Estimating the total cost of software development can be challenging as there is not a specific one-size-fits-all accurate estimation technique to determine this. However, there are certain factors that can be used to predict custom software development costs. In this post, you will learn about the top 5 elements that are crucial in influencing software development costs based on project complexity, team size, the contractual model, seniority levels, and specific project requirements.
Factors that have impact on the final costs of enterprise software
The final enterprise software development cost can be impacted by factors such as:
#1 project complexity and duration
Project complexity depends on the functionality requirements, the expertise required, and the potential technical challenges expected. Generally, complex software development projects are expensive as they need more senior, more experienced specialists who can develop advanced functionalities and conduct in-depth quality assurance tests.
Projects with longer durations are likely to incur higher costs as an extended timeframe needs more resource allocation, including more infrastructure, and additional costs related to support and maintenance.
Complex and longer projects pose more risks due to the increased likelihood of resource constraints and integration challenges. As a result, they need more advanced mitigation strategies that may increase the final costs of enterprise software.
#2 Software development team size
An ideal software development team should have 3–7 members, but this often varies depending on business requirements and project scope. Regardless, the size of the development team can affect the software development costs. A larger team needs more resources in terms of infrastructure and labor costs, leading to overall higher costs. But on the other hand, a large team can still enhance project scalability and flexibility when handling multiple projects simultaneously, leading to increased software development speeds and eventually lower costs.
Thus, it is important to find the right team size balance based on project requirements in order to fully optimize enterprise software development costs. Generally, the ideal team size should be selected based on the complexity of the project, the available budget, the available infrastructure for coordination, and the expected completion period.
#3 Seniority levels within the team
A company’s choice of the seniority levels of software engineers often depends on factors such as project complexity, the size of the team, and budget. A dedicated team with a project manager can be cost-effective if there is the right balance of senior, mid, and junior specialists.
The highly paid and more experienced senior specialists can handle technical project complexities, make important decisions, and guide the skilled junior specialists with less experience and lower salaries. Mid-specialists are skilled with intermediate experience and have commensurate salary range. They can supplement the competencies of both junior and senior software developers.
#4 Choice of contractual model
There are three main contractual models with different cost implications used when outsourcing the services of a software development company: time and material (T&M), quoted time and materials (QT&M), and fixed price.
A T&M contract is used to pay for the actual time and material used by the team during project development. It is a flexible model that can result in increased costs of software development projects based on how the scope and requirements change over time.
QT&M is almost the same as T&M but with predefined time and material requirements used to estimate software development costs. While it is ideal for providing software costs estimation, changes in software development project requirements will still lead to additional costs.
Using a fixed-price model means the price of enterprise projects remains unchanged throughout the agreed project scope. It guarantees overall cost certainty during the entire project development process and significantly minimizes the possibility of new expenses.
#5 Project-specific requirements
Project-specific requirements impact the cost of software development depending on software complexity and project scope. Complex integrations require extensive preparation, design, and implementation; hence they require the expertise of experienced software developers. While expertise in niche technologies may be limited, integrating them needs extensive resources as well, which may consequentially increase software development costs.
Unlike off-the-shelf software with preexisting components, custom software development costs are usually high, as new functionalities need to be added throughout the development process. Overall, the more complex and sophisticated the requirements and the bigger the project scope, the costlier the
It is difficult to accurately determine the cost of developing custom software. However, understanding the influential role of factors such as level of seniority, contractual model, project-specific requirements, and project complexities can help you effectively plan and budget for development costs.