One of the biggest questions entrepreneurs have when considering a software development project is, how much will it cost? This post will help you assess the possible costs of your project.

First up: upfront costs

This is the most common consideration new entrepreneurs take into account when deciding who to work with on a project. There’s a good reason for that: the initial cost of a software project is the easiest thing to compare between developers.

But be warned, as those who use upfront costs as the only metric without considering the other factors learn a hard lesson. Upfront cost is a terrible way to judge how much value a developer will provide, because it’s just the down payment.

So what else should I consider?

Upfront cost + Maintenance Cost

Your software’s functionality and requirements will evolve. Very few software systems can run for years without any changes. Each line of code you add to your application is a line of code that must be maintained.

This maintenance has a cost. If the code was written cleanly, this cost can be low. If it was written poorly the cost will be high (sometimes extremely high). Maintaining the current code most often becomes an issue when adding new functionality. The developer has to add the new code while also keeping the old code working. If the code is in an unrelated system, the cost is usually marginal. But if the new functionality involves the same systems, this cost can be high. An experienced developer knows how to keep a software system in a condition that can be changed without massive maintenance costs. But no developer can turn an economy car into a school bus.

Even if you’re not adding features, the environment you’re running in will change. Security concerns will be discovered and have to be fixed. Some platforms evolve in a way that will break your apps. Mobile apps have had the worst track record for this, because new releases of mobile operating systems frequently require changes to keep the app running.

Upfront Cost + Maintenance Cost + Opportunity Cost

Another cost that isn’t considered by inexperienced entrepreneurs is the opportunity cost. Opportunity cost is the loss of potential gain from not having the right software solution.

Here are some of the sources of opportunity cost:

Buggy software

If your software doesn’t work as designed, or breaks down under pressure, this hurts your business. Your users lose trust in your solution. Your users may lose time or money because they’re counting on a feature working as expected. Trust is a difficult commodity to regain once it’s lost, and this may hurt the brand you’ve worked so hard to build.

Non-existent or late software

Every feature you build into your app should drive value. If a feature can generate revenue for your company, you are losing money for as long as it doesn’t exist. The same holds true for features that can save your organization or customers money.

Late delivery works in a similar way. If the feature isn’t ready when the customer is ready to buy, you may not get another chance. Late delivery also means giving your competition a chance to catch up.

Software that doesn’t solve the right problem

Even if designed well and built exactly to spec, most software doesn’t achieve what its creators intended. There are a number of reasons why this might happen: the interface may have confused users, or the experience wasn’t optimized for the behavior you’re trying to enable.

Or maybe your users want to do something different from what you designed. Or your solution may have been be spot on, but you delivered it to the wrong audience.

Or the platform itself may be a hindrance. Mobile web apps can perform most of the functionality of a native app, but don’t provide the same performance. The effect of this is actions like moving between screens become more costly for the user, resulting in them losing interest.

The possibilities for failure here are endless – but they are not inevitable.


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Opportunity cost is hard to measure because it’s difficult to put into a neat spreadsheet. It’s not something that comes directly out of your bank account, like upfront and maintenance costs.

Accurately assessing opportunity cost requires keen business and technological insight.

How do you measure the cost of a frustrated user leaving you a negative review? And many costs are even more subtle:  if 10% of your users can’t figure out how to perform an action, this can cost you money.

Measuring this might sound like voodoo, but the effects on user behavior and your potential profitability are real.

Developing a deep understanding of how your software affects your bottom line is the definitive task for a software startup.

Cheap developers may help you on the upfront costs, but will harm the maintenance. Good developers will cost more upfront, but will save money on maintenance.

The truly valuable developers will help get maximum value from your software by minimizing your opportunity costs as well.

Be sure to consider all of the costs associated with software development when choosing who to work with.

Opportunity Costs seem invisible but take value directly out of your company. Click here to work with developers who know how to create value.

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Also published on Medium.