Software design and development: How to calculate the budget?

Facing the estimation of custom software development requires a detailed understanding of all phases of the project and of the time needed to complete each activity in accordance with defined quality standards. This process involves financial considerations, legal aspects to the workforce, and many other interconnected variables.

The techniques and tools used for software estimation vary widely, and often involve the application of statistical methods, mathematical models, and comparative analysis with similar projects. Only through a rigorous and detailed approach is it possible to obtain reliable estimates, which constitute a fundamental pillar for the planning and overall success of the software development project.

Software development: When to request it?

A company should consider investing in software development when certain conditions are met. This process requires close collaboration between the development team and the company to define requirements, design, and implementation. Here are a few signs:

• Use temporary solutions: If employees find themselves managing too much documentation or alternative solutions, it may be necessary to request the design of their software to improve efficiency.
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• Difficulties in interpreting the data: if the company needs external experts to interpret the data, an adaptable software can simplify the analysis.
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• Remote data access: if you work with the solution remotely in your company, an adaptable software can guarantee security when accessing data.
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• Specific processes: if the company needs specific functions, and standard software cannot meet all the needs, investing in software development can be a solution.
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• Growing company: with business growth, it is essential to adapt or improve existing systems.

Software design and development: What questions to ask?

The optimal starting point for starting software development is a detailed meeting with stakeholders to analyze the product objectives, the problem it aims to solve, and the key requirements.

It's essential to know what to ask for a more accurate estimate of software development costs.

1. What are the problems that the application aims to solve?
   Answer: The application aims to solve problems of inefficiency in business processes, automating repetitive tasks and improving data management.
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2. ‍What solutions do you intend to adopt?
   Answer: We intend to develop a web application with an intuitive user interface and advanced functionality to meet the specific needs of the company.
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3. ‍What interactions are expected between the system under development and other systems?
   Answer: The system must integrate with existing customer management and cantability systems to allow for a seamless workflow.
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4. ‍Who are the intended users or customers for the application?
   Answer: Users are primarily employees, including managers, operational teams, and administrative departments. In addition, there may also be external customers with limited access to certain features of the application.
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5. ‍What are the requirements for possible integrations?
   Answer: Two-way integration with the customer management system is required to automatically update customer data and an API interface to allow access to authorized third parties.
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6. ‍What are the main requirements for UI/UX design?
   Answer: a modern and intuitive UI design is required, with a responsive layout that adapts to different screen sizes. A clean and professional interface with corporate colors and a logical organization of functionality is preferred.
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7. ‍What are the product's main competitive advantages?
   Answer: Key benefits include improved operational efficiency, easier access to business data, and an optimized user experience that reduces learning time and increases productivity.

How to determine the complexity of a development project

The main conclusions indicate that the cost of software design and development can vary significantly, with values that range on average in Italy from 5,000 euros to 500,000 euros, depending on the size and complexity of the project.

The number, type and complexity of the functionalities clearly influence the final cost of the product proportionately. However, numerous other factors affect the total calculation, including user experience (UX) and user interface (UI), business analysis, marketing (in the case of a product to be launched on the market), quality assurance (QA), and even the location of the IT vendor.

It's important to stress that it's not realistic to assign a fixed price to features and expect the same cost to apply to every project. Each case is unique and the cost of developing the application is closely related to its complexity. The more functionality that is implemented in the application, the more complex it becomes, thus requiring additional resources for development, testing and release.

Within the context of technical complexity, applications can be categorized into three main types:

1. Basic software (simple):
   a. They include a basic set of features with no integration of third-party services.
   b. They have an elementary design with a common interface.
   c. They are able to process small or medium amounts of data.
   d. The estimated development period is between 1 and 3 months.
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2. ‍Medium-complexity software:
   a. They include basic functionality integrated with additional features, such as payments, real-time chats, and analytics solutions.
   b. They present a responsive design with more sophisticated and effective visual interface elements.
   c. They handle medium or large amounts of data.
   d. The estimated development period is between 3 and 6 months.
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3. ‍Highly complex software:
   a. They offer a set of advanced features, such as video processing, synchronization, and several third-party integrations.
   b. They have an adaptive design with advanced interface elements, complex interactions and actual visual effects.
   c. They are able to handle large scale data with high presentations and capabilities.
   d. The estimated development period is more than 6 months.

How to estimate the size of the software

The estimation of the production and development of the software forms the basis for the prediction of costs or of any business case involving the functionality of the software. Applications can be categorized into different types based on their size, or scale of development:

1. Small software: refers to those applications characterized by limited complexity and functionality, with a relatively small code base. These programs tend to be simple and focused on a limited number of features.
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2. ‍Medium-sized software: includes apps that have a moderate level of complexity and functionality. These programs are more complex than small software and may involve multiple modules or components. They are designed to offer a wider range of functionality and often serve to support more complex business processes.
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3. ‍Large software: refers to extensive applications characterized by significant complexity, involving numerous interconnected modules, large databases and complex business logic. These systems are usually used in critical business environments and require very thorough planning, development, and maintenance.

