Custom Software Development Costs - Ultimate Guide For 2023

July 18, 2023
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Custom software development enables companies to tailor software applications to their unique needs and objectives. It’s a game-changing approach that saves both money and time, but only if you know how to estimate custom software development costs.

The software market is going to touch $659 billion in 2023 and is expected to grow further. Market researches show that it’s growing with a 5.42% CAGR while Enterprise Software has the largest share. However, the calculation of custom software development costs is still a tough nut to crack for many businesses.

The cost of custom software development is linked to several primary and secondary factors. To calculate the average custom software development cost, you must consider not only the target platform but also features. Of course, with the increase in complexity of software features, the cost will rise.

In addition to platform and features, there are other impelling factors such as licensing fees, user interface design, and time constraints. Also, you’ll have to count the maintenance and support and third-party integrations.

All these aspects make it difficult to answer “How much does it cost to develop custom software?”

This article is all about the intricacies and dynamics that influence custom software development costs. So, you’ll explore the driving forces behind the pricing structure and demystify the hidden elements influencing the budget.

How Much Does Custom Software Development Cost?

Truth be told, there’s no direct answer for how much custom software development costs. That’s because software costs vary considering the platform, technology stack, required skills, and deadlines.  The cost of custom software development may vary from $5,000 to $50,000 or more. It all depends on the software size, its functionalities, and whether you are getting an app, an ERP, or a SaaS product.

To get a better idea, you must understand:

  • Pricing models,
  • Type of custom software,
  • Custom software size, and
  • Influencing development factors

Now let’s take a closer look at these factors to see how they take a toll on custom software development costs.

Pricing Models for Custom Software Development Cost

Each client has specific requirements for their custom development projects and no two are the same in nature. That’s why companies have different pricing models to estimate custom software development costs. Below are the three main pricing models that are being used in the IT industry.

Pricing Models for Custom Software Development Cost

Fixed Price Model

The fixed price model is a standard approach where a predetermined budget is fixed for the entire project. The development company and the client agree upon it after considering the defined scope and requirements. The key characteristic of the fixed price model is that the price remains constant throughout the project duration.

The custom development cost is typically determined after considering factors such as project complexity and resources required. Furthermore, development effort and the expertise of the development team are measured.  The good thing is that regardless of any changes or additional requirements, the client won’t pay extra.

Pros of the Fixed Price Model

Predictability: With a fixed price, you have a clear understanding of the project cost upfront. This will provide an opportunity for better budget planning and investment costs.

Defined Scope: The fixed price model requires detailed project specifications right from the beginning. This can help you clearly outline deliverables while minimizing ambiguity about the project.

Reduced Risk: Since the price is fixed, the development company assumes the risk for any project delays. You won’t have to worry about unexpected challenges such as resource shortages.

Cons of Fixed Price Model

Limited Flexibility: Any changes or additions to the predetermined scope can result in additional costs. You’ll have to submit change requests which may require contract modifications.

Reduced Adaptability: The fixed price model may not be suitable for projects that have evolving requirements. Frequent adjustments in the custom software will leave you at the mercy of the development company.

Time and Materials Model

In the time and materials model, the development company charges an hourly or daily rate for the team's efforts. In short, the development cost is based on the actual time and resources invested in the project. Unlike the fixed price model, this model offers more flexibility and accommodates changes in project requirements.

So, you’ll only be paying for the resources that have been used during the development. This includes time spent developing the software, software licenses, and or hardware requirements.

Pros of Time and Materials Model

Flexibility: The time and materials model allows for adjustments and additions to the project scope as needed. This makes it a suitable approach for projects with evolving development requirements.

Transparency: Clients have visibility into the development process as they are billed periodically. Since they are charged based on hours worked and resources utilized, they’ll know what’s happening.

Agile Approach: This model aligns well with agile methodologies, as it enables iterative development. You can make changes and ask for improvements as per your business needs.

Cons of Time and Materials Model

Cost Overruns: Without careful monitoring, the project costs can exceed the initial estimates. If the scope continuously expands, you’ll have to manage additional costs.

Uncertainty: Since the final cost is not fixed, it may be challenging to determine the exact budget. The development company may start charging you extra for even making slight changes to your project.

Dedicated Teams Model

This is a collaboration model where the development company provides a dedicated team of professionals. You’ll get a skilled team and dedicated resources exclusively for your custom software project. The model establishes a long-term partnership between the client and the development company. The client pays a monthly fee based on the team's size and expertise while the company handles all the development.

The dedicated teams model is suitable for long-term projects that require ongoing development and maintenance.

In the “Dedicated Teams Model,” the client has full control and direct involvement in custom development. However, the involvement may vary depending on whether you are doing staff augmentation or managed services. Nonetheless, the external team will become an extension of your in-house development department. They’ll work closely with your stakeholders, following your processes and guidelines to align with your project goals.

The composition and size of the dedicated team are typically customized. Thus, you can hire skilled resources for various roles in custom software development. And the cost of custom development will be based on time and resources.

Pros of the Dedicated Teams Model

 Extended Collaboration: The dedicated team becomes an extension of your in-house team. You can benefit from their skills in promoting seamless communication, collaboration, and knowledge sharing.

Resource Availability: With a dedicated team, skilled resources are allocated solely to your project. So, you can ensure their availability and focus throughout the development cycle.

Scalability: Dedicated Teams Model offers scalability, allowing you to adjust the team size and composition. Based on your development project requirements, you can hire or release resources

Cons of Dedicated Teams Model

Higher Cost: The dedicated team model can be more expensive compared to other models. This is because you’ll be paying for a dedicated group of professionals for their skills and time.

Management Responsibility: Since you’ll have a dedicated team, you’ll require project management and oversight. Without proper management, it’ll be hard to ensure effective coordination and productivity.

