If you’re happy to invest in having bespoke software created around your exact needs, it will make your life easier. But what should you expect to spend? You may be using off-the-shelf software solutions and paying affordable monthly fees, so moving to a bespoke solution could be a considerable jump in investment. So how do you determine what’s good and bad value? Why are some software companies cheaper than others? Here’s a brief guide to help you understand a little more about how bespoke software is priced and what to expect before you sign on the dotted line.
Common concerns about the cost of bespoke software
How much do I need to pay upfront for software?
It’s normal to pay a reasonable deposit upfront for a bespoke software system. This deposit should be used to cover the software company’s overheads, and enable them to secure developers. For a project that lasts at least 3-6 months this would roughly be around 20%. For smaller projects this could be higher because there are fixed overheads to cover, such as the project manager’s time.
However, if you’re quoted closer to 50% deposit upfront it’s worth asking the software company to break down the costs and help you understand what the deposit will be used for.
It’s not normal for a software company to ask for the entire amount upfront. They’ll be less incentivised to ensure the project meets your needs, and you’ll lose the ability to withhold payment if they’re not delivering on what they promised.
Because we understand how important cash-flow is for SMEs, we usually charge a deposit of 20% or less, and would much rather build trust with you upfront and on a longer term basis. We believe it’s important to invest time initially to get to know you and your business processes, understanding exactly what you need from a system, before starting the development process.
The cost of development can usually be split into monthly installments, and we wouldn’t expect your final payment until your software system is complete and you’re happy with the result.
How quickly will I make my money back?
Like many things in business, bespoke software is not an expense, but an investment. As it’s a bespoke service, it’s not usually possible to know how much it will cost before the project has been discussed in length with a software developer or consultant. It’s important to invest time initially in scoping out your needs for the software system. We don’t generally charge for this time, even if you decide not to go ahead with the project.
Time is money
Bespoke software will save you and your team a significant amount of time. Although it’s not everyone’s aim to make staff redundant, software is designed to automate any time-consuming manual tasks, so your staff can focus more on human-centered jobs like customer service and sales. It’s not uncommon for our clients to save hours each day because their bespoke software system has automated a few tasks that were previously done manually.
R&D Tax Relief
The UK government has a scheme for claiming tax relief on R&D, which includes bespoke software development. Many of our clients have found that as well as a percentage of the development costs, they can also claim for time training their staff, plus time spent researching the solution to their problems. With R&D Tax Relief as well as all the other benefits of bespoke software, it’s easier than you might expect to get a return on your investment, within a year!
You may like to read our previous article: How to get 25-33% of your bespoke software cost back from HMRC.
What affects the cost of bespoke software?
1. Complexity of the system and time involved
Most businesses need a simple system that stores customer data – such as a CRM. There are plenty of ready-made CRM systems available for free or low-cost, and if your needs are generic enough then you probably won’t need bespoke software. But if you’re hoping to automate business-specific tasks (such as creating quotes that calculate all the variables in your products) every feature or task you automate will take a software developer time to create.
Perhaps you run a fairly simple business but your staff aren’t tech-savvy at all, and you’ve been using manual processes, paper and pen, or Excel. You’d benefit from a simple bespoke system that’s designed to be really easy to use. Most off-the-shelf software will do too much and can confuse staff, but bespoke software is made to include only what you need. Specific team members may need to look at information relevant to themselves, while the manager or business owner would need access to all the information, as well as a management dashboard and reports. Our less complex systems are still made entirely from scratch but are likely to cost less, as they will take less time to build. All of this information is figured out as early as possible, so the price we quote you will be accurate, as well as the time frame we agree.
2. Skill level of the software development team
If you’ve been quoted a suspiciously low amount for a bespoke system, this could mean there are shortcuts being taken with the project, or the software development team are offshore workers and/or a lower skill level than average/mediocre.
As with many things, quality is better than quantity. A small, well managed team will often outperform a large, badly managed team. A project is more likely to run smoothly with a dedicated development team who are involved from start to finish, rather than a group of individuals dipping in and out.
Generally the bigger your project, or the faster you need your system to be built, the more developers will be needed and so this may affect the overall cost.
It’s worth noting that larger companies will usually have additional overheads and expenses to cover, including marketing, managerial staff, customer support staff etc.
Why are some software developers cheaper?
You could work with an individual (freelancer or contractor) software developer, which is likely to cost less than working with a company. But there are disadvantages to this cost saving. Because they’re just one person, they may not be available when you need them, and are unlikely to have a backup developer for when they’re ill or unavailable. They may not have all the skills needed to fulfil your project needs, whether they admit this or not. They’re also likely to be lacking in project planning skills, processes, and all the additional resources that a larger team or software company could provide.
If you find cheaper software developers this can often mean that the work is being done offshore (rather than in the UK) which can also come with a whole host of problems. Language barriers, time zone differences, and lack of creative suggestions are all potential challenges to overcome.
