Software Development Costing: The Hidden Expenses of a Project

A software development project is usually conceived amid a flurry of enthusiasm and aspirations to achieve a specific outcome. It might involve a retailer introducing a new ecommerce platform, a service provider launching their own app, or a program being created that can be licensed by third parties to achieve an outcome.

Unfortunately, in the same way these definitions are broad and vague, it’s impossible to provide an exact definition of a software development project at the outset. As a digital product agency, we understand very well how goals can evolve as parameters shift, and growing aspirations rub up against pre-ordained timescales. This has a profound impact on software development costs—every revision, expansion, or complication could materially affect a project’s bottom line.

Expect the unexpected

No two software projects are the same, nor will they follow the same path. Unforeseen factors and specific requirements often only come to light once an initial contract has been signed. Below, we consider some of the additional software development costs you might encounter, alongside suggestions to mitigate them:

1. Additional staffing costs

There are three options in terms of project staff costs: freelancers, in-house personnel, or independent contractors. We recently compared the merits of each, noting that independent contractors have all the necessary skills and expertise in-house. This can reduce overspend on third-party assistance when a project runs into difficulties. Like contractors, freelancers can be paid per outcome rather than per day; if bug fixes consume more resources than they’d anticipated, that’s their issue rather than yours.

2. Scope creep

Few phrases are more dispiriting to a software developer than “wouldn’t it be good if….” It usually precedes a discussion about additional—and previously unmentioned—functionality. Defining clear parameters is crucial to avoid mid-project scope creep; even minor revisions like the introduction of multiple languages can complicate coding and add expenses that weren’t accounted for during your initial software development costing.

Clients often have a vague idea of the UI and UX they want, which is why everything from color preferences to third-party integrations must be unambiguously agreed upon in the design brief. If it’s not there, it shouldn’t be in the finished software, unless there are predetermined revision points built into the project timeline.

3. Delays

Delays can become a cost in their own right. A company might be losing money every day its services are offline, or every day they lack an app experience already provided by rivals. Complex solutions can take months to engineer and beta test, and the only way to claw back lost time is often by allocating additional resources—which increases costs elsewhere.

Would a one-month delay to the MVP stage be more damaging than the 15% overspend necessary to complete on schedule? Although you can’t wargame every possible scenario, having a few ready-made which-is-worse projections could be useful if delays arise. These may be beyond anyone’s control; there’s no guaranteed timeframe in which Apple will approve a new app for launch in its iOS store, for instance.

4. Debugging

A common source of delays is the unpredictability of debugging new software, which is as crucial a stage as the programming cost which estimates tend to focus on. Even a proven template can bring up issues or errors, while cross-platform OS compatibility is a notorious sticking point. This is worse for desktop applications than mobile apps, which by definition are concisely coded utilities with limited on-screen real estate. The more features software contains, the more potential there is to conflict with other programs, and the more time it takes to debug ready for a soft launch.

Fixing what isn’t broken

Another approach to software development involves negotiating a fixed-price contract with a freelancer or contractor. We recently considered the merits and potential pitfalls of this, discussing how agile development helps to ensure project success through fixed budgets, fixed deadlines, and fixed features. This is one form of contract where scope creep is unacceptable; if it’s not in the original design parameters, it has to be categorized as a “would like.” This adheres to the MoSCoW ideology: must have, should have, could have, and would like. Defining these before commencing any fixed-price contract is vital to bringing the project in on budget and on time.

Preparing for every outcome

Finally, we’d stress the importance of having contingency funds in place. It’s always better to finish a project with unspent capital than end up scrambling to plug a revenue gap. It’s also crucial to have a debrief after each project concludes, examining which additional costs arose at each stage. This supports discussions about how similar software development costs might be predicted/prevented/mitigated in the future.

For more advice and inspiration about affordable software development and on-time digital transformation, give VeryCreatives a call for a no-obligation discussion.

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Feri Fekete

Feri Fekete

Co-founder of VeryCreatives



Digital Product Agency

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