How Do Software Development Rates Affect Your Project Costs?

Puzzle pieces with price and value printed on them

Prospective customers who contact us to discuss their custom software projects always ask about the rates we charge for developers, quality assurance and project management. And it is a fair question. Everyone should ask it. However, it’s just one factor to consider — and a very important one — when comparing software development firms.

You might ask, “Aren’t you guys a rural outsourcing company? Isn’t it all about rates?”. Well yeah, they make a big difference as long as you are producing well designed, high quality software at the same time. But, low rates can equal high cost if a firm is not qualified to do the work. So, the real question you should ask is, “What will my total cost of ownership be?”. Aside from writing quality code, there are many factors that go into determining the total cost of ownership (TCO) for a custom software product, including:

  • Software Architecture – A solid foundation is required for a successful product
  • Good Communication – Critical during every phase of the project
  • Quality Assurance – A bug caught before it reaches the field will lower your costs
  • Project Management – The keeper of balance between efficiency and value

Any one of these factors, if poorly executed, can result in a project with higher than expected TCO.

Low rates do not mean low cost

If a project takes forever to complete, or the final product is unstable and full of bugs, low rates may not reduce your cost. Low rates without experience, and experience without process, will result in a higher overall cost for your project, guaranteed. And that is just to get you to your first production release. This is where total cost of ownership starts to become apparent. Software that is designed and developed by inexperienced developers or unqualified teams, even at lower rates, will cost you much more in support costs, and potentially impact the relationship and good will you have with your end users.

We have inherited numerous software solutions over the years that were built on top of poor designs, then modified and patched over time to produce a maintenance (and cost) nightmare for our customer and their users. Sometimes the only answer is a complete re-write. In other cases the application can be incrementally refactored over time to reach a stable state. In all of these cases the total cost of ownership ended up being much higher than anticipated. Many of these outcomes could have been avoided by choosing the right software partner, and focusing on total cost of ownership instead of rates alone.

Avoid “knowing the price of everything, and the value of nothing”

By all means, ask about rates when you speak to a software development firm regarding your project. They are extremely important, if all other factors mentioned above are equal. But, to borrow some wisdom from Oscar Wilde, avoid the trap of “knowing the price of everything, and the value of nothing”. There are other key questions you should ask to ensure you are making an informed decision on a software vendor. In the end, you are not necessarily seeking the lowest rates, but rather the best value and the lowest cost.

About Scott Risdal

Scott RisdalScott has been in the software development industry for over 30 years and has seen most of what is under the sun during that time. They don’t let him program any more, but he is still good for an opinion. Nowadays most of his time is spent on the business development side of things, and there is a good chance that he will pick up the phone when you call Saturn Systems to talk about your project. If you do, you can also talk to him about: curling, mountain biking, cross country skiing and music.

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