Software development cost guide with man-day rate estimates

Software development cost guide with man-day rate estimates

How much does software development cost?

There’s a good chance that you’re here to find out what it would cost your company to work with Blocshop. So let’s get straight to the numbers. 

The average Blocshop project lasts for three months, needs three full-time developers, and costs around $60,000. A more complex project might need more developers, more time, and cost up to $300,000. 

Now that we’ve dealt with that question, we can break it down and explain just what your investment would give you. 

How is software development cost calculated? 

Software development costs depend on what you want from your app or project. If you set realistic expectations, you can expect a realistic budget and time frame for delivery.  

Time and effort are the basic factors that determine the cost of almost everything in business, and software development is no different. To start working out how much time and effort your custom software will require, you need to consider the scope of the project.

Learn more on step-by-step project planning in our Software development budget estimation article.

These are the questions that can help you: 

Let’s go through each of the questions above and explain how they can affect your app development costs.

Software development cost guide with man-day rate estimates: Factors that affect the software development cost

How large is the range of user needs your software will cover?

You can think of size as number of screens when it comes to developing custom software. A screen, or page, is a way for the user to view or interact with the information being presented by the application. Your user might start out on a login screen, where they can enter their credentials. Once they click the login button, they might be shown a dashboard with options to view different elements of the app. Each click of a button, link, or menu item leads to a different screen. This division into different screens is not arbitrary: each screen will need different rules and code to make it work without bugs or issues. Your application can be considered small if it consists of up to 25 screens. Once you go over 40 screens, you’re already in the big leagues when it comes to app development cost. 

Will your application need to perform complex calculations or analyses

Some software simply presents information in a database so that the users of the app can easily view or edit the data. An application like that may not need to do much heavy lifting in terms of calculations. Other custom software needs to take that information, run it through other systems, analyze the result and present it in different formats. If you need something like that, your final software project price will inevitably be higher.

What data will the software depend on?

The data your custom software uses will determine the design and complexity of the database needed. Each database has to be designed and built to work efficiently and without bottlenecks, and creating a huge database that pulls data from multiple tables every time a user views a screen will add to the time it takes to complete your project. Populating the database correctly and making sure that there are no errors or conflicts will also increase the complexity and cost of the project. 

Do you need to migrate data from legacy systems?

Even if your new database is not particularly complex, the cost of development can increase if the developers need to pull in data from an older system and translate it to the formats used by the new database. If you have data that you need to use in your custom software, the project will need to assign time and effort for analyzing the structure of the legacy database, mapping the data to the new system, and ensuring that the information is correctly migrated. This involves creating rules, writing scripts, and checking the results. That extra effort and time will increase app development costs. 

Does your software need to interact with existing applications?

Integration with other systems is often a feature that you will need in your custom app. You might want to use the application programming interface (API) of external payment or login systems, such as Stripe or Google, or you might need to use a less easily integrated application or system that has been in use in your company for decades. As you can imagine, the latter scenario will be more complex and time-consuming. Modern APIs are often beautifully designed for integration and enable developers to use a few lines of code to get up and running; older, legacy systems are usually not going to be so friendly. If you absolutely have to use an exotic or complicated existing application, your custom software costs will go up accordingly. 

What technology will the app use?

The programming languages, software applications, frameworks, and platforms used by developers as the building blocks for your custom software are known collectively as the technology stack. The tech stack used can determine the time it will take to complete the project, what kinds of developers will be needed, how well the software can be integrated with other systems, scalability, and ultimately the final cost. If your application can be built using a tech stack that is considered standard, that can go a long way to reducing your software development costs. If you need to use a less popular programming language to, for instance, integrate with a legacy system, or you have to rely on an unusual platform, your project will take longer. 

How complex are your UI/UX requirements?

Surprisingly, user interfaces can add a lot to the final cost of an application. If you can get by with something functional, a developer working on other parts of the system will probably have the skills required to design and implement the user interface (UI) and user experience (UX). But if you want the users of your app to see a stunning UI and enjoy a streamlined UX, your project might need the attention of dedicated designers. If your application needs custom artwork, the final cost of the project will go up even more. 

What functionality does your application need?

All of the above questions will guide you in deciding what high-level app functionality you really need. You don’t need to get into the details of how your software will work at this stage, but you do need to know roughly what it will do and how it will do it. 

How big will the team need to be?

