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Cost reduction is the need of the hour for most startups. But software development remains an important area where many businesses incur so many costs. 

For diverse reasons, most businesses continue to have trouble reducing the costs of developing their software products. And, unfortunately, failure to keep costs low has spelled doom for many startups.

This article discusses the different ways startups can reduce their software development costs. But, first, we look at the three major factors that determine the cost of software development projects.

What do software development costs depend on?

The price startups pay for developing their software rests mainly on:

The development team

The quality of the people that make up a development team is an important factor that determines the cost of software development.

 A development team that’s made up of inexperienced people with insufficient technical and communication skills often translates to an increase in the cost of developing products. But luckily, the opposite is also true: when a team is made up of skilled and experienced people, products are developed quickly and at a low cost.

 In some cases, the cost of development can be halved because of the quality of the team handling the project.

Within a team, some of the cost-determining considerations that every startup should look at include:

  • The experience and skills of the team members
  • The cohesiveness of the team
  • How accountable are all team members?
  • How effective is communication and collaboration within the team?
  • The hourly rate of each team member
  • Is the team working remotely or will there be an in-house development team?
  • The level of trust between team members
  • How conversant are the team members with the nature of the business?

If, for instance, there’s poor communication and cohesiveness within a team, product development would be hampered, and that would increase the overall price of the project.

The scale of the project

The more complex a project is the higher its cost. In terms of complexity, projects can be divided into:

  • Basic
  • Medium-complexity
  • Complex

Since they usually have simple features, basic projects can be developed within a short time, and generally require fewer costs.

On the other hand, medium-complexity projects have advanced features and would require more time and resources than the basic types. Complex projects are not only time-consuming, but their development cost is always high. This is because complex projects have complicated features, architecture, integrations, and so on.

Together with complexity, the newness of a software product can significantly raise its cost.


The technology needed for a project will determine the overall cost of developing the software. Will the project require a skill or tech stack your team is proficient in, or other types of frameworks that would be needed? 

Development cost increases, for instance, when you have to hire developers that are skilled in an area where your team falls short.

The following issues may also arise if you choose the wrong technology:

  • The technology stack may be difficult to maintain, thereby increasing the cost
  • The wrong technology stack may also increase the time to develop the software
  • It may be difficult to find experienced developers for the technology

 The tools needed are also a sub-factor that’ll determine how much a software development project costs a startup.

How can software development costs be reduced?

The cost of software development software can be significantly reduced by:

Doing proper planning

A significant part of development costs can be saved by not rushing the planning stage of software development projects. An ill-planned project will most assuredly set the team on the wrong path and become complicated in the long run.

Every project should be properly planned to guard against unexpected costs and lack of clarity during development. Without well-defined deliverables and planning at the beginning, there’s bound to be failure down the line. With proper planning, you’ll be able to understand the problem to be solved and come up with detailed and clear ideas on how to solve it.

Although having a detailed plan and progressing slowly may seem difficult, it not only saves time but money in the long run.

Before starting the development project, the following should be properly laid out:

  • What you’re trying to achieve
  • Metrics
  • How to track progress
  • How to measure success

It’s also best to divide your project into smaller units and set up metrics to assess the project’s progress. Your metrics could include the number of tasks you’ve completed, timely delivery, and so on. You may also want to have regular meetings with the team to assess your progress.

Building a good team

As a startup, you’ll not only save development costs by building a good development team, your products, in terms of quality, will always stand out from the crowd.

However, putting an experienced and competent team together often requires time, patience, and some initial investment. When a new team is being set up, some price may have to be paid. This is especially so in the process of sourcing, onboarding, equipping, and training new team members. Nevertheless, the initial investment involved in setting up quality teams helps to reduce costs and pays off in the long run.

The following are tips you might find helpful in building a committed and experienced team:

  • Examine and assess the engineers you are bringing into your team. 
  • Ensure you hire the people that make up your team from credible sources. It might be helpful to recruit using personal networks, although marketplaces and communities of developers might provide you with the talents you need.
  • Do proper skills and profile verification if you plan to work with your team remotely. Ensure everyone you’re bringing onto your team not only has the technical know-how but also has time management, teamwork, and communication skills.
  • Since a smaller team is easier to manage than a large one, you might want to consider not making your development team a large one.
  • Consider having all of your team members on board before starting the project. Continuously bringing new people into the team would not only slow your progress but might cost you a lot of resources in the end.

Ensuring early-stage testing

A recurring but undesirable practice in some development processes is letting errors accumulate till the end of the development cycle, and then trying to rework and correct the accumulated errors. Such reworking efforts often prove not only to be time-wasting but expensive. Without proper testing, the release date of a product is also usually pushed back, and the finished product is usually of low quality.

The cost of software development can be reduced by carrying out proper quality assurance (QC) at the early stages of the development process. This means performing early and regular testing at each stage of the development process.

By doing so, the development team will be able to identify incorrect requirements and the accumulation of bugs, which can be very costly to rework. Early testing will also help the team make sure that the final product doesn’t have any features that are prone to bugs.

 A good way you may want to reinforce this practice in your development process is by engaging test engineers at every stage of your project.

 Focusing on main features

 A significant number of software development costs can be reduced by concentrating efforts on the basic and main features of a product.

Poor prioritization and implementation of more features can drastically drive up the cost of developing a product. It’s therefore important for startups to identify the must-have features of their product and those that can be added later.

It might not be possible, or even ideal, to accomplish all your desired features at once. This is why it’s vital to focus on the main features that are within your budget.

The best way to do this is to first focus on the must-have features, which are the ones without which your product would not work.

Release your product with its must-have features, and if the product proves valuable and profitable, you can then step up your budget and add more features. This method helps keep development costs low and also gives users a chance to give feedback on the product.


One of the main concerns of most startups is how to reduce software development costs. But even with the way technology is now, startups can still make useful and high-quality products without going over budget or sacrificing quality.

To successfully reduce development costs, ensure you set up a good team and that you spend quality time during the planning stage. Also, make sure your communication is sound within the development team. If you are extremely tight on funds and want to avoid running out of funds midway through the development process, try to reduce the complexity of the product.

You might also want to think about outsourcing your product development process as a way to cut costs.

By following the best practices discussed in this article, the road to creating valuable and profitable software products at reduced costs will become easier and smoother.