Fixed Price Time and Materials Dedicated Teams
Common Project Type Cloning or making a copy (as per demand) Custom development Completely custom on a platform
Turnaround Time Within weeks Weeks to months Months (Continuous)
Requirements Pre-defined flexible Continuously evolves
Flexibility No Somewhat Yes
Communication Low Frequent Regular (sometimes daily)
Project Control Less Somewhat Complete
Project Duration Short term Mid-long term Long term
Pricing Low (Fixed) Medium (Hourly or Daily basis) High (may increase depending on software)
Suitable For Small companies SMBs Enterprises

Average Cost of Custom Software Development

Custom software development pricing can range from $10,000 to over $1 million depending on the project. While the average cost of custom software development falls between $50,000 and $250,000. However, bear in mind that there’s no actual answer to this question and these figures are approximate.

Below are average industry prices for different types of custom software.

Custom Web Development: $10,000 to $50,000

eCommerce Solution: $10,000 to $500,000

Mobile App: $10,000 to $200,000

CMS Development: $10,000 to $50,000

SaaS Product: $50,000 to $200,000

CRM Software Development: $10,000 to $50,000

But there are several factors that contribute to variations in costs within the average range.

Complexity and Scope

One of the primary factors contributing to variations in costs is project complexity and scope. Complex projects that require extensive functionality, integrations with other systems, or sophisticated algorithms will generally have higher costs. Similarly, projects that involve multiple modules, extensive user interfaces, and backend systems will require more development effort.

Location and Labor

The location of the development team is another crucial factor. Hiring developers from regions with lower labor costs, such as Eastern Europe or Southeast Asia, can significantly reduce expenses.

Team Member Cost in The US (Hourly) Cost in India/PAK (Hourly)
Front-end Software Developer $65 $30-$35
Full-stack Software Developer $70 $40-$45
QA Engineer $60 $35-$40
UI/UX Designer $60 $40-$45
Project Manager $86 $50-$55

However, don’t forget to consider the potential trade-offs in terms of communication and time zone differences. You should pay attention to cultural understanding when working with offshore teams.

Level of Customization

The level of customization that you require for your custom software will also affect costs. Custom software development is all about tailoring the solution to meet specific business needs. And the more unique and specialized the requirements, the higher the costs. Off-the-shelf solutions or platforms that require minimal customization will generally be more cost-effective.

Maintenance and Management

Lastly, you should also factor in project management, quality assurance, and ongoing maintenance into the overall cost estimation. These activities are essential for successful software development and ensure the reliability of the solution. 

Custom Software Development Cost by Company Size

Depending on the company, the custom software development costs change significantly. Below is an estimation of how and why the price rate moves upward from startups to large enterprises.

For Startup

Startups typically consist of a small team, having lower budgets and ever-changing demands. Additionally, they are always eager to hit the market with their products to capitalize on the opportunities. Since startups are always looking to cut expenses, it’s hard to assess their average costs.

The custom development cost for startups depends on their unique demands and turnaround time. Normally, custom software for a startup may cost a few hundred to a few thousand dollars.

For Small and Medium Enterprises

SMBs may have variable requirements from building a custom website to a dedicated application. Since they offer a wider range of services and thus, require a structured project management approach. Most of the time they are in need of SaaS products or require customizations. They may require a dedicated team and the average custom software development cost for SMBs can go beyond $100,000.

For Enterprise Software Project

When it comes to enterprise projects, the costs of custom development are much higher. That’s because they want to build software on a basic framework and have specific needs.

An enterprise software project is crucial due to data integrity, logging increase, error handling, and data security. Since enterprise compliance obligations are crucial for enterprises, the development company has to pay close attention. The average cost of custom development for enterprises varies drastically as they tend to pay on an hourly basis.

With a 30-50 dollar hourly rate, the custom development cost can touch $500,000 or more. The cost may go higher depending on the duration, which can be 6 months or above.

Small Project SMBs Project Enterprise Project
Project Manager Yes Yes Yes
Business Analyst Yes Yes
Developer Yes Several Several
QA Engineer Yes Two Several
UI/UX Designer No May be Several
Database Engineer No May be Several

Average Custom Software Development Cost by Type

The average cost of custom software development also varies depending on the type of software. Below is a breakdown of average costs for different types of custom software projects:

Basic Web Application

A basic web application typically involves developing a web-based system with limited functionalities. The cost for such projects can range from $5,000 to $30,000, depending on the complexity. The cost will vary based on the design, the number of pages, and the required integrations.

Custom Mobile Application

Mobile apps are in demand and as per Statistica, It’ll become a $167 billion market in 2023. The average custom mobile application cost varies depending on the platform (iOS, Android, or both). Other factors include app complexity, functionalities, desired features, industry, and development rates.

A simple mobile app typically includes basic functionalities such as user registration, basic data display, and simple interactions. Therefore, the cost for a simple app can range from $20,000 to $50,000. Whereas a moderately complex mobile app includes features like user authentication, data synchronization, API integrations, and push notifications. Such advanced interactions will raise the cost from $50,000 to $150,000.

Highly complex mobile apps involve advanced features, intricate designs, and extensive back-end systems, real-time data processing. They also include complex algorithms and require custom integrations that increase the cost from $150,000 to more.

Custom E-commerce Website

Developing an e-commerce website involves building an online store with custom features. Such a website needs features like product listings, shopping cart functionality, payment gateways, and order management systems. The average cost for an e-commerce website can range from $10,000 to $50,000 or more.

The eCommerce development cost can increase or decrease depending on the number of products, customization needs, and integration requirements.

Enterprise Software Solution

enterprise software solution

Enterprise software solutions are complex systems developed for large organizations to handle specific business processes. Their cost can vary widely depending on the complexity and scale of the system. Such projects often start in the range of $50,000 to $100,000 but can increase drastically.

Custom CRM or ERP Software

Developing a custom Customer Relationship Management (CRM) or Enterprise Resource Planning (ERP) software solution is difficult. The process involves building a tailored system to manage and streamline business operations. Therefore, the cost for custom CRM or ERP software typically starts from $50,000. However, there’s no upper limit as it can exceed several hundred thousand dollars, depending on the complexity.

