As most citizens of the digital world know, software development is never completely “finished.” Software development teams develop new features and fix bugs. They add functionality. In this environment, how should companies budget for their software development projects?

An unlimited budget would make many teams very happy. But that approach has pitfalls. If the team works without much oversight or customer input, they may waste money. They might create features that the customers won’t use.

Some organizations might seek to keep their budgets as small as they can get away with. This might force the development team to cut corners. Choosing the lowest bid almost never proves to be the most intelligent choice.  They might miss out on creating the best project possible. Spending more, in a smart way, usually leads to better returns on the investment.

Thinking about what to develop next? Read on top bespoke software solutions and best SaaS ideas. For even more options check out our list of web application ideas.

Organizations also need to consider whether or not to outsource their project. Outsourcing offers flexibility in workload and hours and demand for outsourcing increases every year. If your firm hires an in-house engineer that person can only work a certain number of hours a week. You might have too much or not enough work for them. With outsourcing, the outsourcing firm can easily provide the services you need in a flexible way, giving you more or less help as required.

1. Estimate the value of the project
   Smart organizations should first decide the value of their project. How much money do they hope to generate or save with the software they want to develop? Then they can decide how much they will spend with clarity and focus. 
2. Analyze costs and estimate
   Ask the agencies you plan to get estimates from to meet with your team. Get their specialists to identify requirements. When they set out the requirements, have a meeting with their account manager and team lead so you can express your expectations. Then the agency will compile a brief. The agency then attends to technical details and gives you a complete production schedule for approval.

When you start collecting bids from external agencies, pay close attention. They should provide detailed bids that show a depth of knowledge. External agencies that submit vague or opaque bids should raise your suspicions. Inspect the bids keeping in mind how much value you place in the project.

1.  Add some cushion to your budget
   Even the best teams might not estimate with great precision. Make sure you have extra capital on hand. Custom software development continues on long after the project seems “finished.” New bugs and fixes appear well after the project launch.  Having the extra funding means that you will not hesitate when it’s time to add an improvement or new feature. Nobody wants unfinished software or software that doesn’t work as expected.
2. Set a budget for the first part of the project
   The team should focus the first part of the project on developing a minimum viable product (MVP). A minimum viable product keeps the team from scope creep. It allows them to make sure their work delivers value. Once the team has released the MVP to beta testers, they can get feedback. The beta testers’ feedback will guide their next steps.
3. Streamlined release of functional software
   Now the team needs to add the required features and functions that will deliver value to the stakeholders and customers. Avoid adding too many features, think in incremental terms. Focus on quality and positive user experience. You can always build on a great project. A project filled with too many features that don’t work as designed helps nobody. Keep software development Agile and simple.

• Plan out the entire project in advance
• Create a realistic timeline for the software development project
• Document the requirements in detail
• Seek out expert advice about what technologies you should employ
• Test early and often, bugs found early in the process are cheaper to fix
• Set priorities based on customer needs and wants

Read also: App development cost breakdown in 2022

At Blocshop, we have mastered the budgeting process. Blocshop works with Agile processes to deliver results on time. Our expert engineers, designers and developers will help you see your full potential. We help our customers reduce costs up to 30%. Blocshop optimizes resources and helps you keep your headcount numbers low. We know how to plan and spec out our projects so we deliver successfully completed projects. To get some insights on how Blocshop works read our recent article on app development for Fairphone.

Read more on how much the software development cost at Blocshop depending on the size of the software, technology is being used, and team size. If you need the custom price estimation, fill our software price calculation form to tell more about your project so we can get back to you with a detailed cost breakdown.