Estimating the cost of software development: price factors and real-world estimates from our portfolio

You can learn more about the basics of software development, like software components and development options, on our blog. Now, the question is, how much does software development cost? The answer is largely determined by these nine factors.

Businesses use B2B solutions either as internal applications or as a way to communicate with partner organizations. This software can serve a variety of purposes. For example, it can help with inventory management or automate some tasks and processes to increase, aggregate, and visualize data in real time. Salesforce and other data platforms are well-known examples of B2B applications.

B2B solutions focus on the core functionality rather than on the app’s visual component. These applications can be packed with features, increasing their average software development costs.

B2C apps enable companies to interact with their customers and advertise and sell their products and services. B2C software’s key features include presenting companies’ offerings, providing customer support, publishing client reviews, etc. Netflix and Amazon are two famous examples of B2C solutions.

When building B2C products, the design and user experience matter as much as the functionality, because usability is key to success in this type of applications. The user interface must be appealing yet simple for everyone to navigate. B2C software products normally have a larger user base and face more intense competition. You also will have to update such apps more frequently to keep up with trends and refine them based on customer feedback.

Internal applications are used within one organization or several affiliate organizations and focus on its internal issues. External solutions, on the other hand, are intended to serve the outside world.

To build an internal application, you need to conduct a rigorous analysis of your own business, which limits your research scope to your own company. With external products, the team performs market research, which widens the investigation scope. This market study covers more use cases. Based on the sheer analysis scope and possibly outsider expertise, external solutions tend to have higher costs of software development.

When comparing mobile and web applications, mobile apps have higher average software development costs as they are more complicated to build. It’s possible to develop a web application using a content management system (CMS), such as WordPress, even without much technical knowledge. Furthermore, you can reuse website plugins that are rather reliable and have many reviews for you to base your choice upon, while mobile plugins are relatively new and unstable.

Both mobile and web apps need back-end and front-end development. For web applications, both layers require similar technologies, while in mobile solutions, both aspects use a distinct set of technologies.

When building mobile apps that include maps, GPS, and other detectors, mobile developers have to deal with more difficulties as they are writing code for RAM-constrained devices, limited processor power, battery, and often limited connectivity. Typically, mobile developers are more expensive than their web counterparts. Here is an average hourly rate comparison from Upwork, which is a platform for freelancers and their fees are typically lower than full-time company employees.

Embedded solutions are more complex on average than mobile and web apps. But they also vary in complexity from bare-metal firmware to proper operating systems capable of performing heavy computations. Embedded solutions introduce the following expenses:

Your software solution can also involve innovative technologies, such as AI, IoT, and RPA. These technologies enhance your app’s potential but simultaneously increase the cost of software development.

Each one of these technologies requires people with specialized skill sets, and niche professionals always cost more. If you are interested in RPA, you will need to recruit domain experts who will help the development team understand the processes to be automated. If you are looking to implement AI in business, you will hire someone who knows mathematics and understands how different machine learning models work.

Let’s take a closer look at the additional costs each of these technologies can introduce.

When we want to incorporate AI into a software solution, there are four possibilities, arranged from the cheapest to the most expensive.

For more information, check out our recent article on AI costs.

IoT will introduce extra software development costs related to hardware and infrastructure.

In the case of IoT development, a company will need to acquire devices—either consumer electronics devices or non-electronic objects enhanced with sensors. The non-electronic “things” may include legacy equipment upgraded using IoT retrofit kits or just consumer goods packaging enhanced with printed tags. It’s relatively inexpensive to create this type of equipment. But if we think of developing hardware from the ground up, it’s a different story with design, manufacturing, and extensive testing.

Regarding infrastructure, you will need to find a hosting platform that is best suited to your needs and pay hosting fees. Popular infrastructure solutions include AWS IoT Platform, Microsoft Azure IoT Suite, and Google Cloud IoT Platform. They have different pricing options and offer some free perks. For example, Google grants $300 free credit to its new customers.

For more information, you can read our blog post on how much IoT costs.

RPA system implementation entails the following additional costs of software development:

If you want to explore the topic further, check out our article on robotic process automation costs.

The type of industry that your solution will serve also affects software development prices. Products designed for heavily regulated industries, such as healthcare and military, must be compliant with the sector’s regulations. Here is how this works.

Compliance implies the presence of standards that every software needs to abide by. There is an extensive list of rules an expert will read, making sure that your software development team honors them at every stage—requirements specification, design, and coding. These subject matter experts are rather expensive to hire, and you might need to employ several professionals. Based on their expertise, these people know where compliance holes might occur and can fix the issue before it escalates.

Also, the engineers and developers working on such projects need to understand how to design and implement the solution in a compliant way. With all these precautions, you will still need to conduct regular internal product audits to verify compliance at every development stage, which will also increase costs.

Finally, to build a product for regulated industries, you might have to obtain governmental approval, which means hiring even more niche experts who can take over the paperwork and communicate with governmental officers. These experts will also interact with your development team and interrupt their working routine. Sometimes the development team might even need to adapt and reiterate some deliverables if they don’t satisfy the compliance rules, increasing the time and costs of software development.

