8 Ways to Determine Software Development Cost

software development costs

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8 Ways to Determine Software Development Cost


Whenever you plan to develop new software, among the most critical steps is to estimate the approximate cost of the process. With the wrong estimates, you will face financial shortages and potential delays during the development process. You, therefore, need to be sure about the costs in consideration to any changes that might occur in the process. However, we realize that this is not a simple task. In response to this issue, we devote our time to develop a list of 8 ways through which you can learn how to determine software prices. These include;


  1. List all the Requirements

software development costs
lists all of requirement

The first way towards establishing a perfect software development costs is to list all the requirements before you initiate the process. When you know what the projects require to completion, it becomes simple to estimate the cost of individual costs. With all the basics listed, the managers will understand the price and what it takes in developing software. It also adds transparency between the software developers and employers. It’ll also create milestones which can get used to determine labor cost. Adding up all the expenses will give an approximate value close to the actual price.


  1. Algorithmic cost determination technique

software development costs
Algorithmic technique

Under the algorithmic model, we use history on similar past projects that are the same size as what we are developing. We compare the labor used, materials and time expectations for completing the first project and assume that the cost will be the same. By doing this, we create an estimated charge from average software development time which predicts the expected value of the current development. And this forms another software development costs you can use in approximating the required efforts. However, this method is not recommendable as prices will change over time and can result in wrong approximations.


  1. Use of Analogy

software development costs

In the third position of our list towards creating software development costs is the analogy. Under this model, we must have completed other similar projects in the past. To go about how to quote for software development prices, we apply analogy in the finished software. For a proper description about the procedure, consider going through Myers, 1989 edition. The technique is reliable and can result to correct price estimations. However, just as the algorithmic method, remember to add extra changes that happen with time.


  1. Use of Expert Judgment

software development costs
Use of Expert Judgment

Another great way to come up with a reliable software development cost estimation templates is through expert judgments. Here, you consult with several professionals in software designs. Each of them will give you what their estimations are depending on their levels of experience. An excellent example of a consultancy agency is Osbay. After the collections, discuss the costs with your team and stakeholders until you come into an agreement. The process is reliable, and most of the times, the price does not vary much from the actual cost.


  1. Price Wining Technique

software development costs

Another great way to determine the value of developing software is the use of what the customers have to spend on the project development. It means that we use customers’ budget in estimating the software development costs tax treatments rather than using the project functionality. However, this is not a reliable way of developing software development costs.


  1. Use of the Available Resources

software development costs
Use of the Available Resources

Another way towards creating software development cost estimation templates is applying Parkinson’s laws. The laws require that work will increase with an increase in unoccupied time. Here, we use the available resources in the estimation instead of the objectives of the project.


  1. Ask, “How much time is needed to complete the task?”

software development costs
Ask, “How much time is needed to complete the task?”

Before you can start working on the project, we advise that you calculate the time it’ll take to complete the activity. Once you have time count, you can make a reliable estimation of labor cost and the possible project size. By doing this, you can generate software development costs that you can compare to come with the best price tag.


  1. Involve the main stakeholders

software development costs
Involve the main stakeholders

Concerning how to quote for software development, involving the key stakeholders will play a vital role. It helps to understand which cycles of projects are essential which allows the developers and management to understand better the project. Also, it holds all involved accountable in estimating the development cost. For this method, you can also make a comparison between software maintenance cost VS development cost.


In conclusion, we can agree that there exists a variety of ways to determine the cost of software development. However, the above-discussed techniques come as suitable procedures for the task. Consider using them for a chance to experience a positive change in your estimations.

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