How Much Does Developing Software Cost in 2022?
Developing software is now commonplace for businesses of every size basically everywhere. However, the prices for developing vary wildly and it is hard to know when something is too cheap to be trustworthy versus overpriced. Here, I try to set a few rules determining how much software should cost to develop and maintain.
The Value of Software
Before discussing the cost of developing software, it is reasonable to discuss its value. The value of a software can usually be measured as the cost-reduction, productivity (and therefore revenue) increase and risk-reduction that its existence brings to a company. Let’s consider three examples below.
1 — Cost Reduction
A last mile delivery operation with 100 vehicles currently creates their routes manually because off-the-shelf logistics software does not work for their particular use cases. Management decides to commission the development of a custom routing application.
A few months after the new software went online, they calculated that the new software reduced the average driven mileage by 5% resulting in a cost savings in fuel and maintenance of approximately $100 thousand annually.
The value this software brings this company is very easy to price given it has a…
