How Much Does Custom Software Development Cost?

Do you want to develop software for your business? If yes, the first question you probably have in mind is, ‘How much does it cost to develop software?’

The average custom software development cost ranges from $20,000 to $150,000+, depending on your business size, project complexity, and required features. Here’s a quick breakdown:

• Startup Business Software Development Cost – $20,000 to $50,000
• Medium-Size Business Software Development Cost – $50,000 to $125,000
• Enterprise Software Development Cost – Starts from $85,000

Understanding software development pricing helps you budget effectively and choose the right development partner for your project.

As a leading custom software development company in Canada, Space-O Technologies has delivered 300+ custom software solutions since 2018 for industries like logistics, food, healthcare, and real estate. Our clients include Fortune 500 companies and startups across North America.

Understanding software development cost in Canada helps you make informed decisions about budget allocation and development partners. Our comprehensive guide covers the complete software development cost breakdown, including:

1. Key factors that influence development costs and how to calculate software development costs accurately
2. Cost breakdown by development phase
3. Pricing based on software type and complexity
4. Engagement models and how they affect your budget
5. Developer rates by location and the cost of outsourcing software development
6. Proven strategies to reduce costs without sacrificing quality

Let’s explore how much it costs to develop software and what drives these costs.

Software Development Cost Breakdown by Phase

Understanding where your budget goes in the software development lifecycle helps you plan resources effectively. The cost to develop software varies significantly across different phases, from initial planning to ongoing maintenance. Here’s a breakdown of costs across each phase.

• Planning and Requirements Analysis ($5,000 to $25,000): Gathering requirements, defining scope, conducting feasibility studies, and creating specifications. Clear requirements reduce costly changes later.
• Design and Architecture ($5,000 to $30,000): UI/UX design, wireframing, prototyping, and technical architecture. Complex custom designs with animations cost more than template-based solutions.
• Development and Coding ($20,000 to $100,000+): The largest cost component, involving front-end, back-end, database design, and API integrations. Costs vary by features, platforms, and technology complexity.
• Quality Assurance and Testing ($10,000 to $40,000+): Ensures your software is bug-free, secure, and performs well. Includes functional, performance, security, and user acceptance testing.
• Deployment and Launch ($5,000 to $15,000): Server setup, cloud configuration, app store submissions, and production deployment.Maintenance and Support (15-20% annually): Plan for ongoing costs of 15-20% of initial investment each year for bug fixes, security updates, and feature enhancements.

7 Key Factors That Impact Software Development Cost

The cost of software development depends on multiple interconnected factors. Understanding these cost drivers helps you make informed decisions and optimize your budget effectively.

1. Software Complexity

Whether you want to develop a CRM like Zoho or a simple business management software, the cost varies based on project size, functionalities, customization, the number of features, design, and third-party integrations. To precisely get the timeline details, you need to consult or hire a software development agency. After research and analysis, the company provides you with tentative details for costing.

• Basic software with standard features typically costs $20,000-$50,000.
• Medium complexity applications with custom integrations and analytics cost $50,000-$125,000.
• Enterprise-level software with AI/ML capabilities and real-time processing starts at $85,000+.

2. Platform selection

The platform you choose has a significant impact on your custom software development price. Here, business owners need to decide which platform best suits their business needs and budget: Windows, Linux, macOS, or cross-platform apps.Depending on the platform the technologies are decided, developers are selected, and resources are assigned to your project.

Native platforms (iOS, Android, Windows, macOS) provide better performance but require separate codebases. Cross-platform solutions like React Native or Flutter reduce costs by using a single codebase, though they may have limitations for complex features.

3. Development Team and Engagement Model

How you structure your development team and engagement model significantly affects software development pricing. Space-O offers flexible engagement options to match your project requirements and budget.

• Part-Time Developers – Best for smaller projects or ongoing maintenance. Developers work predetermined hours daily or weekly, typically 4-6 hours per day. Ideal when you need consistent] support without full-time commitment.
• Hourly-Rate Model – Provides maximum flexibility for projects with evolving requirements. You pay only for actual hours worked, making it perfect for startups testing ideas or projects where the scope may change.
• Full-Time Dedicated Team – Best for complex enterprise projects requiring focused attention. Developers work exclusively on your project, ensuring faster delivery and seamless communication. This model offers the best quality-to-cost ratio for medium to large projects.

