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We understand that bringing a software project to life is not a trivial task. It involves a lot of planning and a real understanding of the problem to be solved. After all, there is a risk of wasting money on something that the market doesn’t need or that doesn’t address the real pain points within the company.
That’s why we have identified several key points for building a 100% custom software, based on our experience with over 100 projects developed and more than 50,000 coding hours.
To make it easier for you to read, we have structured this article as follows:
1. Understand the state of your business or project
2. Understand the hiring models
3. Project estimations
4. Features to be developed vs. investment value
5. Types of companies vs. variations in price, quality, and delivery
Understand the state of your business or project
Before discussing prices and project sizes, it’s crucial to understand the current state of your business.
This is important because custom software involves a more significant investment compared to off-the-shelf market solutions, which are typically subscription-based.
For example, let’s consider a CRM software. On one hand, we have systems like Pipedrive, which range from £30 to £120 per user per month, providing immediate usage.
On the other hand, you can opt for a highly customized solution for specific processes, with development costs ranging from £250,000 to £800,000, depending on the project’s complexity.
Pipedrive is affordable because it aims to serve a large volume of customers with a 0% customized solution. In the case of custom software, it caters to a single client since, in many cases, the development company signs an intellectual property agreement with the paying party (such as Ubistart).
Therefore, it’s essential to determine if custom software is indispensable for your business/project or if you have the option to use an existing market solution. We’ll illustrate two main situations in which a software development company is sought to build a custom project:
In this context, we have companies seeking to improve operational processes that are currently manual, hindering rapid business growth or leading to a high rate of human error. Custom software can assist in digitizing company areas, automating manual processes, and utilizing business intelligence (BI) and big data for informed decision-making.
Therefore, it’s important to estimate the company’s operational cost in the target area that requires digitalization using software and calculate if the solution will pay off within a 1- to 3-year horizon, aiding business growth.
This applies to companies looking to create new customer relationship channels and use software as a support tool for sales (such as applications, e-commerce platforms, and portals). It can also apply to new businesses where custom software is the key driver for sales (e.g., applications like Uber, iFood, Netflix).
In this model, it’s crucial to assess the potential of the opportunity and simulate sales scenarios to understand the return that can be achieved with the solution.
Regardless of the two possibilities, it’s important to understand your current situation.
Identify the stage your company or project is at and then evaluate whether an off-the-shelf software solution can meet your needs or if a 100% custom solution is truly necessary.
In some cases, the first step towards implementing a custom system involves adapting your processes, which can be done using market solutions like SharePoint or Power BI (process automation and business intelligence reporting tools).
Once the market software no longer meets your business needs or if you realize that your opportunity is unique and there’s no existing solution in the market, a custom model will enable the continuity and scalability of your business.
Consider this carefully! Is your company one in which custom software development is fundamental? Will developing a custom solution provide a higher return on investment (ROI)? If so, within what timeframe: short, medium, long-term, or never?
Choosing custom software development is a strategic decision that should consider if there is a genuine return and the timeframe for that return.
Understand the hiring models
When it comes to hiring a company or freelancer for custom software development, there are essentially two choices: fixed-scope project or open-scope project.
In a fixed-scope project, you will receive a proposal for the total investment from the company/professional. On the other hand, in an open-scope project, the company/professional provides you with the cost per hour/week/month, and you pay based on the consumed hours, without a predetermined completion time.
A fixed-scope project provides more security for the hiring party, but it comes with stricter scope constraints and limited flexibility for changes during the development process. An open-scope project offers more speed while allowing adjustments during the development process.
Which model is best? The answer to this question depends on your specific situation. If you have a limited budget and need to understand the total investment before making a decision, the fixed-scope model is a better choice.
However, if you require speed in delivery, your solution is not fully defined yet, and your business can support the monthly cost of a development team, the open-scope model is more suitable.
If you want to learn more about the difference between the two models, you can check out the articles on our blog:
Estimating the scope
If you have decided to proceed with a fixed-scope project, it’s crucial to define how it will be developed. Remember when we mentioned understanding your current situation? In this model, a well-defined scope is essential!
The definition of scope can significantly impact the cost of software, ranging from £30,000 to £2 million for larger projects. Therefore, reaching a software solution with a significant investment doesn’t require much effort.
In reality, the greatest effort lies in understanding what is truly necessary for your digital solution to achieve the desired results with the leanest investment possible.
In this regard, we frequently serve both traditional market companies and startups looking to make a mark with their ideas. We don’t judge them for this because they aim to deliver the best for their customers.
The Ubistart methodology
That’s why at Ubistart, we have a methodology called Planning, which aims to deepen our understanding of our clients’ needs. This methodology typically lasts from 30 to 90 days, depending on the project’s complexity.
We involve a multidisciplinary team of experts in design, innovation, business, and technology, comprising a Business Analyst, a UX/UI Experience Designer, and a Software Architect.
By the end of this period, we present a robust and mature report that ensures our clients feel comfortable proceeding with the software development phase. The report includes risk management, project assumptions, necessary technologies, team composition, scope of requirements, timeline, and budget.
In other words, only after the Planning phase does our client have a clear vision of the investment and timeline for the software project (app, marketplace/portal, or web system). We believe that thorough planning and understanding of the challenges can prevent major frustrations during development, as well as save our clients from wasting money since they know exactly what they are contracting.
In summary, creating highly robust solutions with multiple user profiles can bring about significant complexity that may exceed the investment capacity of the company or entrepreneur.
