pricing
How much is this going to
cost?
“The bitterness of poor quality remains long after the sweetness of low price is forgotten.”
Benjamin Franklin
In brief
- Software development costs follow either a fixed-price model (Custom Software Development) or continuous development (Software Product Engineering).
- Custom Software Development has a finite scope, averaging $200K, with a typical upper limit of $500K per project.
- Software Product Engineering is ongoing, evolving with the business through incremental milestones and releases, typically starting at $300K/year.
- The fixed model offers predictability but limits flexibility, while the continuous model is agile but lacks a defined endpoint.
- Both models are valid, each suited to specific circumstances depending on project nature and customer priorities (time-to-market, predictability vs. agility, and business goals).
Understanding Software Development Costs
Custom Software Development
It is the most common question we are being asked by our prospective Customers.
An underlying assumption of this question is that a finite amount of money exists such, once invested, will result in a final product. Such a product can then be used for a long time without major recurring investments - much like a house which is expensive to build, but you can then live in it without additional costs (excluding property taxes, occasional upgrades, and minor fixes when things do break).
You normally have a pretty good idea of what kind of a house you want, it just needs to be designed and built. Predictable pricing is usually an expectation before you start the building process.
Is this a good analogy for creating a software product? Yes, and we call it ‘Custom Software Development’. But it is not the only option.
What is the second option?
To understand this, we should first realize a critical difference between building a house and a software product:
20-35%
of all costs in construction are labor
65-80%
of all costs in construction are materials
Software Product Engineering
Using the house building analogy above, you can re-paint it every week and see what the users would like more. Silicon Valley companies were the first to realize this critical difference and use it to bring software products to the market with a breakneck speed to outcompete their more traditional competitors.
Time-to-market is the name of the game. You may change your product substantially again and again, and learn from your growing user base how to improve it further. What happens when you finally bring your product to the market? You keep building it to stay ahead of your competitors (they will surely do the exact same thing to try to outrun you).
Whoever does this faster becomes the market leader. There is no finish line, and only sky is the limit. We call it ‘Software Product Engineering’.
Custom Software Development vs. Software Product Engineering
Which approach is right for you?
At Syberry, we believe that both paradigms are valid, yet they are suitable for different types of businesses and underlying business objectives. The table below summarizes key characteristics of the models to help you choose the best path.
Our clients