Pro Tip: For projects lasting 3+ months, a dedicated team often provides better value than hourly rates despite higher upfront costs. The team’s familiarity with your project reduces communication overhead and accelerates development.

4. Project Timeline and Scope

The project timeline directly influences your software development cost estimate. Rushed timelines require additional resources, increasing costs by 20-40%. Clearly defined project scope prevents cost overruns. Scope creep—adding features mid-development—is a leading cause of budget overruns.

5. Testing Requirements

When developing software, testing and quality assurance are essential steps. Testing and QA typically account for 20-30% of total costs. Comprehensive testing identifies bugs and security vulnerabilities before they impact users. Enterprise applications requiring HIPAA, GDPR, or PCI DSS compliance need more extensive testing, increasing costs.

6. UI/UX Complexity

You would be thinking about how UI/UX affects the cost of software applications. Have you ever used an application and left it after a while? The reason can be its UI/UX.The UI/UX plays an important role when it comes to user engagement. So, designing a complex UI/UX leads to more time so does the cost of your software development. What does it mean by complex UX/UI? Let’s understand it with the following example.

• Simple UI/UX design using templates costs $5,000-$15,000.
• Custom design with branded elements and animations costs $15,000-$40,000.
• Advanced UX with complex user flows and data visualizations costs $40,000+.

7. Technology Stack and Infrastructure

Your choice of technology stack impacts development costs and long-term maintenance. Modern stacks like React, Angular, Node.js, and Laravel offer robust solutions but require specialized expertise. Choose your tech stack based on long-term scalability needs, not just initial costs.

How to Estimate the Cost of Software Development Based on Types

In this section, you learn the cost of software based on its type. Different types of software are available in the market.

Check the following table to know the answer to your question – how much does it cost to create software?

In the following section, let’s understand the average software development costs in detail of different software projects in detail.

1. Enterprise resource planning software

ERP is software that helps businesses to manage daily operations like accounting, manufacturing, supply chain management, marketing, sales, and workforce management. As a startup, you can use a ready-made solution.However, when your business expands, you need an ERP solution that effectively caters to your business requirements.

An innovative ERP solution can help you save labor costs, get valuable analytics, manage risks, and scale your business effortlessly. Also, it is important to build software following the latest software development trends to ensure it meets modern standards and scales with evolving requirements.

ERP Software Development Cost: $45,000 to $120,000+ The cost to develop ERP software depends on the modules needed, the number of users, and the integration requirements. Basic ERP systems cost $45,000-$70,000. Advanced ERP with AI-powered analytics and IoT integration costs $100,000-$250,000+. Each additional module typically adds $5,000-$15,000 to development costs.

Your enterprise software development cost depends on the features you choose to integrate. Here is a list of some common ERP software features.

Choosing the features you want to integrate into your ERP development will influence the cost. Here is the list of ERP software features.

Features of ERP Software

2. Customer relationship management software

CRM is a kind of software that allows businesses to manage their leads and clients with ease. You don’t need to maintain spreadsheets, documents, and databases when you are using CRM software systems.

Because CRMs allow you to store important details of your business with the software and operate it from anywhere. This way, you achieve better time management, increase efficiency, and complete organized information with a single hand.

Custom CRM software costs vary based on automation needs and integration complexity. Simple CRM systems cost $35,000-$60,000. Enterprise CRM with marketing automation and AI-powered insights costs $80,000-$150,000+. Integration with existing business systems can add 15-25% to total costs.

Choose the features from the following list to integrate into your CRM software. Here is the list of features.

Features of CRM Software

3. Content management software

WordPress or Joomla are also known as CMS software that allows you to create, update, and manage content for your website. So, it becomes easy for you to manage your blogs, press releases, web pages, case studies, and even videos. Several ready-made CRMs are available in the market like WordPress, Joomla, Wix, Drupal, and Magento.