Take Uber, for example, which caters to both drivers and users, requiring two separate applications for each profile, in addition to an administrative profile that represents the Uber platform itself.
Considering this example, you should always question whether you want to start a project similar to Uber in its early stages or as it exists today. Regardless of whether it’s Uber or other apps like iFood, you need to understand that these companies have already invested millions in software to reach their current stage.
So, reflect on your company’s current position. If you’re initiating a digital platform and want to gauge its potential, focus on structuring a Minimum Viable Product (MVP). Determine the minimum you can deliver without compromising the value proposition for your potential customer, be it external or internal.
Features to be developed vs. Investment Value
At this point, have you already defined your business stage and the scope you wish to build? If so, now you can estimate the cost of your customized software solution.
To help you get investment estimates for custom software, we’ll provide some examples below that can facilitate your understanding of the costs when hiring a software company.
An MVP for a startup, with an investment range of £30,000 to £120,000.
Imagine that you want to collect information from potential customers through a form and create a simple logic that provides specific results for them. For instance, an example could be a calculation for the investment in building a custom-designed house.
Another example could be an app that calculates the best stock market investments for the user. It’s also possible to automate spreadsheet filling and results or even create a relationship app with a few functionalities.
More features, with an investment range of £120,000 to £240,000
In this investment range, we have slightly more robust applications, still resembling MVPs and without major complexities. Simple marketplaces, apps with interactions, and early-stage systems for market validation may fit within this budget. However, this range does not include applications similar to Uber, iFood, and other large-scale marketplaces.
Solutions with an investment range of £240,000 to £400,000
Usually, businesses falling within this investment range require complex solutions with a validated model. For instance, a simplified version of an app similar to Uber, Airbnb, or iFood.
Rebuilding a well-established web system or platform in the market also fits within this category. Additionally, considering the automation of a manufacturing process integrated with other areas (e.g., sales department) is part of this solution.
Processes that were previously manually controlled through Excel spreadsheets can now be managed by a web system integrated with the company’s main ERP (Enterprise Resource Planning).
Solutions above £400,000
This category is for highly established companies in the market with significant investment capital. The solutions will be geared towards automating complex processes or redeveloping relatively large-scale solutions, such as a marketplace.
In such cases, we recommend an open scope approach, as providing a closed estimate becomes very complex and time-consuming, considering it typically involves more than 6,000 hours of software development.
Business Models X Price, Quality, and Delivery Variations
All the models we presented above are suitable for companies specialized in custom software development. These companies take responsibility for delivery and have the necessary expertise.
However, to give you a broader understanding beyond this supplier model, let’s discuss the main profiles you can hire in the market, with variations in price, speed, and delivery quality.
Freelancers are affordable but may compromise on deadlines, quality, and security
We recommend hiring freelancers for startups or companies with an in-house software management team. Freelance programmers are often technically skilled, but they may lack project management expertise.
While they might be cheaper compared to other hiring profiles, relying solely on a freelancer for project management can compromise delivery quality and deadlines. After all, you are hiring an individual professional.
In this same model, a software factory offers a complete multidisciplinary team. Additionally, we have witnessed cases where companies faced difficulties when the freelancer simply disappeared, making it challenging to ensure project delivery.
Agencies have a moderate price but can impact quality and speed
There are excellent agencies in the market that cater to startups and small digital solutions. However, for more complex projects where data security, infrastructure, and DevOps (especially for systems) are crucial, agencies may fall short.
This is because their expertise is focused on marketing, and software is an add-on service rather than their core business, unlike companies specialized in custom software.
Therefore, hiring an agency for complex solutions can lead to misunderstandings regarding the project scope and may not prepare the platform for future maintenance, causing significant headaches down the line when the solution is already in the market and requires substantial improvements.
In short, agencies are ideal for institutional websites, landing pages, blogs, and applications with functionalities similar to an institutional website, presenting the company’s services and contact forms.
Software Factory has a moderate to high price, but with quality and adherence to deadlines
One of the most efficient solutions we find for startups in the sales and growth phase, or already established companies (both software and other services), is hiring companies specialized in software development.
This is because they possess a high level of knowledge for developing various digital solutions. Typically, the team in a software factory comprises:
Business Analyst: a professional who collaborates with clients to map out business rules for the scope.
UX/UI Designer: responsible for the solution’s design and user experience.
Technical Lead: a professional who estimates the effort required and provides senior support to the development team.
Software Architect: responsible for creating the application’s architecture, guiding the use of the latest technologies, and working directly with an infrastructure specialist.
Infrastructure Analyst: responsible for the server layer, database, and application performance.
Project Manager: responsible for ensuring the project progresses smoothly, cost control, and team management, in addition to providing managerial reports to the client.
Test Analyst: responsible for checking for bugs and rule errors in the solution developed by the developers.
Developers: a team that executes the solution, with specialized profiles in various frameworks, along with professionals skilled in front-end, back-end, and infrastructure.
A software factory stands out when compared to freelancers and agencies precisely due to its multidisciplinary team of professionals, which enhances commitment to delivery and quality. However, its price may be higher, but it pays off in speed and quality.
Developing custom software is not a trivial task, especially when it involves a well-defined scope, understanding your company’s current situation, and structuring a solution that fits within your available investment.
Looking for companies like Ubistart will help you comprehend your scope and provide a comprehensive investment estimate tailored to your project needs.
So, if you’re seeking assistance in this challenge, we can be that company for you! Visit this link to learn more about our services and fill out the contact form at the bottom of the page. One of our sales consultants will reach out to you to discuss how we can support your software project.