"How much will this cost?" is the first question every business asks when considering custom software development.
The honest answer starts with "it depends", so this guide shows what it depends on. The ranges come from public market rates and from quoting and shipping projects since 2023.
It covers hourly rates by location, the three pricing models, costs by project type, what drives the price, the costs people forget, and how to get more for the same budget.
Quick answer: typical software development costs
- Simple Website: $5,000 - $20,000 (2-4 weeks)
- Startup MVP: $25,000 - $100,000 (2-4 months)
- Mobile App: $50,000 - $200,000 (3-6 months)
- Custom SaaS Platform: $100,000 - $300,000 (4-8 months)
- Enterprise System: $200,000 - $1,000,000+ (6-12+ months)
Table of Contents
1. Hourly Rates by Location and Expertise
Quick Answer: Software development hourly rates range from $25-$50/hr offshore (India/Asia), $50-$100/hr nearshore (Latin America/Eastern Europe), $100-$200/hr in lower-cost US regions such as Texas, and $150-$400/hr in SF/NYC/Seattle.
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:
| Location | Junior Dev | Mid-Level | Senior Dev | Tech Lead |
|---|---|---|---|---|
| India/Asia | $15-$25/hr | $25-$40/hr | $40-$60/hr | $60-$80/hr |
| Eastern Europe | $25-$40/hr | $40-$60/hr | $60-$90/hr | $90-$120/hr |
| Latin America | $30-$50/hr | $50-$75/hr | $75-$110/hr | $110-$150/hr |
| Texas | $75-$100/hr | $100-$130/hr | $130-$160/hr | $160-$200/hr |
| SF/NYC/Seattle | $100-$150/hr | $150-$200/hr | $200-$300/hr | $300-$400/hr |
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 (see BLS pay data for software developers)
- Premium office space and overhead
- Brand positioning and market rates
Lower-Cost US Regions:
- Lower living costs and overhead than the coastal hubs
- The same timezones, language and business culture as other US clients
- Rates in the table above, typically well below SF or NYC for the same seniority
2. Pricing Models Explained
Quick Answer: The three main pricing models are fixed-price ($25K-$500K for defined projects), time-and-materials ($100-$250/hr for evolving projects), and dedicated team ($10K-$90K/month for ongoing development). Choose based on requirements clarity, budget flexibility, and project duration.
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
Key Takeaways: Pricing Models
- Fixed-price works best for well-defined projects under 6 months where budget certainty is critical
- Time-and-materials suits evolving projects with unclear requirements where flexibility trumps budget certainty
- Dedicated team is ideal for long-term development (6+ months) requiring consistent team continuity
- Cost varies 2-3x between models for same project due to risk allocation and overhead differences
- Choose based on requirements clarity (90%+ clear → fixed-price, <70% clear → T&M) and project duration (>6 months → dedicated team)
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
4. What Drives Development Costs
Two projects with the same one-line description can differ in price several times over. These are the usual reasons:
- Scope: the number of screens, workflows and user roles. Each role brings its own permissions, views and edge cases.
- Integrations: every external system (payments, ERP, CRM, accounting) adds work for the normal path and more for the failure cases.
- Platforms: web only, one mobile platform, or web plus iOS and Android.
- Design: a standard component library versus a custom design system with animation.
- Data and compliance: migrating data from old systems, audit trails, HIPAA or GDPR requirements.
- Who builds it: seniority and location set the hourly rate (section 1). An experienced team is often cheaper in total because there is less rework.
- Timeline pressure: a fixed date usually means more people working in parallel, and coordination is not free.
The same factors decide how Stratagem prices projects: each one changes the written scope, and the fixed price follows the scope.
5. Hidden Costs to Budget For
- Hosting and infrastructure: from tens of dollars a month for a small app to thousands for heavy workloads.
- Third-party services: payments, email, maps, SMS and AI APIs, usually billed per use.
- App store fees: Apple's developer program costs $99 a year; a Google Play developer account costs $25 once.
- Maintenance: plan on roughly 15–20% of the build cost per year for updates, security patches and small changes.
- Your own team's time: product decisions, testing and content usually take more of your time than you expect.
- Change requests: scope added mid-project is priced separately in most fixed-price contracts.
6. How to Maximize Value
- Write down the requirements first. Vendors can only quote what they understand; vague scope gets padded.
- Start with an MVP. Ship the core, learn, then spend on what users actually use.
- Fix the price per phase. A fixed-price discovery and MVP phase limits your risk before you commit to the full build.
- Own your code and accounts from day one. See the contract checklist.
- Budget for maintenance so the system doesn't decay after launch.
- Compare proposals on total cost, not the hourly rate. Here is a framework.
Want a price for your own project? I quote fixed prices per phase after a 30-minute discovery call, and I'll tell you if an off-the-shelf tool would do the job for less.
Frequently Asked Questions
How much does it cost to hire a software development company?
Simple websites cost about $5,000–$20,000, MVPs $25,000–$100,000, and custom enterprise software $100,000–$500,000 or more. Hourly rates run about $25–$50 offshore, $50–$100 nearshore and $100–$250 in the US.
What pricing model is best for software development?
Fixed-price works best for well-defined projects with a clear scope. Time and materials suits evolving projects with unclear requirements. A dedicated team fits long-term ongoing development. Choose based on how clear the requirements are, how flexible the budget is and how certain the timeline is.
Why is US-based software development more expensive?
Higher salaries, living costs and overhead. In return you usually get easier communication, overlapping working hours and stronger contract and IP enforcement. Rates also vary within the US: lower-cost regions often charge $100–$150 an hour, against $200 or more in the largest coastal cities.
What hidden costs should I budget for in software development?
Third-party APIs and services, hosting, app store fees ($99 a year for Apple's developer program, $25 once for Google Play), maintenance of roughly 15–20% of the build cost per year, and scope changes or new features.
How can I get the best value from software development companies?
Start with clear requirements, build an MVP before the full feature set, fix the price per phase, keep ownership of your code and accounts, and choose a team whose case studies show work like yours.
