Delivering a high quality product within budget is one of the biggest challenges in software development. There are many reasons for a project to go over budget, and many ways to avoid it. However, it is important to understand that not all of these practices are efficient, and some may actually cost more.

In this article, we will tell you how to reduce software development costs without compromising the quality of the finished product. We have tested all these recommendations with our own experience and can assure you that they really work.

Quick Facts & Stats

  • The average software development project takes 4.5 months to build and costs $36,000. 23% of projects cost over $60,000 to build.
  • The industry average accepted cost to maintain software is roughly 15-20% of its original development cost.
  • Almost one in four companies prefer to choose software development outsourcing services for their projects. The main reasons are cost reduction, flexibility, faster time-to-market and a large pool of talent.
  • 46.20% of development firms stated that they offer basic software development for under $20,000 (
  • The U.S. custom software development market will be worth $8.3 billion in 2021. It is projected to have a CAGR of 19.4% between 2022 and 2030.

Define Clear Project Requirements

If you have a document describing your goals, requirements, and product functional capabilities (Software Requirements Specification, SRS), you will manage to get the most accurate forecast describing work duration and cost. It is an essential point either for in-house or outsourced development.

This approach helps developers avoid many misunderstandings and confusion in the tasks, build a clear project roadmap, and make communication between customers and developers more productive. As a result, the final software development budget will feature the closest possible figures to the ones you have planned.

Ensure Good Planning (Project Roadmap)

You have to plan everything related to working on the project from the beginning and invest funds in development after that. This way, you will manage to clearly understand where the money goes, and your expenses will be targeted to the utmost.

To plan the work on the project, you first need to comprehend what business objectives the product-to-be must reach. Based on the conclusions, you can form a list of the required functions and divide the implementation work into a schedule of time-estimated tasks. Next, you will establish the budget for each of these stages.

Why software project planning is matter

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Avoid Overstaffing in Resource Management

Be sure to hire sufficient personnel for your project and avoid overstaffing, which can lead to a dramatic cost increase without commensurate benefits.

This fact brings us back to the first point mentioned in this article — if you have a clear understanding of what product exactly you want to build, you will manage to reduce software development expenses. You will form a team consisting of only those specialists who you really need for the project.

Outsource Non-Core Activities

Hiring an offshore software development team can also become an efficient cost-cutting solution. It does not make sense to perform all the work in-house, especially if it is unrelated to your core expertise. Offshore teams can offer very competitive prices and provide highly qualified specialists.

Read more: Why Hire Offshore Developers? 7 Key Business Benefits

In-house development vs outsourcing

Create Cross-functional Teams

This approach presumes your team staff can work on different aspects of the project and reduce the need for external resources. When it comes to software development, such a team typically includes developers, designers, testers, business analysts, and sometimes employees from your operation unit, marketing division, or customer service.

Teams with diverse skills can solve complex problems as efficiently as possible, which results in more innovative product solutions.

– Yuriy Nayda, CTO at SmartTek Solutions

Consider a Semi-custom Alternative

One of the reasonable ways to reduce software development costs is to use off-the-shelf components, templates, or functional existing apps integrated through API.

When you build each module and component from scratch, your project implementation cost will be high enough in any case. If you intend to save time and reduce development costs, it would be best to find alternative solutions.

Benefits of using APIs in software development
Why API Reduces Costs and Saves Time

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Invest in Testing & Code Reviews

Implement quality assurance and testing as early in the development cycle as possible. Every mistake costs money, but the ones found late will cost the most. That is especially true when the product is already on the market.

For example, undetected security bugs can lead to data leakage, fines, reputational losses, and the customer company’s bankruptcy in the worst case. Consequently, by securing the product from errors at early stages, you can significantly reduce software development costs.

Start With Essential Features Only

Another way to make software development cheaper is to use the MVP (Minimum Viable Product) approach. In a nutshell, the point is to release a product to the market with the minimum feature set required by the target audience. The approach will allow you to test your business idea in real-life scenarios, get quick feedback, and use these insights for further improvement.

MVP approach in software development

This way, by making minimum investments, you will wrap your mind around the market situation and the demand for your product. The approach will let you avoid the unnecessary risks of spending significant time and money and developing a product with functions your target audience does not really need.

Final Word

The technical implementation of software is only one piece of the puzzle that must be put together to achieve success in product development. The right approach to the project, communication between the client and developers, and many other factors are equally important. Therefore, to avoid unnecessary expenses, keep in mind the points described in this article.

An experienced team knows how to manage the process to avoid unnecessary expenses and at the same time create the best solution in specific conditions in accordance with the customer’s needs. 

Our experienced engineers have been creating successful products for customers around the world for many years. If you are looking for a reliable technology partner, contact us and let us discuss the details!

Andrii Sydoruk
Andrii Sydoruk CEO, Managing Partner at SmartTek Solutions