How much does custom software cost? What decides it

Custom software is the hardest technology work to price, because nobody can see it before it exists. A website has pages and an app has screens. A system that runs your orders, approvals or stock has rules, and most of the rules live in people's heads.

The price follows from how many rules there are, how many other systems are involved, and how much is still unknown on the day the quote is written. This guide lists what sets the price, what a low quote leaves out, and how to pay for the unknown part without signing a blank cheque.

01The ten things that set the price

The number of processes. Purchase approvals alone make a small system. Orders, stock, billing and returns together make four.
The rules and their exceptions. "Every order needs approval" is one rule. "Unless it is under a limit, or from a named customer, or raised at month end" is where the work is.
Kinds of user. Each role that sees different screens and may do different things adds design, code and testing.
Connections. Each link to another system, such as an ERP, a CRM, a payment provider or a government portal, is a piece of work and a thing that can fail.
Old data. Moving years of records out of spreadsheets or an old system, cleaning them and checking they arrived intact is often underestimated.
Reports. Each report someone relies on has to be defined, built and checked against the numbers people already trust.
Where it runs. A cloud service, your own servers, or both. Your own servers add set-up work and remove some monthly bills.
Security and records. Logins, permissions, a record of who changed what, backups and a security test take real time when done properly.
How many people use it, and how hard. Software for twenty staff and software for twenty thousand customers are engineered differently.
What is still unknown. The less that has been written down, the more the quote has to allow for surprises.

02Why the unknown part costs the most

The first nine can be counted once someone has asked the right questions. The tenth cannot. It is why two honest companies can quote very different prices for the same request: one has assumed the simple case, and the other has allowed for the exceptions it expects to find.

The fix is to pay for the finding-out separately. A short piece of work, usually called discovery or specification, ends in a written document: the processes, the rules, the screens, the connections and the data. The quote for the build is then written against that document, and it can be compared with anyone else's.

Agree at the start that the written specification is yours to keep, so you can take it to another company for a second quote.

03What is usually left out of a low quote

Moving and cleaning the old data
The exceptions to each rule
Reports and exports
An admin area, so your own team can manage users and settings
Testing by the people who will use it, and the changes that follow
Training and written documentation
Hosting, monitoring and backups after launch

A quote is only cheap if it covers what you assumed it covered. Ask for the list of what is not included.

04The cost after launch

Software you own usually has no fee per user, and that is often the reason to build it. It still costs money every year: hosting or servers, security updates to the things it is built on, fixes, and changes as the business changes. Ask for the yearly figure and what it includes before you sign.

Then compare over several years, not at purchase. A product you rent has a small first bill and a fee that never ends, and often grows with each user. Software you own has a large first bill and a smaller running cost. Which is cheaper depends on how long you will use it and how many people will.

05How to get quotes you can compare

Write down the process as it runs today, step by step, with who does each step.
List the exceptions people handle by hand. They are the expensive part.
List every system it must exchange data with, and the old data that must move.
Say where it must run, and who may see what.
Ask each company for a written scope, a price, a timeline, the yearly running cost and what is not included.
Ask how a change to the scope will be priced once work has begun.

Our guide on comparing technology quotes shows how to put the answers in one table.

06Spending less without regretting it

Build one process end to end first, and put it in use before starting the next.
Buy what is ordinary. Accounting, payroll and email are solved problems. Build only what is particular to you.
Keep the first version's reports to the few that people open every week.
Clean the old data yourself before it is moved. Nobody knows it better.
Leave rare exceptions to a person at first, and automate them once you see how often they occur.

In short

Custom software is priced by its rules, users, connections and data, not by its screens.
The unknown part is the costly part. Get a written specification first, then have the build quoted against it.
Ask what is not included. Old data, exceptions, reports, testing and training are the usual gaps.
Compare the cost over several years with the product you would otherwise rent.
One process, finished and in use, is a sound first version.

Questions

Why will nobody quote for custom software without a conversation?

Because the price depends on rules and exceptions that a one-line description does not show. A company that quotes without asking has assumed the simple case, and the difference appears later as extra charges for changes.

Is custom software more expensive than buying a product?

At the start, nearly always. Over several years it depends. A product's subscription continues and often grows with each user, while software you own costs mainly its upkeep. Build when the work is particular to your business, and buy when it is ordinary.

Should I pay a fixed price or by the hour?

A fixed price suits work with a written specification. Paying for time suits work whose shape is still being found. Many projects use both: a specification first, then a build priced in stages. Our guide on fixed price or time and materials goes through each.

Is it cheaper to have custom software built in India?

Engineering rates are lower than in the United States or Western Europe, so the same scope usually costs less. The scope still decides the price, and a low rate does not rescue an unclear brief.

How long does custom software take to build?

It follows the same list as the price: more processes, rules and connections take longer. Ask for the plan in stages, with something working at the end of each, so the first stage is in use while the later ones are built.

How does Quantum Beetle price custom software?

We write the specification first, quote against it, and state the cost of running the system after hand-over. Work is delivered in stages you can see, and the code is yours.

Sounds like your problem?

Tell us about it. We'll say honestly whether the swarm can help, and what it would take.

Talk to us hello@quantumbeetle.ai

What custom software costs: the ten things that decide the price