Why an Estimate Is Not Equal to a Software Development Cost

  • Date Published
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When you’re asking the software development agency about the estimation you shouldn’t take this assumption as the total amount of money that will be spent on a project

The thing is – the first evaluation of the work going on before the discovery session is not the final price but it indicates the estimated cost of the project. Through this article, we would like to explain to you why the estimate is not equal to a software development cost, but only an assumption.

Syndicode’s team of dedicated engineers has been accumulating expertise in building custom software products and solutions. Our experience allows our full-stack engineers to tailor projects specifically for our clients and create digital products that fill their needs. And from our experience, we can say that…

When you ask a software development company for a quote – you get the estimation (not the final price)

If we talk about product development or hiring an extended team in Syndicode, this estimation includes:

  • Rates for a chosen specialists multiplied by hours on development (calculated approximately). That forms the engineer’s salary;
  • Office and hardware rent;
  • Taxes in Ukraine;
  • Profit margin.

Basically, by offering custom software development we can also mean:

  • Develop software from scratch
    (actually, that is exactly the same as custom software development);
  • Design IT infrastructure architecture;
  • Integrate into a currently running project
    (our experience allows our full-stack developers to jump in and help you despite the fact that we haven’t created the original version);
  • Run tests to assure the quality of a product;
  • Move legacy system to a new platform;
  • Provide maintenance.

Keep in mind, that custom software development is not cheap. You have to go through cost-benefit analysis to understand if the features you want to implement are really vital, and what they will bring to your business. But if you run a global enterprise, custom software development can eventually bring giant cost savings. In terms of use and costs, custom software development will always be more efficient for big companies and global businesses.

It’s Impossible to Figure out the Final Price in the Beginning

When the client comes with the idea, we have limited time to give out the estimation, and sometimes, the core functions which will take the most time to develop will be revealed only after the detailed discovery session. Sometimes the decisions on the technology do not come right away but need proper investigation and the potential use of innovations. So the final proposal might have different prices from what you’ve heard at the beginning. And this is normal as you’ll be informed about every decision and need. At least, we do so in Syndicode staying transparent about everything.

Here we will try to estimate the development timeframes depending on the digital products and different custom development according to Syndicode practice:

  • Ruby on Rails marketplace development ranges from 2000-3000 hours. MVP for marketplace takes from 1000 hours.
    Despite the fact we do websites, SaaS, mobile apps, it seems that Ruby on Rails marketplace development is our main expertise.
  • Ruby on Rails MVP development takes from 400 hours. As a startup, cost minimization is essential, as well as the minimum viable product (MVP). The MVP with Rails framework to be used for the web or mobile app can be developed faster.
  • Web app development (using any technology) is a complicated process and will take more than 1000 hours.
    Here in Syndicode, we use Ruby on Rails as our framework of choice. With the use of Ruby on Rails, the resulting web app has lower risks of hacking, data theft, and spying.
  • Mobile application development varies, so it will take more than 400 hours. When you have some figures about mobile app development stages duration, you can calculate an approximate time to develop your own mobile app depending on its complexity and features.
  • Website development starting from 200 hours using WordPress and 500 hours for the marketplace. We develop fully responsive static and dynamic websites with different types of content – from landing pages and blogs to e-commerce and video streaming.

What the Final Price Depends On

The final price depends on many factors, like:

  1. The number of iterations depends on the software development methodology. This basically means you are not restricted by ‘two fixing requests’ and then you get the product as it is without the right to change anything (even if you don’t like the final version). So it’s quite important to understand what methodology the company you have contracted with is using. We’re Agile and that means you have all the power to ask for changes and iterations if you think they’re needed. No extra money will be charged. At least, in Syndicode. By applying the Agile methodology, the project team has to go through a cycle and evaluate each iteration and find out what changes they need to apply to make a satisfactory end product. This model is the perfect choice for managers and team leaders.
  2. The tech stack behind the product.  For example, in many of our projects, we use Ruby on Rails. This great framework comes free of charge and consists of many outstanding libraries supporting almost every need the developer might have. But sometimes extra charges are coming with domain names, hosting, paid integrations and SaaS solutions. We consider every option for a project individually. We advise you the option – you decide to agree on it or not.
  3. The development timeline. For example, if you need the development to be done twice as fast as possible, you should understand, that we probably will need more people to complete it in time. That causes the rise of the spent costs.

What to Do If You Don’t Understand Tech Nuances and Can’t Tell Whether the Price Is Fair?

Our advice is that you can always search for software development rates online and check developers profiles on Upwork, Freelancer and so on. There you can even track the prices for completed projects and evaluate them. If you have doubts about the price you received, you can always ask to compare your product to the other product (you know the price of) and explain why it is so.

You can browse through Ruby on rails, SaaS, UX design and Web design projects we did to see the proficiency level and approach. We give our clients a premium level of support and not afraid to face the challenges.

Trustful software development providers will always explain to you all the nuances so you wouldn’t have any hesitations. Here there are points you need to take into account while choosing to work with a dedicated team of developers:

  • It is profitable to outsource your business to other countries where the taxes and salaries are lower.
  • Be prepared that it’s a time-consuming process as such partnership usually has a long-term ground.
  • Both sides need to ensure long-term guarantees. Signing an NDA, for example.
  • Sometimes it’s hard to predict the quality of the services so take time to research the market and evaluate the quality risks.

How Can You Save Money?

To save money when developing a software product:

  • Validate your business idea before starting the development. We also advise you to read our useful material about IT startup business plan. Figuring out how you want to find resources for your business, go and write all questions that you can be asked by potential investors. If you are going to use your own resources, you can share this plan with your team to help you get feedback.
  • It’s better to try an MVP first rather than spend all of your money (you bootstrapped) to something that will not take off. User research will be beneficial as never for such cases.
  • Hire developers in Ukraine. Hiring software developers in Ukraine will cost you much cheaper than hiring a specialist from the UK, the US or Australia. Why? Taxes, regulations and local level of expenses. Living in Ukraine will cost your developers less than living in western or central Europe. But the living conditions, food, infrastructure, and banking system are very good.
  • Always keep in touch with your dedicated engineers and ask them about possibilities to cut the current expenses without the impact on the software quality.  They know how.
  • Be a loyal client, who is ready to tell about your software development provider and recommend it. Because this is the best way to get a discount. And set a friendship.
  • Use innovations. Of course, we mean you should ask your development team to explore all the possible ways to make your product modern and top-notch. Users love being progressive, and if your product will make future closer – they’ll appreciate it.