How to reduce the cost of making a software?

As a custom software development company a common question we get asked is about reducing the cost of development. Software development is expensive. Even using relatively lower cost countries such as Bangladesh or Cambodia, a startup owner is likely to spend the largest portions of her funds on making the software. Yet software is only a piece of the story and usually the one of the first ones, huge costs waits for her in marketing and sales that she has to budget for. Hence cost optimization and reduction is an important strategy for the software development, and if done right can be a deciding factor for the success of the startup.

Here are some strategies we suggest to startups (and even established and large companies) to manage, optimize and reduce their software development costs:

Use an outside development company

Salary cost, particularly development salary cost takes up the largest regular cost of a company. An in house software team is invaluable, there is no question about it but when budgeting becomes tight, using an outside development team that can be dialed up and dialed down on short notice is the single best move a company can take. This gives them immense flexibility to adjust and control the cost on a regular basis and defer the risk of financial commitment of an in house dev team (which I think is essential once the software and business is established).

Source: Inc article

The graphic here shows the social sharing and marketing company Buffer’s average monthly costs. Thanks to Buffer’s open book policy this information is available for a live 7+ million dollar annual revenue company and will give a rough picture of how the costs are laid out. As expected about 69% of cost is spent on salary (for 64 employees when this data was taken).

In case of this example, the company has already produced its flagship product. The initial time when the product was being built would incur a much larger cost. For many software projects and startups this initial injection of fund can a big problem or might lead little or no funds for the marketing effort that will follow the launch of the product.

Finding good software development vendor and utilizing that vendor in an optimal way can give startups a huge edge over its competition yet keep the overall flexibility in its business operations.

Advancing the project tasks by non developers

Many software project tasks can be done in house by the founders or members of the existing team. Getting these tasks done would mean that the total effort by the software development team (in house or outside vendor) would be reduced. This leads to higher productivity for the team and obviously less cost per feature.

A great example of project tasks that can be done by a founder herself (or non developers in the team) is the creation of initial product ideas and wire frames. Sometimes founders approach dev teams just a list of ideas say in an email, this means the development or product team has to work to turn those into usable specification. This requirement analysis cycle can be quite prolonged if the founder or key stakeholder hasn’t fleshed out the ideas well and has to go through prolonged sessions involving members of the technical team or the outside vendor. The whole process can be fast forwarded and compressed if the founder can think through the ideas and use an easy to use mockup tool (our favorite is of course balsamiq ) draw out the ideas. The whole requirement process then gets cut down by as much as 80% in our experience.

Non development stakeholders and founders can also help out on many other areas of the software development process like testing, helping with documentation etc. All of these add up to create substantial reduction of costs for making the software.

Keeping the requirements stable

One of the biggest way of increasing cost of a software project is feature creep or constantly changing requirements. When a software development team has a clear specification it can plan and implement the features at a very fast pace. But as soon as those initial specifications start changing or new features start creeping in (because “business demands it”) the cost of rework and changed priorities will also pile up. Over time this single cause lead to cost increases by 100-200% if not controlled in our experience. So this is a single big area to be concerned about and control to keep the cost of software development under control.