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Determining the real cost of software development

by Robert Duff

As a custom software development company, we get plenty of questions from prospects about our people, our processes, technologies we use, etc.  We can answer honestly and forthrightly about all these things – and we do, in our website, sell sheets, case studies and more. But the most challenging question we get on a regular basis is how our costs compare to others. Beyond rate you have to look at the complexity of the project itself, the newness and complexity of the software involved, project timelines, size of team and more. Ultimately, only the success of the end product will tell you your final cost.

So before I launch into an explanation of the variables involved, I tell a prospect the age-old saying, “The best predictor of future success is past success.” At Coherent, we have dozens and dozens of cases that illustrate our success at building:

  • Commercial grade software products that prove themselves in the global market
  • Mobile applications that engage and delight users
  • Business intelligence systems for big data analytics
  • Exciting new products that tap into the internet of things
  • Enterprise solutions that solve business challenges

Cost = rate x productivity 

The next thing I tell prospects is that cost is not just labor. It is labor times productivity. While it is easy to quantify pure labor costs, it is more complicated trying to calculate productivity. Among the many factors that go into this are:

  • The amount of time spent gathering and communicating requirements and architecture
  • Time spent clarifying requirements and architecture
  • The amount of rework due to incorrect understanding of requirements or architecture
  • Testing time, accuracy and success
  • The amount of rework due to software not working correctly—bug fixing
  • The cost of maintaining the software after it is released



Unfortunately, too many people can tell you horror stories of finding out too late that the gain they thought they were getting by a low rate was completely erased with poor productivity. Thus, I encourage anyone looking to get the best value for their software development dollar to look at a supplier’s past success. It is the most probable indicator of your future success with them.

Robert Duff

Robert Duff

Chief Operating Officer

Rob has worked in the consulting industry since 1992. At Coherent he is responsible for the operational management of the company. His prior experiences include management consulting, technical architecture, and program/project management. Rob holds an MBA from the University of Minnesota’s Carlson School of Management and a BA in Economics from the University of Notre Dame

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