outsourcing market reached $92.5 billion in 2019 while information technology outsourcing generated $66.5 billion.

Clutch, a trustworthy review and rating platform, conducted a survey of 529 small businesses in the USA to discover why they prefer delegating their projects.

Experts at Clutch revealed that the key reasons for outsourcing are: 

  • Boost efficiency (24%)
  • Access high expertise of the hired specialists (18%)
  • Improve flexibility (16%)
  • Free up the time of in-house professionals for other tasks (15%)
  • Increase resource availability (12%)
  • Cut expenses (12%)

So, although price reduction may seem to be the main reason for outsourcing, now organizations turn to third-party contractors to build high-quality solutions, hire teams with field-specific skills, and relieve in-house employees from software tasks.

However, cost savings are an important advantage of IT outsourcing. 

An approximate budget for mobile app development (medium complexity) in different countries/regions:

  • USA — $45,000-$75,000
  • Western Europe — $30,000-$52,500
  • Belarus (Eastern Europe) — $20,000-$35,000

Therefore, with software development outsourcing, you can cut costs by more than two times.

2. Choose a reliable software development company

If you want to launch a successful website or application, turn to a trusted IT service provider. Otherwise, you may receive a product of poor quality, or release it too late, or have extra expenses. However, how do you hire the right partner?

Define your project goals and requirements. What solution’s type do you need to build? What industry does your business belong to? The fact is that you should choose the vendor by the speciality and experience. 

Say, you are a business owner of a large insurance firm and aim to integrate a blockchain-based system to protect sensitive data.

So, look for a partner who has solid experience in making blockchain applications (e.g., Hyperledger, Ethereum, etc.). When choosing the contractor, check out the range of services and portfolio.

Then, browse a company on platforms such as Clutch, GoodFirms, and Design Rush. These B2B reviews and rating platforms contain profiles of the best custom software development companies worldwide and by different categories, for example, “Top web development agencies in Europe”, “Top B2B firms”, etc.

Here you can find the overall rating of a software house, the number of customer reviews, and client testimonials.

3. Create a technical specification

A tech specification is a document that describes the requirements for the future product: how it should look, behave, respond to user actions in different cases, what tasks it must perform, and a lot more, up to the level of performance and scalability.

If it is difficult for you to clarify technical characteristics, don’t worry! The main thing for the development team is to know the app objective, how it is intended to work, and understand what processes it must support or automate. 

In our company, for example, our experts discuss the project with the client, delve into business needs, and then help prepare a detailed specification.

It is truly useful when specialists check the final system for compliance with the requirements. Furthermore, it allows the customer and vendor to be on the same wave. Here you can see how to write a technical specification that will help create a quality product.

4. Develop an MVP


Another way to cut software development costs is to build a minimum viable product. An MVP is a working solution that has only the key functionality, or those features that allow performing the necessary tasks and satisfying early users.

According to “Startup Lessons Learned” written by Eric Ries:

An MVP is that version of a new product which enables a team to gather the maximum amount of validated learning about customers with the least effort. Many globally known companies began with an MVP, including Uber, Instagram, Snapchat, Amazon, and Foursquare.

Here you can read how Dropbox started as an MVP and reached success.

Creating an MVP, you develop only the core functionality that addresses a particular user problem and then collect feedback to get a clear understanding of what should be improved. Once this stage is passed, you continue adding new features.

As a result, you: 

  • Don’t waste time on building features that users don’t need
  • Save time and money
  • Have the ability to validate a project concept and check the product in action

How the MVP development process generally looks like:


5. Prioritize features

Prioritization is a practice that means that you define the importance of each feature based on the audience expectations, team’s opinions, surveys, and other factors. When creating an MVP, you choose the core functionality that should be built first of all.

However, even at the early development stage, it may be very challenging to define what elements are the most critical. Just imagine that you have a list of dozens of functions that you would like to integrate but it is impossible due to huge investment and long project duration. 

Then, you again risk implementing unnecessary things and just spend time and money. For instance, some user needs are successfully fulfilled by other apps that they use every day and won’t stop even if you provide them with an amazing product, say, WhatsApp or Instagram. Fortunately, there are plenty of feature prioritization techniques that will help you. 

6. Chose cross-platform mobile app development

If you are going to create a mobile application, which is not intended to have a large audience of millions of users but to address some internal business challenges, think about cross-platform development.

Choosing this way, you will build the same app for iOS and Android instead of writing two separate codebases for each operating system. As a consequence, you will save both time and money.

If 5 years ago cross-platform solutions provided lower quality, worse user experience and performance compared to native apps, now there are frameworks like React Native and Flutter that allow making truly great products faster and easier.

Final thoughts

There are many practices that enable companies to reduce software development costs while saving product quality or even increasing it.

Choose a reliable IT service vendor, take into account the partner’s speciality and experience, check out portfolios for similar projects, begin with an MVP, and use feature prioritization techniques.

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