Factors Influencing Custom Software Development Costs

Understanding the key factors that influence the cost of custom software development is essential for effective budgeting. This is crucial, especially in terms of business planning before embarking on such projects. A good understanding can help you make informed decisions and optimize your investments.

I. Project Complexity

The complexity of software development is synonymous with more logic, more coding, and more time investment in testing. And we don’t have to tell you that the costs will go higher with the project's complexity. Normally, the complexity of custom software development is assessed based on the software size and integration.

The size of the Software directly impacts the development pricing. With size, increases the number of features and functionalities of software, and hence, the development costs. A large software not only requires more time but also more coding, effort, and resources.

Similarly, the complexity and cost of development will increase if your custom software needs to integrate with third-party services. Integration with existing systems often requires additional time for analysis, development, and testing. This is necessary to ensure seamless connectivity and data exchange for a long time.

II. Functionality Requirements

It’s obvious, the desired functionalities of custom software significantly impact its cost. The following aspects come under the functionality requirements:

Complexity of Features

Highly complex features, such as advanced algorithms or real-time data processing, require specialized skills. Expert resources will charge more to build complex software as it requires more effort and time.

User Interface (UI) and User Experience (UX)

A sophisticated and intuitive UI/UX design enhances user satisfaction but also adds to the cost. Customizing the UI/UX to ensure responsiveness across different devices requires extensive usability testing. This means better coding and more resources which will further increase the costs.

Customization and Personalization

A good software development company knows how to develop software for specific needs. But if you are asking them to accommodate specific business requirements or individual user preferences, you’ll have to pay extra. After all, you are asking them to put in additional development effort.

III. Technology Stack

In case you aren’t aware, technology stack means programming languages, frameworks, and databases. The choice of your technology stack directly affects the development cost in multiple ways.

Technology Stack

Skill Availability

Technologies with a larger talent pool are generally more cost-effective. Whereas rarer or niche technologies may require higher development costs due to increased competition for resources.

Licensing and Infrastructure

Certain technologies may require licenses or subscriptions, adding to the overall cost. Additionally, the infrastructure required for hosting the software can vary in cost, depending on the chosen technology stack. You’ll be paying less for open-source software and may have to pay a premium for others.

Scalability and Future Maintenance

The scalability and maintainability of the chosen technology stack impact long-term costs. This means your custom software development cost will be higher if you are asking the vendor to maintain it. Since they’ll have to dedicate resources and cater to your needs, they’ll charge higher.

IV. Integration Needs

Your software may need integration with payment gateways, CRM platforms, or third-party APIs. Custom software integration with external systems affects development costs in several ways.

Complexity of Integration

Depending on the third-party software, the integration may take a few minutes to weeks. Well-documented and widely adopted APIs require less effort, while proprietary APIs require effort. The development team may have to work hard on the user interface, scalability, or API key management.

Data Migration and Transformation

Integrating with existing systems means data migration and transformation of necessary information. Depending on the software size and industry, this can be a hectic, time-consuming process. Extra effort and time in data migration will ultimately add to the overall cost of development.

Testing and Quality Assurance

Integration requires thorough testing to ensure data consistency, security, and reliability. The overall project cost may increase if it requires rigorous testing efforts, including unit testing, integration testing, and end-to-end testing.

Tips for Cost Optimization

It’s often hard to keep track of expenses when you are outsourcing. Follow the below tips to reduce your custom software development costs in the long run.

Prioritize Software Requirements

The first step is to identify and prioritize the must-have features for your custom software. You should focus on core functionalities and essential user requirements first.  Consider adding additional features in later development phases to control costs and minimize delays.

Also, clearly define and document your project requirements to minimize scope creep and unnecessary revisions. Enlisting detailed specifications help developers understand your needs accurately, reducing the chances of rework and additional costs.

Follow Agile Development Approach

It’s time to embrace an agile development methodology that promotes iterative development and feedback cycles. Doing so will ensure early identification of issues and course corrections. This will reduce the risk of costly rework and improve the ability to adapt to changing requirements.

Select the Right Technology Stack

Choosing the appropriate technology stack based on your project requirements is the key to cost-effectiveness. When you opt for well-established and widely used technologies, I’ll ensure access to a larger talent pool. This means lower development costs and ongoing community support for your custom software.

Choose the Cross-Platform Development

If your application needs to support multiple platforms (e.g., iOS and Android), consider cross-platform development. Such frameworks will minimize development efforts as well as time and costs. Cross-platform frameworks allow you to build a single codebase that can be deployed on multiple platforms.

Focus on Ongoing Maintenance Planning

Don’t forget to consider the costs of ongoing maintenance and support when budgeting for custom software development. To ensure the usability of your software application, you’ll need regular updates, bug fixes, security patches, and compatibility updates. These are ongoing works that are essential for the long-term success of your software.

On the other hand, development maintenance can increase the overall custom software costs. So, you should plan ahead and add to the contract if you can.

Consider Outsourcing or Nearshoring

If the software development costs are higher in your area, explore the option of outsourcing. The best way is nearshoring to leverage custom cost advantages without compromising quality. Working with development teams in regions with lower labor costs such as Pakistan or India is a good idea. This way you can lower the cost of custom software development while maintaining high standards of expertise.

Do Continuous Evaluation and Optimization

It’s crucial that you regularly evaluate and optimize your software development process. While doing so, identify areas for improvement and try learning from previous projects. With careful evaluation, you can enhance the efficiency, productivity, and cost-effectiveness of your custom development project.

Ensure Effective Collaboration

Lastly, try fostering clear and open communication with the development team to ensure alignment. This will help you minimize misunderstandings and you’ll be able to promptly address any issues. Above all, efficient collaboration and regular status updates can prevent costly delays and rework.