The larger the application, the greater the number of resources required for development and management. As a result, the overall cost of the project increases in proportion to the size and complexity of the application. The determination of the size of the software can be carried out through various methods, including function points, story points, use case points, and other analytical approaches.

How to choose the distribution platform

In the context of creating an application such as Uber or Clubhouse, selecting the right distribution platform is of paramount importance. This decision forms the foundation for efficient deployment, scalability, and project performance.

The cost associated with distributing the software can vary greatly depending on the platform chosen. Therefore, it is essential to conduct a detailed analysis of the pricing details and terms offered by the different distribution platforms. It is also necessary to carefully consider the specific requirements of the software project, the expected usage models, as well as the scalability necessary to ensure adequate support for the increase in demand.

In addition to pricing, there are other important factors that may influence the overall cost of distributing the software:

• Pricing model: understand if it is a model based on subscription, consumption, or other types of pricing.
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• Use of resources: Evaluate the consumption of system resources, such as CPU, memory, and storage, based on the needs of the application.
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• Data storage and transfer: consider the costs associated with storing and transferring data to the distribution platform.
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• Support and Service Level Agreements (SLA): evaluate the levels of support offered and the associated SLAs to ensure a timely response if problems arise.
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• Additional services: review whether additional services are available, such as monitoring, security, or identity management services, and their associated costs.
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• Geographic location: take into account differences in distribution costs based on the geographical location of the servers and clients.
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• Contract terms and commitments: understand the contractual conditions, as well as any long-term commitments required by the distribution platform.

Software design and development: How does the quote change?

When requesting a quote for a customized software development project, it is essential to understand the different billing approaches and cost models offered by development companies. Two of the most common models for quotes are the body design and the Time&Material.

• Body design: in this model, the quote is based on an estimate of the total costs of the project, which is presented to the customer before the start of the work. The total amount is fixed and does not vary, regardless of the time actually spent or the resources used during the development of the software. This model offers greater certainty about costs, but it may not be the best choice if the project is subject to frequent changes or not fully defined at the beginning.
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• ‍Time&Material: In this approach, the customer pays for the time and resources actually spent developing the software. The costs are determined based on the hours worked and the materials used during the project. This model offers greater flexibility and adaptability to changes over the course of the project, allowing for additions or changes to the work in progress. However, it may be more difficult to predict the total costs of the project and more careful monitoring may be necessary to avoid financial surprises.

How to estimate the cost of software development

The most direct method for estimating the cost of a project is to apply the following formula:

Cost of project resources x Project duration = Total project cost

However, this simple equation does not take into account the complexity of the resources involved and their use over time. Many resources may play more than one role within the project and rarely work full time on it. For example, once a design professional, such as an architect or UI/UX expert, has completed their contribution, they may no longer need to stay on the project full time. Instead, it may only be required occasionally to verify that the coding meets design requirements or to make changes.

So why pay for a full-time team when resources aren't constantly working? The answer lies in two main considerations:

1. Cost proportional to the effort: The cost of the team is not based on the full-time work of each resource, but is calculated based on the percentage of each resource's contribution to the project. For example, the cost of a tester is calculated as a percentage of the total project.
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2. ‍Access to premium skills: by paying for a mixed team, you get access to a wide range of expertise without having to bear the full costs of each resource. This makes it possible to have highly qualified professionals available at a lower cost. Maintaining a dedicated project team is crucial to ensure efficiency and consistency in work progress. This allows you to avoid interruptions and slowdowns that could compromise the timely completion of the project. A well-coordinated and synchronized team ensures that the necessary resources are available when and where they are needed, thus optimizing the overall effectiveness of the project. To obtain a rough estimate of a team's costs, certain standard numbers are used, which represent a weighted average of resource costs based on their expected contribution to the project. These numbers are used as a starting point for a preliminary assessment, but it is important to consider that actual costs may vary based on different factors such as experience, role, size and position.

In addition to these factors, to estimate the costs for software design and development, it is necessary to go through other steps:

1. Map the software development lifecycle: it's crucial to have a clear understanding of all phases of the software development lifecycle. This project management framework ranges from initial planning, analysis and design, to implementation, testing and maintenance. The greater the level of detail on the activities, key roles and deliverables of each phase, the greater the accuracy will be in estimating the software development project.
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2. ‍Verification of project requirements: after defining the software development lifecycle, it is crucial to verify that the project requirements are in line with those established by the stakeholders or the customer. The clarity and completeness of the requirements directly affect the accuracy of the project estimate. Leaving out this step makes it almost impossible to make a precise prediction of the costs and the effort required.
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3. ‍Creating a work breakdown structure (WBS): once the activities have been outlined, it is essential to create a work breakdown structure (WBS) to identify each individual task and deliverable of the project. This tool helps to systematically collect all the steps necessary to reach the final deliverable, thus allowing a more precise estimate of time and costs.
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4. ‍Use of software estimation techniques: after gathering the necessary information, it's time to use a software estimation technique. The choice of technique depends on the software development methodology adopted for the project. Deepening the software estimation techniques allows you to obtain more accurate forecasts of the costs and efforts required for the project.

