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Software Development Costs and Budget

Software Development Costs – Make Your Budget Plannable

Transparent factors instead of guesswork: scope, complexity, integrations, quality, operations – and which models actually work.

"How much does software cost?" is like "How much does a house cost?" – the answer is: "It depends." We show you which factors drive costs, how to keep budget and risk plannable, and which project models work in practice.

Why Costs Are Often Hard to Compare

Custom software is not an off-the-shelf product. Budget depends less on "hours" and more on scope, risks, integrations and quality level (testing, security, operations). Anyone who locks in too early buys risks later.

Scope & Complexity

Number of features, roles, workflows, edge cases, validations

Integrations

ERP/CRM/PIM connections, APIs, data migration, partner onboarding

Security & Compliance

IAM, logging/audit, GDPR, industry-specific requirements

Operations & Scaling

Observability, SLAs, cloud architecture, auto-scaling

The Most Important Cost Drivers

Number and complexity of features/user stories
Number of different user roles and permissions
External interfaces (APIs, legacy systems, partners)
Data migration and historical data
Test coverage and quality requirements
UI/UX complexity (custom design vs. standard)
Security requirements (audits, penetration tests)
SLA requirements (availability, performance)

Typical Cost Ranges

€30,000 – 80,000 excl. VAT
MVP / Pilot
  • • Validate core features
  • • 2-4 months development
  • • Basic integrations
€100,000 – 300,000 excl. VAT
Business Application
  • • Complete feature sets
  • • 6-12 months development
  • • Multiple integrations
€300,000 – 1,000,000+
Enterprise Software
  • • Complex workflows
  • • 12-24+ months
  • • Enterprise integrations

Which Project Models Help

In practice, hybrid models often work best:

Workshop → MVP Scope

First create clarity (vision, scope, risks), then implement in a plannable way. Workshop costs: approx. €5,000 excl. VAT.

Agile Budget Cap

Fixed budget, variable scope prioritization. Regular reviews for course correction. Full transparency.

Fixed Price Partial Scope

For clearly defined modules (e.g. migration, API integration). Clear definition of done.

Team Setup & Day Rates

Costs also depend on team setup. A typical project team consists of:

Developer (Mid/Senior)

€800-1,200/day excl. VAT – Backend, Frontend, Full-Stack

Tech Lead / Architect

€1,200-1,600/day excl. VAT – Architecture, reviews, mentoring

Project Management

€900-1,200/day excl. VAT – Coordination, stakeholder management

DevOps / QA

€800-1,200/day excl. VAT – CI/CD, testing, infrastructure

Common Budget Planning Mistakes

We see these mistakes time and again – and they cost companies time and money:

❌ Underestimating Scope Creep

"Just one more small feature" quickly adds up to 30-50% additional effort. Clear prioritization and a change request process are essential.

❌ Neglecting Testing

Testing costs 20-30% of the development budget – but bugs in production cost 10 times that. Invest in quality from the start.

❌ Underestimating Integrations

Legacy systems, undocumented APIs and data quality are often the biggest time sinks. Budget 20-40% buffer for integrations.

❌ Forgetting Operating Costs

Software is not "done" after launch. Hosting, monitoring, security updates and further development cost 15-25% annually.

Realize Your Software Project with Up to 50% Funding

Custom software development is supported by numerous funding programs at federal and state level. Calculate your potential subsidies – free and without obligation.

Calculate funding

How We Make Budgets Plannable

We start with a compact workshop (vision, risks, integration landscape). Then you receive a recommendation including effort range and an approach that delivers quick wins and reduces risks early.

View workshopService: Software DevelopmentBook initial consultation

Tip: When does custom software pay off?

Our ROI calculator compares your ongoing license costs with development costs over 5 years.

Calculate custom software ROI

Frequently Asked Questions About Software Development Costs

How much does custom software development cost?
The range is wide: An MVP (Minimum Viable Product) costs €30,000-80,000 excl. VAT, a mid-sized business application €100,000-300,000 excl. VAT, enterprise software €300,000-1,000,000+ excl. VAT. The price primarily depends on scope, complexity, integrations and quality requirements.
Fixed price or Time & Material?
Fixed price works well for clearly defined scope (e.g. migration of a module). For innovative projects with unknowns, we recommend Time & Material with a budget cap and regular reviews. This maintains flexibility without cost explosion.
What is included in the price?
Our standard includes: conception, development, testing (unit/integration), code reviews, CI/CD setup, documentation and deployment. Not included (optional): UX design, security audit, performance optimization, hosting/operations, training.
How accurate are your estimates?
After a workshop, we estimate with ±20% accuracy. For rough budget planning without a workshop, expect ±50%. Precision increases with each sprint iteration as we can better assess velocity and complexity.
Can we start with a small budget?
Yes, we recommend the MVP approach: identify core features, go live quickly, then expand iteratively. A workshop (approx. €5,000 excl. VAT) provides clarity on scope and priorities before larger budgets are committed.
How long does a software project take?
An MVP typically requires 2-4 months, a business application 6-12 months, enterprise software 12-24+ months. Duration depends on team size, scope and coordination cycles. Agile methods enable early partial results.
What are typical hidden costs?
Often underestimated: data migration (10-20% of budget), integrations with legacy systems, change management and training, ongoing maintenance (15-25% annually), as well as infrastructure and license costs for third-party tools.
Offshore vs. Germany – which is cheaper?
Offshore hourly rates are lower (€30-60/h vs. €100-150/h excl. VAT), but communication overhead, time zone differences and quality assurance often increase total effort by 30-50%. For complex projects, local development is usually more economical.
What payment models are available?
Common options include: milestone-based payment (e.g. 30-40-30), monthly billing for agile projects, or fixed price for defined modules. We recommend milestone payments tied to concrete deliverables.
How do I reduce project risk?
Start with a paid discovery workshop, define clear acceptance criteria, plan buffer (20% of budget), use agile methodology with regular demos, and prioritize features by business value.

Next Step

Need a custom cost estimate for your project?

We provide a realistic effort estimate based on your specific requirements.

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30 min strategy call – 100% free & non-binding

Software Development Costs | Calculation