Navigating the realm of custom software development costs can be a daunting task. As we conclude this journey through the intricacies of custom software development costs, one thing becomes abundantly clear: there is no one-size-fits-all answer. The average cost range of $50,000 to $250,000 serves as a starting point. But it is merely a compass in the vast sea of possibilities.

shopdev can provide you with custom software solutions for your business at affordable rates. We can design and build best-in-class digital products as per your preferences and client needs. 

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What is Lean Software Development and how does it work?
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Lean Software Development (LSD) is an agile methodology that aims to minimize development time and resource usage while eliminating waste, delivering only what the product truly requires. The Lean approach is often associated with the Minimum Viable Product (MVP) strategy. In this strategy, a team releases the most essential version of their product to the market. 

Subsequently, the team collects feedback from consumers to understand their preferences, dislikes, and desired additions. Based on this feedback, they iterate and refine the product.

In this blog, we will explore the principles, practices, and benefits of Lean Software Development, as well as how to implement it successfully.

History of Lean Software Development (LSD)

Lean Software Development (LSD) draws its philosophy from the manufacturing industry, where the concept of lean principles was pioneered to optimize production and assembly lines, reducing waste and maximizing consumer value. 

Originally known as the Toyota Production System, Toyota developed it in the mid-twentieth century to streamline automobile production and minimize the wastage of time and resources. Over time, this approach was adopted by various manufacturing firms across industries and adapted into what we now know as Lean. 

In 2003, the concept made its debut in the world of software development with the release of the now-famous book, "Lean Software Development."

7 Core Principles of Lean Software Development

The principles of the lean development approach can be applied to any IT environment to improve programming methods. 

The practice is founded on 7 fundamental principles:

  • Waste Elimination
  • Amplifying Learning
  • Late Decision Making
  • Fast Delivery
  • Team Empowerment
  • Built-in Integrity
  • View Applications as a Whole

Waste is defined as everything that has the potential to degrade code quality, increase development time and effort, or decrease provided business value. It could be in the form of redundant code or functionality, programming delays, unclear requirements, or insufficient testing. Lean development focuses on removing these impediments, mastering essential technology, and developing an understanding of the user's true needs.

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Additionally, by deferring judgments until the last minute, the cost of change remains significantly lower. Iterative development is used to produce new applications or updates rapidly. Software is designed with integrity to ensure that the architecture and system components work effectively together. Organizations adopt lean development techniques to ensure continual improvement due to the rapid implementation of changes.

Waste Elimination

Project managers have regular meetings to discover and reduce waste, such as redundant code, process delays, ineffective communication, quality issues, data duplication, and more tasks in the log than accomplished. This enables team members to identify flaws and suggest adjustments for the following turn.

Enhance Education

Learning is enhanced through extensive code review and cross-team meetings. Additionally, paired programming ensures that a single engineer does not collect specific knowledge when writing a particular piece of code.

Delay Commitments

In traditional project management, this frequently occurs when you develop an application and discover that it is entirely unsuitable for the market. The LSD approach foresees this danger and allows improvement by deferring irreversible judgments until all experiments are completed. This methodology always flexibly builds software, allowing for the incorporation of new knowledge and the ability of engineers to make changes.

Fast Delivery

Previously, long-term planning was considered critical to corporate success. Still, it has been shown that engineers spend excessive time developing sophisticated systems with undesirable features over time. Thus, they devised an MVP method, which entailed rapidly developing products with limited functionality and launching them to market to gauge reaction. This technique enables them to improve the product based on user feedback.

Team Empowerment

LSD is more concerned with empowering team members than with dominating them. Establishing a collaborative environment maintains a great balance when faced with tight deadlines and an enormous workload. This technique becomes critical when new members join an established team.

Built-in Integrity

LSD is all about minimizing waste while maintaining a focus on quality. Developers frequently use test-driven programming to validate their code before writing it. Additionally, the quality can be improved by receiving frequent input from team members and project managers.

View Applications as a Whole

Lean's approach enables managers to break down a problem into its constituent elements to optimize the team's workflow, foster team togetherness, and instill a sense of shared responsibility, all of which result in improved team performance.

The Advantages and Disadvantages of Lean Software Development

Advantages of Lean Software Development Disadvantages of Lean Software Development
1. Waste Reduction: Eliminates wasteful practices, leading to efficiency improvements and cost savings. 1. Resistance to Change: Implementation may face resistance from teams accustomed to traditional methods.
2. Customer-Centric: Focuses on delivering value to customers, resulting in more satisfied users. 2. Learning Curve: Requires teams to adapt to new principles and practices, which can take time.
3. Quality Enhancement: Emphasizes building quality into the development process, reducing defects and enhancing software reliability. 3. Initial Overhead: May require an initial investment in training and process adjustments.
4. Agile and Flexible: Allows for rapid adaptation to changing requirements and customer feedback. 4. Complexity Management: May struggle with handling highly complex projects or organizations.
5. Faster Time-to-Market: Frequent releases and iterations accelerate product delivery and market responsiveness. 5. Lack of Documentation: Lean development may prioritize working code over comprehensive documentation.
6. Continuous Improvement: Encourages a culture of continuous learning and improvement within teams. 6. Not Suitable for All Projects: May not be the best fit for all project types or industries.
7. Empowered Teams: Empowers cross-functional teams, boosting collaboration and innovation. 7. Requires Strong Leadership: Effective leadership is crucial for successful adoption and maintenance.
8. Cost Savings: Reduced waste and optimized processes often result in cost savings over time. 8. Limited Predictability: Predicting project outcomes can be more challenging due to its adaptive nature.

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What is the Difference Between Lean and Agile Development?

Agile and Lean development share common principles, often emphasizing their similarities more than their differences. In fact, they often coexist and are referred to together as Lean-Agile. However, there are subtle distinctions between the two methodologies.


Pace and Accountability: Both Lean and Agile place the product development team in control of the project's pace and make them ultimately accountable for product delivery. Agile teams typically achieve this through the sprint process, while Lean emphasizes optimizing the entire process.

Continuous Improvement: Lean's philosophy of "optimizing the entire" resonates with Agile's retrospective meetings, where teams review achievements and issues following a project's completion.