Once you have worked out an idea of what you want to build, you might start to develop some idea of the size of the team you will need to complete the project. Team size is the big one. Developers are skilled and in high demand, so their time is valuable. If your project needs a lot of developers, it will cost more. Very few applications can be completed by a single developer, so you should count on three or more. Evaluating how many developers will be needed on a project is a skill learned over the course of years and many successful application releases, and you will probably find that your estimates are a little low. 

Choose your pricing model: time and materials vs. fixed price

At this point, you should also be aware of the two different options you have when it comes to pricing models. Both can work, but you need to make sure that your application is suited to the model you choose. 

Software development cost guide with man-day rate estimates: Fixed-price vs. Time and materials


Fixed-price contracts determine the scope of the project and agree on a price before development begins. This can work if your project is small and of limited scope. By agreeing on a fixed price before development, you can be sure that you will keep within budget. The fixed-price model can fail badly if the design of the application changes during development or the client is unsure of what they really want. 

Time and materials 

The time and materials model means that you will pay for the time of the developers and for whatever tools or software they need to use. The development team has the flexibility to respond to user feedback and change features or direction if needed. You have the freedom to request new features or choose a different path during development. Modern software development methods mean that clients are usually kept aware of how much the project is costing as it progresses, and you will have clearly defined intervals at which you approve the budget for each stage of development. 

If you want to read more about the differences between fixed-price and time and materials models, we have a more detailed article you should check out. 

Examples of software projects and costs 

Using the list of questions above, you can probably already see that software development projects can be roughly divided into small, medium, and large. You can in turn work out the approximate software project price for each of these. 

Project complexity Time Number of developers Cost 
Small 30 days $15,000
Medium 3 months $60,000 
Large 6 months $300,000

A small project might be a simple set of fixes or UI improvements for an existing system, where you know what you want to be changed, but need an external developer to go in and solve the problems. There should be very little back and forth in this kind of project. Once you get to large projects, you can expect multiple rounds of iteration, where you need to review and approve deliverables at each stage before moving on to the next.

No one size fits all and your project will be the same. You might only need a single developer for two weeks for one project (cost: $3,000), three developers for 3-4 weeks for the next (cost: $20,000), before going on to a team of more than three for six months if you decide to develop a standalone application from scratch (cost: $160,000).

Small project: $15,000

Software development cost guide with man-day rate estimates: Small project costs
  • Scope: Design and implement 20 screens for an online membership management tool, using an existing database, and off-the-shelf login and UX tools. 
  • Number of developers: 2 
  • Duration: 1 month 

Medium project: $60,000

Software development cost guide with man-day rate estimates: Medium project costs
  • Scope: Design and implement 30 screens for an employee management system, including custom database, data migration, and custom UI. 
  • Number of developers: 2 
  • Duration: 3 months 

Large project: $300,000

Software development cost guide with man-day rate estimates: Large project costs
  • Scope: Design and implement 50 screens for a cross-platform standalone mobile application, including a secure, cloud-based database, custom admin tools, and multiple integrations with external APIs. 
  • Number of developers: 6 
  • Duration: 6+ months

Choosing your custom software provider

Software development cost guide with man-day rate estimates: Freelancer vs. Agency

As with projects, software development teams come in all shapes and sizes, from individual freelancers to huge, in-house departments consisting of hundreds of developers. If you don’t have the luxury of having your own army of programmers, you will probably need to turn to an external company. This table will give you some idea of the options you have and how they will affect your final app development costs.

Type of provider Size of company Man-day rate Avg. project size 
Freelance individual $200-$350 $5,000-$25,000 
Small provider 2-20 $350-$600 $15,000-$100,000 
Medium provider 20-100 $600-$1,000 $60,000-$500,000 
Large provider 100-1,000 $1,000-$2,000 $100,000-$1,000,000+ 
Enterprise provider 1,000+ $2,000-$5,000 $200,000-$10,000,000+ 

You might be also interested in: Software engineer hourly rates in 2021 (based on experience and location)

When it comes to the table above, Blocshop fits in neatly at Medium provider. While we have been reliably completing software development projects for ten years, we have deliberately remained boutique size, only growing when we identify a gap in our skillset. This enables us to never lose sight of how important it is that our clients always get the very best developers. We also keep our costs low by using efficient agile methods to reduce the time it takes to get from project kick-off to minimum viable product (MVP). 

Now that you have a clear idea of the process that we’ll use to estimate the cost of your software development project, reach out to us and tell us what you want to build. Want to learn more about our approach? Check out our case steady on mobile app development.

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