Another factor that could lead to a software development team being cheaper is finding inexperienced coders or someone who is moonlighting, and isn’t available full-time during normal office hours. Depending on the level of service and responsiveness you need from your tech team, this can cause serious problems.
Why are some software developers more expensive?
More expensive software developers are usually specialists in a niche area or have advanced technical knowledge. You’re paying for their expertise and many years of learning. As technology is changing so quickly, a good software developer is always learning the newer ways of working and the new technologies available. However, there are many “software experts” out there that have been in the industry for decades but haven’t ever evolved their skills and knowledge. Being resistant to change is not a great sign in the world of technology – so someone’s age isn’t always the best indicator of their knowledge and experience.
3. Does your software system need to connect to another system?
Many businesses need features which rely on connecting to other systems. A popular example is “postcode lookup” – for sending engineers, members of staff or products to the correct address, or for customer analytics. Although this can be free for small volumes, connecting to these types of systems can incur additional costs, depending on your usage needs. As the costs come from Google, Royal Mail or a data reseller, your software developer would have to pass this cost on to you. We’re always transparent about extra costs like this upfront, and will usually suggest or offer to research the best 3rd party options to suit your needs before the software development begins.
How do Source Code Software’s prices compare?
When Kris started this company in 2015, it was a vehicle for him to provide freelance coding services. Since then, we have evolved into a world class, process-driven software consultancy.
We’re proud to have built a team of skilled and dedicated UK-based software developers, and have also added and refined our processes to ensure the quality of the results we deliver.
Our current rates* are as follows:
£960 + VAT per day (charged in ½-day increments) – standard rate
£800 + VAT per day (charged in ½-day increments) – preferential rate (if agreed as part of a maintenance & support package)
By charging a rate that’s consistent with our years of expertise, we can keep our client base relatively small and, in turn, provide a better quality of service to our customers.
*Our current rates are correct as of July 2020.
How much does a simple bespoke software system cost?
Many businesses don’t need a bespoke software system that does absolutely everything. There are plenty of off-the-shelf solutions that do various tasks brilliantly. Rather than reinventing the wheel, we often recommend simply building bespoke pieces of software that integrate with other existing software solutions, such as your accounting software, your email marketing software, or your CRM.
We often refer to these types of software solutions as “Bridge” software or “Annex” software. The bridge software is a bespoke solution that literally bridges the gap between your existing software solutions. For example, if you’re using a CRM and a cloud-based accounting system, but you have some additional info that neither of these systems handles, the bridge software can take care of that and make the 2 systems work more seamlessly together.
Annex software is like an extension to an existing software solution, but a bespoke section. So when your off-the-shelf solution or existing software falls short, we can create additional functionality that could be bespoke to your business, so you can pull or push data in or out of that other software.
We would scope out your project requirements and familiarise ourselves with your existing software systems before quoting usually. But to give you an idea of price, our typical quotations for smaller systems such as these ranges between £5k to £30k.
How much does a complex bespoke software system cost?
There are many levels of complexity but if you’re looking for an end-to-end solution that does everything you need and can replace pretty much all the other software tools you’ve been using, a full bespoke system will do this. Every business is unique and therefore every system will be different, so we always scope out your project requirements before quoting. But to give you an idea of price, our typical quotations for a full bespoke software system ranges between £30k to £100k.
Does your software company provide a guarantee?
It’s always worth checking what guarantees a company will provide, as it can say a lot about their ability to fulfil the work and deliver their promises.
Our Guarantees are:
- We guarantee regular updates over phone or email to let you know how things are going and to get crucial feedback.
- If you are not satisfied that your system meets your needs (as described in the ‘Requirements’ section of your proposal), we will work with you for free until it does.
- Bug fixes are fixed for free during user testing.
What ongoing costs are there with bespoke software?
Monthly maintenance & support fee
With most of our projects, once the development phase is complete and the payments have been made, you own the IP and are free to have your system hosted and maintained by anyone. A monthly fee would usually be expected to cover the costs of hosting your system as well as support and maintenance. The cost of this will vary based on the size and complexity of your system, and the number of users. The monthly fee will also depend on the speediness of fixes and how much support you and your team need. Our maintenance & support packages tend to range from £200+VAT to £1,000+VAT per month but we’ll always discuss this with you before the project is launched.
A good software development company will fix bugs for free as standard – after all a bug is usually a problem they created.
As your business and technology will always be evolving, it would be worth discussing a long-term agreement for ongoing future development, so your software will always be up-to-date. We offer a preferential rate for ongoing development for our maintenance and support customers and tend to work with our clients for many years. We’re often seen as an extension of their team, as we build such strong relationships and get to know the businesses on a deep level.
How do I enquire about a bespoke software system?
Now that you understand a bit more about how bespoke software is priced, you might be ready to get some quotes from software companies.
The first step is to have an honest chat about your current situation and systems, and determine what the ideal solution for you would be. Sometimes, it’s not bespoke and we would happily point you in the right direction.
Simply drop us a message – we’re a friendly bunch and will never pressure you to buy.