Key Differences:

Focus: Lean primarily centers on improving processes, while Agile concentrates on enhancing products. Agile methodologies aim to create products that meet consumer needs and expectations, with Lean being one of the approaches to achieve this objective.

Frameworks: Lean is often discussed in conjunction with Agile frameworks like Scrum and Kanban. The Agile approach, on the other hand, is detailed in the Agile Manifesto, which outlines its core values and principles, guiding various Agile frameworks.

Lean Software Development Best Practices

Value Stream Mapping

Value Stream Mapping is a technique used to visualize the entire software development process. By identifying bottlenecks and inefficiencies, teams can make targeted improvements.


Kanban is a visual workflow management tool that helps teams visualize their work and limit work in progress. It promotes a smooth and efficient development process.

Continuous Integration

Continuous Integration involves regularly merging code changes into a shared repository. This practice ensures that code is constantly tested and integrated, reducing the risk of integration issues.

Test-Driven Development (TDD)

TDD is a practice where developers write tests before writing the code. This approach ensures that the software functions as intended and reduces the likelihood of bugs.

Continuous Delivery

Continuous Delivery involves automating the deployment process, allowing for frequent, reliable releases. This practice accelerates the delivery of new features to users.

Customer Feedback Loops

Lean Software Development emphasizes regular feedback from customers. By involving users throughout the development process, teams can make informed decisions and create software that truly meets their needs.

Benefits of Implementing Lean Software Development

The adoption of Lean Software Development offers numerous benefits, including:

Increased Efficiency: By eliminating waste and optimizing processes, teams can work more efficiently.

Reduced Costs: Waste reduction leads to cost savings in development and maintenance.

Enhanced Product Quality: The focus on quality from the start results in higher-quality software.

Faster Time-to-Market: Rapid delivery of features and updates keeps the software competitive.

Steps to Implement Lean Software Development

Assessment: Begin by assessing your current processes and identifying areas where waste exists.

Training: Provide training and resources to educate your team about Lean principles and practices.

Pilot Projects: Start with small pilot projects to test Lean concepts and measure their impact.

Iterate and Improve: Continuously review and adapt your processes based on feedback and data.

Scale Up: As the benefits become evident, expand Lean practices to other teams and projects.

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Brand Examples of Implementing Lean Software Development

Lean Software Development principles have been successfully adopted by several organizations and projects. One prominent example that showcases the practical application of Lean Software Development is Spotify. This music streaming giant has effectively integrated Lean principles into its development processes, making it a noteworthy case study in the industry.

Spotify's Implementation of Lean Software Development

Spotify employs a scaled Agile framework that incorporates Lean practices into its software development methodologies. Here's how Spotify has embraced Lean Software Development:

Squad Model: Spotify organizes its development teams into autonomous squads, each responsible for specific features or aspects of the product. This decentralized structure aligns with the Lean principle of team empowerment.

Iterative Development: Similar to Lean's focus on iterative and incremental development, Spotify encourages squads to work in short cycles, frequently releasing new features and updates. This approach enables them to respond quickly to user feedback and changing market demands.

Continuous Improvement: Spotify fosters a culture of continuous improvement and learning. Squads regularly engage in retrospectives to assess their work, identify areas for enhancement, and implement changes, aligning with Lean's emphasis on continuous improvement.

Customer-Centric Approach: Lean Software Development places a strong emphasis on delivering value to customers. Spotify uses Lean principles to ensure that their product aligns with user needs and preferences. Regular user feedback and data analysis inform their development decisions.

Waste Reduction: Lean aims to eliminate waste in processes. Spotify incorporates Lean thinking to streamline workflows and eliminate unnecessary steps in their development pipeline, resulting in more efficient software development.

By adopting Lean Software Development principles, Spotify has managed to maintain a competitive edge in the music streaming industry. Their agile and customer-centric approach, coupled with a commitment to continuous improvement, exemplifies the successful implementation of Lean principles in a real-world context.


Lean Software Development is a proven methodology for creating high-quality software efficiently. By embracing its core principles and practices, organizations can streamline their development processes, reduce waste, and deliver software that meets customer needs. The journey to Lean Software Development may have challenges, but the rewards in terms of efficiency, cost savings, and product quality make it a path worth exploring.

Software Development
How to Calculate ROI for Custom Software Development Projects
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Are you a decision-maker at your organization?

Then you must be busy figuring out ways to make your company’s investments worthwhile. 

While custom software solutions provide the best ways to extract maximum business potential, measuring ROI in software development can be quite complex. In today’s competitive business landscape, you can lose millions due to inefficient software architecture, which makes cost-effectiveness necessary. 

Calculating the ROI for software projects is crucial to making informed business decisions. The metric provides greater clarity to business owners and stakeholders on the profitability of custom software solutions they invest in. The typical ROI for a software project is 20% or less, which is a little over the cost of capital.     

Why ROI Matters in Software Development

ROI calculation provides detailed insights into the capital invested by your company in a given project, team, or campaign.

When it comes to custom software development, the intention is to generate higher revenue and improve operational efficiency to get a competitive advantage. In this case, the ROI metric helps you understand whether the custom software project is indeed profitable or harmful for your company.

Regardless of the type of software you want for your company’s ecosystem, you need to determine whether it will be beneficial in the long run. Ideally, the software must work efficiently even when your business grows to new industry verticals. Apart from identifying how much profit your company can make by using a particular custom software solution, ROI also points out any potential drawbacks. 

Why ROI Calculation is Essential in Software Development?

The calculation of ROI is the foundation of any custom software development project. It helps determine the actual value of your investment and whether your business can benefit from it. That being said, ROI calculation also helps your business beyond the numbers. 

Make smarter decisions with ROI insights

Startups and small businesses simply do not know whether they will make more money than they are investing in custom software development. Instead of relying on guesswork or assumptions, you can have real numbers in front of you by calculating ROI. When you have a clear understanding of the pros and cons of a custom software project, you can make confident and informed business decisions. 

