In an increasingly digital business world, many companies are faced with the question: Is a tailor-made software solution worth the investment? At agsolutions, we have extensive experience in developing software products and understand the factors that influence costs. In this article, I will explain why costs can vary so much and what you should consider when planning a tailor-made software solution.
Why Custom Software?
Custom software, that is, tailor-made software, provides solutions that are perfectly tailored to the specific needs and workflows of your company. It is often a better choice when off-the-shelf software does not cover all the functions that are critical for your business, or when you want to stand out from the competition through specially adapted processes.
Factors Influencing the Costs of Custom Software
1. Scope of Functions and Complexity
The scope of desired functions is one of the biggest cost factors. A simple application for managing customer information costs less than a complex ERP solution that connects multiple departments and integrates various data sources.
2. Technologies and Platforms
The price also depends on the choice of technologies and platforms you want to support. A web application can typically be cheaper than separate developments for Android and iOS.
3. Development Time and Hourly Rates
When developing custom software, companies often face the choice between fixed-price projects and hourly billing. Both models have their pros and cons and are suitable for different types of projects.
Fixed-price projects offer the advantage that costs are set from the beginning, allowing for clear budget planning. They are sensible for smaller projects with well-defined scopes and fixed requirements. However, as complexity increases in larger projects, estimating the effort for the entire undertaking becomes more difficult and less accurate. Therefore, it is also possible to bundle smaller packages that include features of the entire scope, also known as milestones. The implementation of the individual packages can then be offered at a fixed price.
On the other hand, hourly billing offers more agility: changes and extensions can be implemented flexibly without having to conclude a new contract. This model is especially suitable for larger projects where requirements may change during development or where exact specifications become clearer during the project. However, costs here are less predictable as they directly depend on effort. The choice of the right model therefore heavily depends on project requirements and the predictability of functions.
Typically, software agencies or service providers in the German-speaking area with qualified experts and experienced developer teams charge an hourly rate of 120 to 200 euros.
4. Integration into Existing Systems
Integrating existing systems or transferring data from one platform to a new one can entail additional effort. Each interface requires its own adjustments and tests to ensure seamless integration.
5. Design and User Experience (UX/UI)
A user-friendly design is crucial for the acceptance of the software. Extensive design and usability testing is time-consuming and can increase costs. Our designers and developers work closely together to ensure that the product not only works but is also intuitive and appealing.
6. Operation, Maintenance, and Further Development
An often underestimated factor is the ongoing costs of operation, maintenance, bug fixes, and adjustments to new system requirements. Connected digital products typically do not run without the right infrastructure. For example, a web application requires one or more servers to function. Depending on the requirements, fixed costs arise for operating the product. Products that require elaborate infrastructure or regular maintenance can incur higher fixed costs. Even after the initial development is complete, we recommend budgeting for operation and future adjustments.
Sample Cost Ranges for Custom Software
To give you a rough orientation, here are typical cost ranges:
Small app or simple web application: 5,000–20,000 euros
Medium-sized enterprise solution (e.g. CRM or ERP): 20,000–150,000 euros
Complex enterprise software (e.g. with comprehensive data integration and specific security requirements): 150,000–500,000 euros and more
Is Custom Software Worth the Investment?
The decision for custom software depends on what requirements you have and how much your workflows would benefit from a tailor-made solution. While the development costs may seem higher than with off-the-shelf software, the expenses often pay off quickly due to the individual adaptability, efficiency gains, and the competitive advantage you gain.
Our tip: Let our experienced team advise you and define your requirements as concretely as possible to make an informed decision.
A Simplified Calculation Example
Custom Software
A client commissions custom software at an hourly rate of 120 euros and a total time commitment of 400 hours.
This results in project costs of 48,000 euros.
Standard Software Subscription Model
A client pays for standard software 29 euros per user monthly. There are 40 active users and the duration is 48 months.
This results in license costs of 55,680 euros.
Conclusion
Tailor-made software development is a forward-looking investment for your company. It allows developing solutions that are precisely tailored to your requirements. Although initial costs may seem high, this investment pays off in the long run through significant added value. Well-designed software optimizes your business processes, increases efficiency, and gives you a decisive competitive advantage.
At agsolutions, we accompany you every step of the way – from needs analysis to technical implementation and long-term maintenance. Together, we develop a solution that optimally fits your budget and your business goals.
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