You can either choose from these readily available solutions or develop a custom solution tailored to your business requirements. Having customized CMS software gives you the liberty to scale according to your business needs. Custom CRM solutions can also help increase profitability by enabling you to sell new services and products.

Custom CMS development costs depend on content types, workflow complexity, and customization needs. Basic CMS costs $25,000-$45,000. Advanced CMS with multi-language support and extensive integrations costs $60,000-$120,000+.

You can choose the features that you want to integrate into your CMS and get a cost estimate. Here is the list of features.

Features of CMS Software

4. eCommerce software

If you are planning to start an eCommerce business, you must create a custom web-based eCommerce software for your business. Several off-the-shelf eCommerce solutions like WooCommerce, OpenCart, Shopify, and Magento are available in the market.

These eCommerce solutions allow you to create a website to sell and promote your products. But, these platforms offer limited customization to your website.

So, if you are running an eCommerce business with complex processes, then having an eCommerce software solution built with the right software architecture is useful. So you have freedom for creative design and scale your platform as your business grows.

eCommerce software development pricing depends on product catalog size, payment integrations, and customization. Basic eCommerce platforms cost $30,000-$55,000. Advanced solutions with multi-vendor support and AI recommendations cost $75,000-$200,000+.

Your eCommerce software development cost depends on the features you want to integrate. Here is the list of eCommerce software

Features of eCommerce Software

5. Supply chain management software

SCM is centralized software that allows companies to manage and execute the products/services properly and manage the processes of converting raw materials into final products.

Using such software allows companies to achieve the business objectives like controlling manufacturing to improve the quality of the final products. Also, businesses are able to ship products by avoiding any problem of shortage of products.

Supply chain management software costs depend on facilities, integration points, and automation level. Basic SCM systems cost $45,000-$70,000. Advanced SCM with predictive analytics and IoT integration costs $85,000-$180,000+.

The following section lists key features that you can integrate into your SCM depending on your requirements. The cost of your custom SCM solution will be estimated based on the features you choose.

Features of SCM Software

6. Marketing automation software

Is it difficult to keep track of marketing efforts for your business? Are you planning to develop software that helps you to streamline your marketing? Then, you need marketing automation software. This software helps you to track, manage, execute, and automate the marketing channels of your business.

Even, the main role of marketing automation software is to help you properly manage customer data. In addition, with the help of AI technology, you are able to enhance campaigns, draw more clients, and increase business growth in an incremental way.

Marketing automation software pricing varies by channel coverage and automation complexity. Basic platforms cost $40,000-$55,000. Advanced platforms with multi-channel automation and AI personalization cost $65,000-$120,000+.

The cost of custom business software development for marketing automation depends on the features you require. Here is the list of features.

Features of Marketing Automation Software

7. SaaS software

Saas refers to software as a service which means you develop software applications that are hosted on cloud servers. Being an entrepreneur, you sell your software to users as a service and against it, you charge some annual fees.

For example, Shopify is a SaaS software project. Shopify sells its software services to users and charges fees against it. So, if you have a SaaS software project idea, then you surely want to know how much does it cost to develop custom SaaS products? Most SaaS products are different, and each software project’s cost differs.

In addition, SaaS applications are more secure, user-centric, and provide the best user experience compared to simple software.

SaaS development costs are higher due to multi-tenancy architecture, subscription billing, and security requirements. Basic SaaS applications cost $50,000-$85,000. Enterprise SaaS platforms with white-labeling cost $120,000-$300,000+.

Start with MVP development, containing only essential features. Launch quickly to validate your concept, then add features based on user feedback. This reduces initial investment and improves product-market fit.

Now that you know the different cost of software development, let’s see the cost of hiring software developers from different locations to build software.

Software Development Pricing Models: How Payment Structures Affect Cost

Understanding different software development pricing models helps you choose the best approach for your project. Custom software development pricing varies significantly based on the payment structure you select. Each model has distinct advantages depending on your scope and flexibility needs.

1. Fixed-Price Model:

You pay a predetermined amount for clearly defined deliverables. This fixed cost software development approach works best when project requirements are well-documented and unlikely to change.

