Running over budget on software development projects can be a nightmare for project managers and business owners alike. Unfortunately, unforeseen mishaps and increased costs are very common during software development.
That’s why it’s crucial to be ready for common pitfalls, poor time and resource planning, unmet design objectives, failure to clarify business objectives, infrastructure failure, and poor quality coding, which can lead to numerous code rewrites. Also, failing to consider additional human hours can prove to be disastrous in the long run.
But this shouldn’t be your concern when planning a software development project. With intelligent planning, you can easily create a responsible software development budget, which can give you peace of mind as you start your project.
In this post, we shall give you tips to help you create a budget for your software development project.
The Costs of Software Development
To budget effectively for your software development project, you must assess the different expenses you will incur. Although these costs majorly depend on the scope of the project, here are some common costs you will incur during a software development project.
Labor Costs
The most important resource during a software development project is your development team. Thus, you must factor in their compensation when budgeting for the project.
In addition to the development team, you will also need to consider any professional involved in the project when determining the labor costs. These professionals include:
- Managers
- UX designers
- Graphic designers
- QA testers
- Content creators and editors
- Developers with specialized technical expertise
- Subject matter experts
The best way to prepare yourself for these expenses is to search for independent professionals with clear fixed or hourly project rates
Infrastructure and Equipment Costs
Typically, you will need to acquire new equipment for your development team if you want your project to succeed. This is particularly true if you are embarking on a technical project your team has never tried.
Also, it’s important to note that your project might demand infrastructure changes like expanded cloud storage or upgraded server setup. Such kinds of investments are considerable and can stretch beyond the expected launch date of your software program.
Overhead Expenses
Custom software development services tend to generate overhead costs, which range from administrative and office rent costs to staff perks like coffee and snacks. Even though these costs are easy to overlook, you should never forget to factor them into your budget.
However, you can avoid such costs entirely if you choose to hire a remote development team. Likewise, hiring a team of independent professionals can help you lower your overhead costs. This is because such work arrangements don’t come with the expenses associated with hiring a full-time development team.
With that said, here are 4 tips to help you budget for your software development project.
Set a Limit
Generally, a software development project is not a cheap undertaking. They are costly and time-consuming. Therefore, you must make sure that you allocate the necessary resources if you want to get the product your business needs. However, never start a software development project without setting a limit on the amount you’d like to spend.
Custom software development costs can quickly escalate if you are not careful. This calls for one to set a maximum budget for their development project. When you keep these numbers in mind, you’ll have an easier time prioritizing specific features and allocating your budget accordingly.
To determine this budget, you should carefully review the profit and loss statements of your business, revenue streams, and other expenses over a given time frame. This analysis will provide the necessary information to effectively allocate the resources required for your software development project.
Outline the Project Requirements
You must clearly understand the specific requirements of your software development project if you want to manage your budget effectively. In most cases, companies start a software development project with broad requirements which lack a precise expectation of the outcome.
Therefore, you should take your time to understand the priorities of all stakeholders involved in the project. Besides, you need to communicate directly with each team with a vested interest in gathering insights into their ideal outcomes.
Once you have a comprehensive understanding of everyone’s expectations, it’s time to define the requirements for a “minimum viable product” (MVP) that can be accepted by all. Share these MVP requirements with your stakeholders, and don’t forget to emphasize the importance of limiting the scope and the possibility of adding additional elements later.
To ensure that all costs and timelines are controlled, budget around the essential features necessary for the project launch. Nonessential features can be addressed in the future.
Get Quotes from Experienced Software Development Experts
If you don’t have an in-house software development team, you are more likely to engage a remote software development team. Typically, these experts specialize in developing various types of software programs while ensuring a high-quality final product.
Remote software development teams charge hourly rates for their services. That means the overall cost of custom software development can vary depending on the size of the team and the scope of the project. However, outsourcing can be more cost-effective than hiring an in-house development team, regardless of the possibility of increased labor costs.
To accurately estimate your project costs, it’s essential to request a quote from your service provider. Make sure you clarify the services you need, including design, launch support, and maintenance.
Budget for Several Iterations
Generally, software development is an iterative process. Depending on the development methodology employed by your team, they may begin by working on the design and development of the product before testing it. The results from the testing phase are then used to refine and perfect the software. This approach allows for the efficient deployment of a high-quality product.
However, it’s important to note that software rarely achieves perfection in just one iteration. Thus, software development companies must be prepared to make alterations to the product to ensure it meets the exact requirements of their clients.
Now, this can impact the project timeline and increase labor costs, and it’s something you need to take into consideration when budgeting for software development. Therefore, it’s advisable to leave room for additional expenses or costs associated with these potential changes.
