Software Development Company Pricing Guide 2025

"How much will this cost?" is the first question every business asks when considering custom software development.

The answer frustrates many: "It depends." But after delivering 100+ software projects ranging from $10,000 startups to $500,000+ enterprise systems, I can give you real numbers, explain why prices vary so dramatically, and show you how to maximize your return on investment.

This guide breaks down every cost factor, pricing model, and hidden expense you need to know before hiring a software development company in 2025.

1. Hourly Rates by Location and Expertise

Location dramatically affects pricing. A developer in India charges very different rates than one in San Francisco, but location isn't the only factor—expertise matters just as much.

Global Hourly Rate Breakdown:

Stratagem Systems rates: $100-$150/hr for MIT-trained engineers with 100+ project track record—substantially below coastal rates with equivalent quality.

Understanding the Rate Differences

Why Offshore is Cheaper:

• Lower cost of living in India, Philippines, Ukraine
• Large talent pool = competitive pricing
• Government incentives for IT services

Hidden costs of offshore: Communication overhead, quality variability, timezone challenges, management burden often eliminate apparent savings.

Why Coastal US is Expensive:

• High cost of living (SF median rent: $3,500/month [RentCafe 2025])
• Competitive tech talent market drives salaries up (average software engineer salary: $180K+ [Bureau of Labor Statistics])
• Premium office space and overhead
• Brand positioning and market rates

The Texas Sweet Spot:

• 30-40% lower cost of living than coastal cities [BLS Regional Data]
• No state income tax = lower business overhead
• Access to top universities (UT Austin, Rice, Texas A&M)
• Same timezone, language, business culture as coastal clients
• Quality equivalent to Silicon Valley at Texas prices

2. Pricing Models Explained

How you pay matters as much as how much you pay. Each pricing model suits different project types and risk tolerances.

Fixed-Price Projects

How it works: You pay a predetermined amount for defined deliverables, regardless of time spent.

Best for:

• Well-defined projects with clear scope
• Projects with firm budgets
• Shorter timelines (under 6 months)
• Clients who want cost predictability

Advantages:

• Budget certainty: Know exact cost upfront
• Reduced financial risk: Company absorbs overruns
• Clear deliverables: Scope explicitly defined
• Easier planning: Finance approval simpler

Disadvantages:

• Less flexibility: Changes trigger change orders
• Requires detailed specs: Upfront planning intensive
• Risk premium: Company charges buffer for uncertainty
• Scope disputes: "Was this included?" arguments

Typical cost: $25,000 - $500,000+ depending on complexity

Time and Materials (Hourly)

How it works: You pay for actual hours worked at agreed hourly rates, plus materials/expenses.

Best for:

• Evolving projects with uncertain scope
• Long-term engagements
• Projects needing frequent pivots
• When you want maximum flexibility

Advantages:

• Maximum flexibility: Easy to adjust scope and features
• Pay for actual work: No padding for uncertainty
• Faster start: Less upfront specification needed
• Transparent costs: See exactly where money goes

Disadvantages:

• Budget uncertainty: Final cost unknown
• Requires oversight: Need to monitor progress closely
• Risk on you: You absorb cost overruns
• Ongoing decisions: Constant prioritization needed

How to manage T&M risk: Set weekly or monthly spending caps, require weekly progress reports, establish clear milestones.

Dedicated Team / Retainer

How it works: You pay monthly fee for dedicated team members working exclusively on your project.

Best for:

• Long-term projects (6+ months)
• Ongoing product development
• Companies needing to scale fast
• Teams requiring specific skills

Team composition examples:

• Small team: 1 Senior Dev + 1 Designer = $15,000-$20,000/month
• Medium team: 1 Tech Lead + 2 Developers + 1 Designer + 1 PM = $35,000-$50,000/month
• Large team: 1 Architect + 4 Developers + 2 QA + 1 PM = $60,000-$90,000/month

Advantages:

• Team continuity: Same people throughout
• Deep product knowledge: Team learns your business
• Flexible allocation: Adjust team as needs change
• Ongoing relationship: Long-term partnership benefits

Disadvantages:

• Long-term commitment: Typically 3-6 month minimums
• Management needed: You guide priorities and direction
• Higher monthly spend: Paying whether busy or not

3. Cost by Project Type

Different software types have different cost profiles. Here's what to expect for common project categories:

Website Development

Simple Marketing Website

• Features: 5-10 pages, contact forms, basic CMS
• Timeline: 2-4 weeks
• Cost: $5,000 - $15,000
• Tech: WordPress, Webflow, or static site

Professional Business Website

• Features: Custom design, 15-25 pages, blog, SEO optimization
• Timeline: 1-2 months
• Cost: $15,000 - $40,000
• Tech: Custom CMS, headless architecture

Complex Corporate Website

• Features: Multi-language, integrations, member portals, advanced SEO
• Timeline: 2-4 months
• Cost: $40,000 - $100,000+
• Tech: Next.js, headless CMS, complex integrations

Mobile App Development

Simple Single-Platform App

• Features: Basic CRUD, user auth, simple UI, iOS or Android
• Timeline: 2-3 months
• Cost: $30,000 - $60,000
• Tech: Native Swift/Kotlin or React Native

Medium Complexity Cross-Platform

• Features: API integration, push notifications, payments, iOS + Android
• Timeline: 3-5 months
• Cost: $60,000 - $150,000
• Tech: React Native or Flutter with backend

Complex Consumer App

• Features: Real-time features, complex UI, third-party integrations, both platforms
• Timeline: 6-9 months
• Cost: $150,000 - $300,000+
• Tech: Native development, microservices backend

Custom Software / SaaS Platforms

Simple MVP

• Features: Core functionality only, basic UI, essential features
• Timeline: 2-3 months
• Cost: $25,000 - $75,000
• Example: Simple booking system, basic CRM, task manager

Medium SaaS Platform

• Features: Multi-tenant, user management, integrations, analytics
• Timeline: 4-6 months
• Cost: $75,000 - $200,000
• Example: Project management tool, industry-specific platform

Enterprise Custom Software

• Features: Complex workflows, integrations, reporting, admin panels
• Timeline: 6-12 months
• Cost: $200,000 - $500,000+
• Example: ERP system, comprehensive SaaS platform

E-Commerce Platforms

Basic Online Store

• Features: Product catalog, cart, checkout, basic admin
• Timeline: 1-2 months
• Cost: $10,000 - $30,000
• Tech: Shopify, WooCommerce customization

Custom E-Commerce

• Features: Custom functionality, integrations, inventory management
• Timeline: 3-5 months
• Cost: $50,000 - $150,000
• Tech: Headless commerce, custom backend

Enterprise Marketplace

• Features: Multi-vendor, complex logistics, advanced analytics
• Timeline: 6-12 months
• Cost: $150,000 - $500,000+
• Tech: Custom-built, microservices architecture