Align software goals with business objectives

Apart from setting your project budgets and other financial planning, ROI also helps create clear business objectives. When you have a definitive roadmap for business growth, you can align your software goals and set clear requirements for custom software development. This means you can get the right functionality for your business and also allocate your resources more efficiently.

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Explore Software Types for ROI Calculation

Different types of businesses require different kinds of software to achieve maximum benefits. This means that the ways to calculate ROI for different types of businesses can vary depending on the goals, benefits, and costs involved. 

Business Process Software  

Custom software built to improve internal business operations and streamline workflow are quite common these days. The calculation of ROI for business process software involves the cost of implementation, software maintenance, and employee training on how to use the software. 

Since every business has its unique operations and workflows, there are several aspects to be considered while calculating the ROI. For instance, you need to factor in the time saved by incorporating a more efficient system, the improvement in sales, and the following:

  • The cost of operations is replaced by custom software
  • The efficiency of the custom software and how much it improves the operations
  • The percentage of increase in revenue and clients with the use of custom software
  • The improvement in sales efficiency
  • The ability to perform risk analysis and avoid problems with and without the software
  • The improvements in customer satisfaction and retention rate

You can get a cost estimate for the custom software you want to build, but what’s important is to consider what you will gain from your investment. You need to have all the numbers in front of you before deciding whether you should make the investment. Here’s how you can perform the calculations:

Problem Losses Cost/Gains Loss/Profit
Unused Productive Hours
3800 hrs/year
At a rate of $40/hour
due to lost productive hours
Business Process Software
Acquire 2 new clients
$200k per new client
Business growth of 20%
Average client revenue is 500k/year
Total clients are 50
Gain of productive hours +$152,000
Total Loss: -$152,000 Total Gain: +$909,000

Calculating ROI for software projects is never a straightforward process because it involves multiple aspects related to each business process. In some areas, you might need to cut down your budget and set a minimum threshold. Considering the increase in profits shown in the example above, you can easily jump to the conclusion that the ROI of your custom software development project will be high.

Commercial Software or SaaS 

For SaaS, or ‘software a service’ companies, the software itself is the revenue stream. It’s not hard to guess that calculating the ROI for SaaS projects will be much different compared to business process software. Here, ROI is measured using sales data in the numbers of MRR and ARR subscriptions. But there’s more to SaaS - as your clients who are using the SaaS product will be calculating their own ROI as end-users. 

That being said, in order to determine the ROI for SaaS projects, you need to consider various factors apart from the ones seen previously. One of these factors is the trading time of the SaaS company because they often need a significant amount of capital, especially in their intial days. An example of ROI in such companies is seen in tech companies offering project management solutions. These SaaS companies calculate ROI by putting subscription profits against the cost of the software project and its implementation.

At this point you might be wondering about the metrics for measuring ROI in SaaS projects. Here are the factors you need to consider, with the first one being the most important if you are a SaaS startup:

  • Cashflow
  • Monthly customer churn rate
  • Cost per client acquisition
  • Client LTV

Calculating ROI for SaaS companies involves identifying your break-even point. You need to determine how many customers you should have each month in order to balance your expenses and revenue. For companies selling regular software, the break-even point is acheived by onboarding upwards of 500, and ideally above 1000 customers.

A Step-by-Step Guide to Calculate ROI for Software Development Projects

Gather Investment Data

The first and most important part of calculating the ROI of custom software projects is defining the costs. You need to break down the cost of each step of the project, including design, development, deployment, and maintenance. Then, you need to sum up the cost associated with each step, which will be the cost of investment for your software project. Apart from the development costs, the investment also includes hardware, employee training, and annual operational costs.

Identify Returns

Once the investments part is settled, the next step is to determine the amount in savings and profits that your software project will provide. In the beginning of your ROI calculation, you will find it difficult to estimate the returns. For this reason, most companies are forced to use estimates in place of true values. You can create estimates using similar projects involving software that are currently in use, and identify whether they improve efficiency and reduce errors. Most importantly, the software must help improve sales and profitability.

Quantify Returns

Here’s the tricky part. You need to ensure that all your software development project capital is decided while staying within the defined budget. For this purpose, the resources must be allocated efficiently for maximum returns. For tangible benefits, you need to quantify the financial gains, such as increases in sales or savings. For intangible benefits, you need to identify other advantages that are not directly linked to your finances. These include enhanced user experience and user ratings, feedback, and Google rankings.

Calculate ROI      

The ROI (return on investment) of your custom software development project shows you how much revenue you have generated for your investment. Calculating the ROI is your actual objective, and having a positive result here means that the project will most likely be a success. Here’s how to calculate ROI for software development project:

ROI % = Net Profit / Cost of Investment * 100%

To calculate the ROI using this formula, you need to have concrete values of investments and returns of your custom software project. 

For example:

If your Net Profit is 450,000

And your investment is 300,000

450,000 / 300,000 x 100% = 150% ROI

Your ROI is 150%

Interpretation and Analysis

Now that you have calculated your ROI, how will you know whether it is good enough for your business? To know this, you need to compare the value with industry benchmarks and the goals set by your company in its early stages. Your ROI shows you how the software project will impact your business as it factors in every small detail of the project. Assessing the ROI in the right way is crucial to understanding how you can maximize your profits and take your business to the next level.

Strategies to Maximize ROI in Software Projects

Efficient Project Planning

As we have seen, ROI in software development is dependent on various factors that often go unnoticed. However, leaving out any of these factors can have an unexpected impact on your business. So it’s important to plan your project effectively. You need to incorporate processes that make the project more efficient and feasible so that the ultimate goal of your company can be achieved.

Agile Development Practices

One of the ways to improve the efficiency of your software project is by choosing an agile methodology. This process of software development lowers your costs and increases the productivity of your teams. Not to forget, it also improves the ROI of your custom software project. 