Software design and development: What are the cost factors?

In the process of estimating software development projects, numerous factors influence the overall cost.

In addition to the complexity of the project, other aspects can significantly determine the costs. The following are the main factors that may affect the cost of the software development project:

1. Research and planning: before starting development, it is necessary to conduct accurate research to precisely define the objectives of the project and the methods of development. Detailed planning involves a precise estimate of costs.
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2. ‍Technological choices: decisions regarding the technologies to be used may influence the overall cost of the project. It is important to assess the long-term costs associated with maintaining technologies and training personnel.
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3. ‍Complexity of the project: complex software projects require more resources and time for development. The complexity is reflected in coding, testing, security, and user interface design.
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4. ‍UI/UX requirements: user interface and user experience requirements can significantly influence costs. Designing the UI/UX requires additional time and resources, which must be considered when estimating costs.
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5. ‍Recruitment model: the choice of the personnel recruitment model, whether internal, freelance or through an outsourcing company, can impact the overall costs of the project.
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6. ‍Localization of the development team: in the case of outsourcing, the geographical location of the development team may affect the rates applied. It's important to carefully evaluate the cost-benefit ratio of different localization options.

How to avoid going over your available budget

Software development projects can be complex and expensive, so it's essential for companies to find ways to accurately estimate the project budget and prevent costs from being exceeded. To avoid such overruns, we recommend:

1. Align the scope of the project at an early stage: Changes to the scope of the project can quickly cause the budget to be exceeded. It is important to obtain approval from stakeholders and management on the scope of the project before development begins.
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2. ‍Consult with experienced vendors: software development companies can offer advice based on their extensive experience in the field, helping to formulate more accurate estimates for the project.
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3. ‍Plan for the unexpected: It is prudent to include reserves in the budget to deal with any unforeseen events, such as additional costs or unexpected delays in the project.
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4. ‍Define project milestones: dividing the project into smaller milestones and objectives allows a more accurate monitoring of progress and costs, facilitating possible updates to the estimate.
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5. ‍Monitor progress and costs: it is important to constantly monitor the progress of the project and the related costs to promptly identify any deviations from the budget budget.
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6. ‍Use proven development strategies: the adoption of development methodologies such as Agile, Scrum and DevOps can help increase the overall efficiency of the project and reduce the risks of exceeding the budget.

How to track software design and development costs

Cost tracking in software development turns out to be a crucial practice and can be simplified by considering the hourly rates of staff and the hours of work spent on each project activity. However, cost management becomes complex when staff are working on multiple projects at the same time. In these cases, relying on spreadsheets for manual monitoring becomes onerous, and completely neglecting time and cost tracking is a serious mistake.

To optimize the tracking of project time and costs and ensure accurate reporting, it is advisable to adopt a dedicated time tracking system. The choice of software is crucial, since it must not only meet the needs of resource tracking, but also ensure full compliance with the organization's internal processes. Using a time tracking system allows for more efficient resource management, greater cost transparency, and better analysis of project performance.

Conclusion

The correct assessment of costs in software design and development is essential for the success of the project. Asking the right questions helps to clearly define objectives and to effectively plan the development process.

Determining the complexity of the project and estimating the size of the software are fundamental steps to have a clear view of the work involved and the related costs. The choice of the distribution platform and the billing method directly influence financial planning and asset management.

These and all the other steps in this article will help design the quote for the software development project.

FAQ on software design and development

When should a company consider software design and development?

‍A company should invest in software design and development when it needs to streamline operations, handle specific processes, or requires remote data access and custom functionality that off-the-shelf software cannot provide.

How can you estimate the cost of software design and development?

‍The cost is influenced by project complexity, size, and the chosen development method. A detailed analysis of the software's lifecycle, scope, and required functionalities is crucial for accurate estimation.

What factors affect the complexity of software design and development?

‍Factors include the number and type of functionalities, UI/UX requirements, integration needs, and the technology stack used. Complexity directly impacts the time and cost of the project.

What questions should be asked before starting software design and development?

‍Key questions include identifying the problem the software will solve, understanding the necessary integrations, defining target users, and outlining UI/UX requirements.

How can companies avoid exceeding their software design and development budget?

‍To prevent budget overruns, align the project scope early, consult experienced vendors, set aside contingency funds, and use proven development strategies like Agile or Scrum.

What are the most common billing models in software design and development?

‍The two common models are "Body design," a fixed-cost approach, and "Time & Material," where costs are based on hours worked and materials used, offering more flexibility.

How do you choose the right platform for software distribution?

‍Consider factors like cost, scalability, resource usage, and the geographical location of servers. Analyzing these aspects ensures the platform aligns with project needs and budget.