Why is Bespoke Software Expensive?
In our last post we looked at how much does bespoke software cost? Towards the end of that post we listed some cost ranges for various typical project types. From there we pointed out that our most common projects that we work on are all mid 5 figure projects.
The obvious follow up question is “Why is Bespoke Software Expensive?” and that is what we are going to cover today.
What makes up the cost of development?
The Developers
We have to start with the most obvious, the developers themselves. The barriers to entry to becoming a developer are quite low. There is, for example, no need to have a qualification in development, you can be self-taught and to a large extent even this can be free.
There is a shortage of experienced developers right now. In fact, in the UK there has been a shortage for as long as we can remember. Right now though, there is huge demand and just not enough developers to fill the places. The end result is that what used to be a well-paid job is now a very well-paid job.
So, with the role being well paid and the barrier to entry being quite low why has there not been a flood of new developers to keep price rises in check. Well, it is quite simple, there is no shortcut to experience and bespoke software development needs a lot of experience.
Are high quality experienced developers expensive? Yes. Are they worth it? Yes.
The Rest of the Team
It is easy to forget that a successful project needs more than developers. Nearly every project will need at least a project manager (which adds 5 – 15% to a project) and a QA / Software Testing team (this with the work required to fix what they find adds around 30% to a project).
For bigger projects you may need a hardware engineer, a database architect, designers or front end specialists.
The Indirect Costs
The project cost will include a contribution to the software development companies other costs. For example, sales and marketing, accounting, the building and equipment cost.
Profit
Of course, software companies want to make money and you actually want them to as well if you want them to be around to look after the software they develop for you.
So, it is easy to justify why bespoke software development can be expensive even though the hourly rate compared to other professions (have you ever needed a lawyer?) is very reasonable.
Making Bespoke Software Less Expensive – The Builders Approach
You may have heard the saying “Cheap, Fast, Good, pick 2.”, which is sometimes attributed to being a saying of builders but it works great for software development too.
We have put that saying into a Venn diagram below.
If you want to make bespoke software less expensive you can therefore choose it to be:
Good and Cheap: Probably using a one-man band who has no overheads and no team. The downside being that it will take a very long time.
Fast and Cheap: The downside would be a very low quality product which in all likelihood would be expensive in the long run.
We don’t recommend this approach for any bespoke development project, it is almost always wrong to pick 2 of the 3 choices in the diagram and tends to be associated with a very short term view.
Look for Value and ROI
Concentrating on expense alone will often lead to non-optimal decisions being made. Of course, you should try to reduce costs but this can be done in a sensible way. For example, a good Software Requirements Specification completed before development begins can save thousands of pounds in changes made during development.
To make the best decisions for your company you really need to concentrate on the return on investment for your bespoke software project. We briefly covered a potential way on deciding what your budget should be in a previous post but of course we are always here to help.
Summary
We started out with a very common question that we are frequently asked. Why is bespoke software expensive? We looked at why it is expensive and even though the hourly rate is incredibly reasonable, projects tend to require a lot of hours work and therefore the total cost can be high.
The real takeaway from this post though is that expense is the wrong thing to concentrate on. Expensive bespoke software projects can be incredibly good value for money and inexpensive projects can be bad value for money. The real decision maker should be return on investment or value for money.