Agile methodology is used by software developers to make the process smooth and bug-free. The resulting software is more adaptable as it is less costly to change features and release new updates with Agile.  

Here is why Agile is the way to go in software development:

  • You get more feedback during the development and have better chances of tailoring the software to your needs
  • The development takes less time and resources, which helps cut down your valuable investment
  • The flexibility of the Agile framework decreases individual workload and helps adopt a problem-solving approach
  • Higher customer satisfaction

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Effective Resource Allocation

No matter what the nature of your project, resource allocation is always a key aspect for maximizing ROI. In this step, you need to assign roles based on the experience and skillset of each individual involved in the project. Allocating the wrong resources to the wrong parts of the project often results in delays or even alters the direction of the project. You need to clearly define the goals, the scope, and the dependencies of the project. It’s also important to set priorities for each phase of the project based on the skills and availability of resources.

Continuous Improvement

Any project that comes at a standstill after its completion is bound to go useless after a given period of time. For this reason, your software project should undergo continuous improvement practices.. These include regular evaluation of the performance and making improvements where necessary. Examples of companies that have implemented these best practices to enhance ROI include Amazon, Netflix, and Microsoft.

Key Takeaways

Calculating the ROI for custom software projects may sound difficult for starters, but it is becoming increasingly important for businesses to thrive. Even if you do not have concrete values, you should still calculate ROI for your projects using estimates and have a clear understanding of the impact it will have on your business. That being said, it is important not to overestimate the benefits and underestimate the costs of the project.

Using the formula above within your pitch decks, you should have a much more informed conversation and an easier time convincing those on the fence that the investment will be worth it in the long run.

Software Development
Custom Software Maintenance: Keeping Your Solution Up-to-Date and Efficient
5 min read

The world as we know it today has evolved into a highly competitive place that does not accommodate slow-paced businesses. Establishing your presence has become more challenging than ever. Businesses are now expected to deliver top-notch services without sacrificing customer satisfaction. Thankfully, you can get customized software to suit your specific business needs and provide the best services in your niche.

Custom software provides the right functionality and evolves with the changing requirements of growing businesses. However, this is not achievable without proper custom software maintenance. Not only is maintenance an important part of the software development lifecycle, but it is also a continuous process that keeps your solution in its best shape. 

This blog dives deep into the process, the importance, and the benefits of custom software maintenance, as well as the right strategies to adopt. 

Why is Custom Software Maintenance Important?


Businesses opt for custom software applications to get the right functionality and to be able to offer the best services in their respective niche. While upholding unique business values, these applications provide organizations with the most convenient ways to go about day-to-day operations. 

With that being said, custom software are just like off-the-shelf software when it comes to bugs, defects, and run-time errors. In certain cases, these issues may even multiply over time. And that is when the importance of software maintenance shines through. 


Software maintenance covers all the measures taken to counter unexpected issues such as crashes and security concerns. By doing it right, developers can maintain the stability and usability of the application, ensuring that the business using it doesn’t have to face any downtime. 


If you dig deeper, custom software maintenance is the necessary fine-tuning you need to extract maximum performance from your solution. The process optimizes the code, enhances database queries, and fills in memory leaks. As a result, users get a highly responsive and seamless experience that provides businesses with the engagement they are looking for.

Types of Software Maintenance

Corrective Maintenance

Bugs and errors are a part of every software’s lifecycle. Corrective maintenance is the type of maintenance that addresses the issues that can affect the design, code, and logic of your application. When the software is in use, bug reports are automatically generated to allow quality assurance engineers to spot these problems. 

The goal of corrective maintenance is to identify and resolve these issues before users notice them. Understandably, this is important to avoid staining brand reputation by ensuring stability, security, and performance.

As the name suggests, corrective maintenance is about making the necessary changes within a given time frame. It comes under the category of urgent maintenance tasks and is mainly focused on low-priority issues in custom software development.

Adaptive Maintenance

Software applications are designed to be used on a wide range of platforms, but that is only made possible by performing adaptive maintenance. With customized software, you always need to be sure that your application will be able to adapt to changes in platforms and the introduction of new technologies. Thankfully, adaptive maintenance addresses this by modifying the software to fit in with new operating systems, third-party integrations, and even hardware.

Adaptive maintenance is typically carried out in tandem with corrective maintenance, allowing developers to update the system for new platforms while addressing bugs. Some bugs, such as speed issues and lags can be automatically fixed when the software is updated for a more advanced operating system. 

One of the advantages of adaptive maintenance is that it allows you to pinpoint software issues before they become critical and also helps reduce the number of code changes required. Rather than fixing bugs after they are discovered, you can use this approach to update the code beforehand. 

Perfective Maintenance

When developing customized software, users are normally concerned about the quality as compared to legacy software from trusted brands. With perfective maintenance, you can guarantee that the software will perform its intended functions without running into problems. The process covers the addition of new features, code optimizations, and UI and UX improvements. 

When it comes to enhancing the performance of your application, it's important to not only fix the bug but ensure that it does not generate again. Quality assurance teams need to be consistent in their practice to look for bugs as perfective maintenance requires attention to detail.

Perfective maintenance also includes the improvement, evolution, and introduction of features into your software application. Upon using the software, users often find something missing and also make suggestions for improvements. Here, perfective maintenance helps improve functionality and enhance user experience. 

Preventive Maintenance

With new technological developments coming every year, any software built today will go out of date in some time. To keep up with the times, software development teams need to perform preventive maintenance. This kind of maintenance covers all aspects related to the deterioration of a software solution as ages. Preventive software maintenance includes code optimization and thorough documentation to ensure long-term stability. 

By making your software more understandable and maintainable, you have better chances of improving engagement for businesses. For this reason, preventive maintenance is a must. You need to go beyond just fixing bugs and render your software future-proof. Considering the fast pace of technological evolution, the preventive maintenance process should ideally allow your software to work well in changing environments without deteriorating. Then there are the changing requirements of businesses and individual users. Preventive maintenance ensures that the software performs as intended and continues to be a secure and convenient solution in the years to come. 