There are three main project types; each requires a different amount of effort and thus has its own software development cost range.

Another factor that influences software development pricing is the size of the project. It can be classified as follows:

The composition, seniority, and location of software development team members will also impact the total costs of software development.

In every software development project, there are at least three roles—project manager, developer, and QA engineer. Other roles include business analysts, designers, architects, etc. For small projects, the same person can act as a developer and QA, or as a manager and business analyst. For larger projects, one role might require several people.

Team members’ experience and seniority level is another factor affecting the costs of software development. Developers are typically divided into three seniority levels:

The hourly rate of different professionals depends on their location, as the costs of living and salary expectations in some countries are considerably higher than in others. For comparison, you can see the table below compiled from Accelerance’s 2025 Global Software Outsourcing Rates and Trends Guide. It showcases the average hourly rate of software developers in different geographical locations.

It seems tempting to opt for the cheapest workforce, but be mindful of time zone and cultural differences. It’s also a safer option to choose team members who can understand and speak your language, even if it increases software development costs.

When working with a software engineering company, you have three engagement models to choose from. These include fixed price, time and materials (T&M), and a dedicated team. Please note that the choice of an engagement model will directly impact the costs of software development.

Let’s see how different engagement models compare to each other:

You may consider partnering with freelancers, which will significantly reduce software development costs but will introduce other risks along the way. For example, you might not be able to verify the freelancers’ credentials and skills; a lack of expertise, meanwhile, could lead to higher project failure rates.

In the table below, you’ll find a breakdown of freelancer, software vendor, and in-house software engineering teams’ rates. This information has been taken from Accelerance.

It’s likely that your software solution will not operate in isolation. Engineers will integrate it with external services, such as payment gateways, and with other applications used in your organization.

When speaking of integrating with external services, some of them provide a convenient API that is easy to use, such as the PayPal payment portal. While other older systems make it challenging to connect with them, requiring more development time and effort.

When you build an application for internal use, you want it to work with the other systems in your organization. For instance, your company might use human resources software to identify best-performing employees and a financial compensation program to reimburse employees for work-related traveling. Any new internal application will need to seamlessly share data with those.

Simply put, the more integrations you have, the more costly the implementation process will become. But sometimes even one integration can have a noticeable impact on software development costs, such as legacy systems and portals that lack technical documentation.

At ITRex, we are using the no-code/low-code approach with some of our projects. It reduces the number of project participants, shortens time to market, and dramatically cuts down costs.

But these favorable conditions come at the expense of flexibility and customization. You will be limited by the capabilities of the no-code/low-code platform you choose. If your requirements change and you need a feature that isn’t supported by the platform, you will have to resort to traditional development, which can double the total project costs and extend the timeline.

To contrast the prices and the team structure with both approaches, here are two projects from our portfolio executed using a high-code vs. a no-code/low-code approach.

The client wanted to build a chatbot that could answer a wide range of questions about cancer, from describing different cancer types to evaluating the symptoms and pinpointing the location of the nearest oncology center. This chatbot could also determine whether the user is a medical professional or not. With a medical professional, the chatbot would converse in medical terminology without overexplaining. But with non-experienced users, it automatically adjusts to their knowledge levels and uses simple, understandable terms.

The Chatling no-code development platform seemed like an obvious choice for this project. It allows you to design a suitable interface, select and train a large language model (LLM), and even slightly customize it. We opted for a ready-made LLM Claude and trained it on 40 oncology books, in addition to other data, such as oncology center locations.

In the middle of the project, the client decided to add a feature that would enable users to save their chat with the bot to possibly share it with their doctor. Chatling doesn’t support such functionality, and we had to allocate a developer to implement it with the high-code approach. This one feature took the total costs from $5,000-$10,000 to $12,000-$17,000.

The table below demonstrates how this project’s requirements would shift depending on the development approach.

The client was looking to build a virtual psychologist that can converse with users and respond to voice-based prompts in real time. Our team felt that they could satisfy the client’s requirements with the FlutterFlow no-code/low-code development platform, especially that its integration with Firebase allowed us to build the back end without high-code development. For the voice interface, we chose OpenAI’s Realtime voice API.

Here is the difference between our approach and how this project would look with the traditional development.

Now that you know which factors affect the cost of custom software development, it’s time we give you some numbers so that you can understand how much your application might cost. In the estimates below, we consider high-code development.

When a potential client gets in touch with us, we go through a standard set of procedures to help them with estimating software development costs. Here is what we do:

f the client comes with just a mere idea of what they want, lacking a clear understanding of the software they need to build, we strongly recommend going through a discovery phase to identify the requirements and conceptualize the solution. The discovery phase will help you form a better project vision and communicate it clearly to the implementation team.

We approach the discovery phase in two different ways, depending on the project at hand.

During the discovery phase, we provide a set of deliverables, according to the industry’s standards. Our team will rely on this material during the implementation phase. The client can benefit from this documentation internally and show it to external platform providers, such as Google and Microsoft.

To produce a software development cost estimate, we follow the expert judgment method and give a range of worst-case and best-case scenario estimates. Here are the steps we take to come up with a price tag.

When determining the hourly rate for every professional, we take the following factors into consideration: