7 Ways To Estimate The Cost Of Developing Software Offshore

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One of the most challenging things in the entire software development cycle is to determine how long and how much it will take to launch a new software product in the market.

Every software project is unique in its way and is dedicated to delivering customer-centric benefits in a given timeframe.

Be it a customer, a developer, business leader, or software analyst all are owning a different set of knowledge, industry experiences, values, expectations, and ability to adapt.

But when it comes to software development, understanding software trends, emerging new technologies, customer needs, and competitor analysis is extremely important.

Before thinking of establishing a startup, consider the 2 key components cost and duration that help you in making strategic business decisions. You need to realize a new business opportunity, or enabling your business to perform better.

It’s a bitter fact that the timing, return on investment, and benefit delivered can make, shake or break your business anytime. So estimating the size, duration, and cost of a project is highly crucial to make the future benefits.

No matter what software development methodology you use – waterfall, Agile or a hybrid one or what technology you use or the software development team you hire, providing accurate project estimates is a big challenge today for the business leaders to stay ahead. They have to deal with it smartly and patiently. 

When doing business, every customer wants to know beforehand when the project will be done and how much it will cost. These are the two important things that your customer is more concerned about.

Here are the components that include the software development costs. Let’s see the breakdown: 

  1. Software Size

  2. Scope of the Software 

  3. Software Flexibility 

  4. Software Budget

  5. Complexity elements of the Software

  6. Software Development Team Cost

  7. Inhouse or Outsourcing

Software Size

Software size is the main accelerator for estimating the cost of software development. It is directly proportional to software development costs. The strategy is simple - The higher the number of screens/pages, the more effort, and the higher the software costs. 

For example, a small-sized app generally ranges from 10-25 feature pages, a medium app varies between 25 and 40 pages, and a large app is usually more than 40. Large-sized software will need to be optimized and tested more extensively, that's why its overall cost is a bit high.

 Suppose, if you are developing a large application with more than 40 screens and other various complex functionalities, your cost will be definitely on the higher side.


A big portion of the software development cost depends entirely on the scope of the software. Project requirements are directly proportional to the software cost. Every deliverable, every constraint, and every assumption to the project will be added to the software costs. 

A project that involves multiple features, integrations with databases, or additional functionalities and it involves several stages of software development, cost scope will reflect that.

So, work with your development teams to create the most accurate and effective estimate, including timescales and deliverables required from both sides.


Taking a flexible approach benefits both clients and software development companies.

It’s almost impossible to fix the cost of software development down to the last dollar unless a scope and project timescale is clearly defined. A myriad of factors can influence the cost outcome, including the amount of testing and experimentation needed and the outcomes from those tests.

Software Budget

Many companies developing software have a limited budget. If a client wants to add several features in the project which cost much more than first they need to set the priorities or increase the budget.

Client budget is a big constraint when it comes to estimating software development costs. 

You, as an entrepreneur, can make sure that the workflow is going with high productivity and that the right set of technology is being used. But you have to know about the budget before the start of the new project. 

Software Complexity

When you are looking at the ways to identify software development costs, understand that complexity of the project also affects the project cost. For example, type and extent of coding and testing, designing software requirements, and whether there is any need to integrate the application with third-party apps or systems.

If the app has many forms and involves processing big blocks of data with lots of details, then it would require more time to develop such an app. If it needs a unique interface with custom fonts, images, and icons then you need a hire a web designer to deal with all of these.

Also, if the app needs to be integrated with third-party apps or payment gateways, then it will become a challenging task to build such an app.

Complexity also comprises data migration as you may need to write a simple script to transfer data from one system to another and it may involve lots of details.

Developers Cost

It is crucial to note the cost of de­vel­op­ers re­quired for a pro­ject. This fig­ure is then used in com­bi­na­tion with the cost of the sprints and mul­ti­plied out.

Offshore soft­ware out­sourc­ing is a low-cost al­ter­na­tive for businesses be­cause of the lower-paid and af­fordable de­vel­op­ers in coun­tries like India. However, off­shore out­sourc­ing comes with a va­ri­ety of long term risks and may in­volve un­ex­pected costs such as le­gal fees or ad­di­tional train­ing costs. 

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In Australia, the av­er­age pay of a software professional is over $83000 yearly. Also, soft­ware ar­chi­tects and se­nior de­vel­op­ers earn around $120 000 to $176 000 per year. The higher pay of the software professionals motivates businesses to migrate to software offshoring.

Inhouse Or Outsourcing

Cost of software development is highly affected by both in-house and outsourcing. Software outsourcing can reduce your development cost upto 40%.

From the above table, we can easily see how outsourcing helps you save your money over in-house development. In-house software development includes multiple charges like overhead costs, increased salary, retention, benefits, and even the hardware and software costs also.

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But, in outsourcing, you only have to pay the remote developer’s salary or the bid if you are hiring an outsourcing company and optional charges for the software licenses if and when required. You save over $135,000 in outsourcing

As seen from the above table, outsourcing can certainly help you cut down your software development cost. And it’s not only about the cost that makes entrepreneurs and startups follow the outsourcing approach it also offers them the below benefits:

  • Access to a vast global talent pool
  • Provides round-the-clock productivity
  • Delivers high-quality codes
  • Ensures faster project delivery
  • Allows entrepreneurs to focus more on their core business operations 

Last Words

Before investing your precious time and money in the software development process, you should be very clear on what the requirement is. Document all your business requirements so that it will be easier for you to undergo the development process smoothly. 

The software development cost depends entirely on the business requirements and it is the foremost and important step that needs to be considered.

Rethinking software estimation will also provide a beacon of the reason for business leaders even when pivots are necessary or new challenges arise. 

Development teams that remain agile and collaborate closely with each other empower software development and building and releasing quality software to the end-customers that delivers value.

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Topics : Software Development

Kanika Gupta

Written by Kanika Gupta

Kanika Gupta, a professional tech writer works as a content writer in Classic Informatics, a leading web development company. She loves to write master tech pieces and let readers connect with them fluently.

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