Benefits of Regular Software Maintenance

There is a reason so many businesses are investing in custom software. However, the real purpose cannot be fulfilled without the guarantee of ongoing software maintenance. The benefits of custom software maintenance extend beyond resolving testing issues; they involve making meaningful changes that have a real impact. Here are some of the major benefits of regular software maintenance. 

Improved System Stability and Performance

With operating systems, hardware, and applications becoming more and more advanced, you need to be sure that your software is ready to change as required. Custom software maintenance allows you to keep your software updated and compatible as new operating environments are introduced to the world. 

If you perform regular maintenance, your software will be able to connect with a wider range of devices, versions of third-party applications, and other integrations. The benefits don’t stop there either, as users get to experience seamless transitions between pages and have no issues in terms of compatibility with upgrades and new releases.

Enhanced Security and Vulnerability Management

Apart from performing the intended functions, the software is also expected to be secure against cyber threats. No business would want to lose their data to malicious attackers and that is why software maintenance regularly includes security patches. 

As part of your maintenance practices, you are able to identify loopholes and vulnerabilities within your code. Following that, developers are able to make the necessary updates to the code and libraries to strengthen the software against threats. In case you miss out on security patches, your clients are always going to be at risk of serious data breaches. 

Cost Savings Compared to Reactive Fixes

When a user encounters a bug in your software, it means it's already too late to perform maintenance tasks and you have to resort to reactive fixes. Not only do reactive fixes cost more, but they are unplanned and mess up the entire schedule of development teams. Instead, the best practice is to implement plans for software maintenance beforehand. 

Performing software maintenance and identifying issues proactively allows you to bypass critical problems that can be very costly. If you keep an eye out for potential areas of improvement and optimize your software for performance and security, you are able to save valuable resources.

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Best Practices for Effective Custom Software Maintenance

Software maintenance is clearly an ongoing and never-ending process. As long as your software is being used, it is always going to need improvements and fixes here and there. Here’s what you need to know about effective custom software maintenance.

Regular Monitoring and Evaluation

Once your software is up and running, you need to constantly monitor and evaluate its performance. Checking whether the software works according to the client’s requirements allows you to pinpoint potential problems and fix them. Some of the important metrics to be monitored are system uptime, user feedback, and resource utilization. Apart from getting the maintenance process right, evaluating these aspects also helps you keep you make better decisions about new releases and improvements to your software.

Timely Updates and Patches

Coming back to the security aspect of the software, it's essential to keep sending out timely updates and patches to ensure that your application runs smoothly. Just like receiving updates on your smartphones, these maintenance tasks include bug fixes, performance improvements, and in some cases the addition of new features. But most importantly, they provide the security necessary to keep your application safe from cyber attacks. 

Proactive Issue Identification

Just like in any other IT-related system, software requires proactive issue identification to reveal some of the hidden errors. This is especially important because the identification of an issue is where you either get on the right track to improve the software or lose it all by misunderstanding what’s really happening. Your software maintenance plans must include regular testing and identification of even the smallest of errors so that the users do not face any downtime.

Documentation and Knowledge Management

Whether you consider software maintenance in specific, or software development as a whole, documentation is of utmost importance. Without documentation, you cannot keep track of anything and you never know what you’re working on. The best practice in this regard is to document every single change in code, architecture, and design so that it can be maintained and managed easily.

Implementing the Right Software Maintenance Strategy

Identification Any issues with the software must be identified either by a user or a quality assurance engineer.
Analysis The cost and feasibility of the identified problem must be analyzed along with insights from stakeholders.
Design The proposed software must be designed as agreed initially. This is to avoid additional costs due to changes in design.
Implementation Developers must work on the updates and bug fixes while sticking to the right design and functionality.
System Testing After the changes are made, developers must test the entire system thoroughly for its functionality and performance.
User Testing Users must also test the software after the said changes have been made and check for discrepancies before going live.
Deployment Upon successful testing, the software can be deployed for the public with the new updates.

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Challenges in Custom Software Maintenance

Dealing with legacy systems

One of the main challenges in custom software maintenance is getting around legacy code. These programs are outdated and often come in the way of newly updated code. The real issue arises due to the lack of proper documentation and testing of legacy systems, which puts developers in a tough spot with unpredictable compatibility issues.

Balancing maintenance with new feature development

Adding a new feature to your software is always a bit of a challenge as every new change connects with a lot of existing aspects. Developers often struggle to streamline the development of new features alongside maintenance tasks, as they need to think about the compatibility and integrations of the new feature but also consider the implications on the existing system. 

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Managing evolving user requirements

Another challenge that comes in the way of software maintenance is the changes in user expectations over time. This is because you can never measure or anticipate what the user may expect now and how their expectations will change in the future. It often happens that a user wants you to build the software to behave a certain way, but is not able to communicate what they expect. To ensure that user expectations are met, and you need to establish strong communication channels with them.

Future-Proofing Your Custom Software

Anticipating Future Technological Changes

When you’ve been in the field of software development for a considerable amount of time, you can somewhat guess what is to come. This is exactly what is required to develop a future-proof solution. Keeping in mind what the world is currently running on, and anticipating what it will need in the future, allows you to plan your software maintenance effectively. The end goal here is to keep the doors open for innovation and improvements. 

Designing software with scalability in mind

If you are incorporating all the right practices into your software development process, chances are high that it will be used for bigger purposes in the future. It is one thing to create a solution that gets the job done. But it's another thing to create a scalable solution. Once your customer bank grows and bigger businesses start searching for your software, it must be ready to take up the challenge. 

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Key Takeaways

Custom software maintenance is now becoming more important than ever, as user expectations are increasing and the competition between digital solutions catches on. The goal behind developing customized software is to achieve maximum performance and ROI. None of that can be achieved unless you keep your applications and web platforms up to date and maintain them well. So your best bet is to invest your time and resources in effective software maintenance processes.

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