Price Assessment
Companies ordering a software development service often wonder how software engineering pricing is structured in order to assess how reasonable the project costs charged by developers really are.
We try to identify the best formula to fairly and transparently calculate the costs that need to be charged for the client’s individual software requirements and infrastructure.
Ultimately, the price information should be just as specific and individually tailored to our customers as the software solution they need from us.
Calculation formula
Calculating the price of software development requires, among other things, knowledge of the “consumables” used by developers.
The following cost items must be taken into account:
- material and technical resources;
- costs for third-party component libraries (if necessary);
- staff salaries;
- costs for outsourcing (if necessary);
- social contributions;
- other costs.
Typical costs
Salary expenses depend on the number of employees and their experience that an IT outsourcing company needs for product development, testing and debugging.
Material and technical resources in the software development process include equipment, tools and licenses. Costs for licenses or prefabricated components from third-party developers are passed on to customers on a pro rata basis and can be split between several clients.
In some cases completely finished software is also implemented. The purchase price is then added to the final price for the software development.
Important price factors
The customer requirements are central to our software development offering. They are incorporated into the technical specification based on experience and expected resource consumption. We estimate the number of employees and the need for additional licenses or proprietary solutions.
To achieve a significant price reduction, we can use free licenses and platforms for you and divide the project into smaller segments, which is particularly suitable for multi-purpose products.
What Can You Save On?
Saving is always good! Offshore outsourcing is a common method of reducing costs in software development. Developers from the Middle East and India are often cheaper. However, there are risks associated with this approach, as discussed in one of our previous articles.
However, reducing the number of IT outsourcing employees used can extend the duration of the project and therefore make software development more expensive. A thorough technical specification is therefore essential to clarify the price nuances of working with IT outsourcing companies and avoid potential problems in advance. We mainly work with proven nearshore partners in order to avoid financial risks for our customers.
