Apples to Oranges: Evaluating Software Development Quotes

Speaking directly to the influx of people requesting to build the next “Uber” of delivery, child care, housework, pet sitting, etc., we have to remind these businesses to consider the bigger picture – their project is not just some software development to get an app to market.  Building an application is much more than just the design, project management, UI/UX and software development.  There are costs associated with code and application maintenance and updates as well as server and hosting costs. And that’s just the beginning.

A topic that comes up in many conversations with potential customers is the difference in costs between companies when requesting/receiving a quote. We have discussed an equation for the cost of software development in our post “What’s Your Budget”, but how do you accurately compare quotes from different companies? Initially, you need to set the dollar amount in the quote aside and look at actual effort involved. This is a helpful exercise when you receive drastically different quotes for your proposed software application.

Receiving a quote that breaks down at approximately $X/hour for 500 hours effort of work is going to be different than receiving a quote for the same rate ($X/hour) for only 50 hours of effort.  The first baseline comparison you should do is determining effort –to- effort. When receiving a quote, if the programming portion of the quote is apples to apples in terms of hours, then you need to determine the amount of true work/effort you are receiving as well as the service mix.

One way to determine the baseline of “effort” required to build your application is to compare programming-to-programming and extrapolate the cost for the effort. A deeper evaluation and dimension in comparing quotes is to dig deeper into the time needed outside of core development that is considered in the quote. If programming effort alone doesn’t justify the cost difference, look at what other items are being bundled into the quote? Is one company quoting the product design, technology oversight, project management, software development, QA, & support and maintenance and another company solely providing you a quote for software development?

The company that quotes a higher total price may charge the same cost per development hour, however, may have additional services that they include in the estimate. Look deeper to uncover the consideration of project management, design, UI development, dev ops, deployment and maintenance in the quote. It’s often very difficult to truly compare apples to apples in software development quotes.

It’s not just about writing code for a software application. In the end you are evaluating the work composition of quotes as well as which “work” composition will successfully deliver a full turnkey product. Craig Hockenberry answered a question on Stack Overflow related to the cost to develop an application and what goes into the final cost. Craig wrote, “Now if you want to build backend services for your app, that number’s going to go up even more.  Everyone seems surprised that Instagram chewed through $500k in venture funding to build a new frontend and backend.  I’m not.”

Remember that a holistic cost of a custom application will need to include:

  • Research and Planning
  • Project Leadership / Oversight
  • UI/UX Design
  • Software Development
  • Support

In the end you must ask yourself, which company is going to deliver the right product, the right way, the first time for your business…and that will be there for you for years to come.