• Best For: Small to medium projects with well-defined requirements and fixed deadlines.
• Advantages: Predictable budget, clear deliverables
• Disadvantages: Limited flexibility for changes, may cost more if requirements evolve

2. Time and Material Model:

You pay for actual hours worked. This flexible approach adapts to changing requirements throughout development.

• Best For: Projects with evolving requirements, innovative products, long-term partnerships
• Advantages: Maximum flexibility, easy to adjust scope
• Disadvantages: Less predictable total cost, requires active oversight for changes, may cost more if requirements evolve

3. Dedicated Team Model:

A team works exclusively on your project, billing monthly or as agreed. This combines flexibility with cost predictability.

• Best For: Long-term projects (6+ months), complex applications
• Advantages: Consistent team, scalable resources, balanced flexibility
• Disadvantages: Higher monthly costs, requires longer commitment

Pro Tip: For projects lasting 3-6 months with some uncertainty, consider a hybrid approach: fixed price for initial MVP, then time and material for enhancements.

Software Development Cost Estimation Based on Developer Location

The location of developers you hire significantly affects the average cost of custom software development, as hourly rates vary from country to country. The table below lists the average hourly rates of developers in different countries.

Name of Country	Software Developer
The USA	$50 – $120
Canada	$40 – $100
Australia	$40 – $55
Ukraine	$25 – $50
Asia	$23 – $55

The hourly rate of software developers varies significantly by location due to the cost of living and market demand. Canadian software development rates are competitive globally while offering timezone alignment for North American businesses.

Understanding rate differences helps you make informed decisions about hiring onshore, nearshore, or offshore teams. The software engineer and software developer hourly rates depend on experience level, specialization, and geographic location. When evaluating the cost of outsourcing software development, consider total project value, not just hourly rates, as communication efficiency and code quality significantly impact overall costs.

5 Proven Strategies to Reduce Software Development Costs

Reducing custom software development costs doesn’t mean compromising quality. These strategies help you maximize value while staying within budget.

1. Start with an MVP (Minimum Viable Product): Launch with only essential features. An MVP costs 40-60% less than a full-featured application and validates your concept before investing in advanced features.
2. Choose the Right Technology Stack: Select proven technologies with strong community support. Modern frameworks like React, Laravel, and Node.js offer robust solutions without expensive licensing fees.
3. Leverage Open-Source Solutions: Use open-source libraries for common functionality like authentication and payment processing. Building these from scratch adds unnecessary costs.
4. Prioritize Features Using the MoSCoW Method: Categorize features as Must-Have, Should-Have, Could-Have, and Won’t-Have. Build Must-Haves first to prevent feature creep—a leading cause of budget overruns.
5. Implement Agile Development Methodology: Agile’s iterative approach allows regular feedback and course corrections, reducing costly rework. Two-week sprints provide visibility into progress and costs.

Pro Tip: Combine strategies for maximum savings. Starting with an MVP + Agile methodology + nearshore development can reduce initial costs by 50-60%.

How to Calculate Software Development Cost: Space-O’s 6-Step Process

As one of the leading offshore software development companies, we have successfully delivered 300+ mobile and custom software solutions. With our custom software development process, we can provide you with an estimate of your software project idea. How do we provide the estimation to our clients?

First, we understand your requirements, prepare documentation based on your requirements, and provide you with details, and a final quotation. Here is our detailed process of how we provide cost estimation to our clients.

Throughout this process, we maintain complete transparency. You’ll understand exactly where your investment goes and why specific features affect costs. Our estimates include development, testing, deployment, and three months of free maintenance support.

Get a Customized Quote for Your Software Development

Through this blog, we aimed to provide you with all the essential information needed to determine the budget and average cost of software development. This should give you a general idea of how much it may cost to build your software.

However, we strongly recommend contacting a credible software development firm for an accurate cost estimate. As a leading software development services provider in Canada with a track record of serving more than 100 global clients, Space-O can provide you with a detailed cost quotation.

We also assist in identifying the right features and tech stack based on your project requirements, helping you manage resources efficiently and reduce overall costs. Book a free consultation with our experts today.