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Software development lifecycle may sound scary or confusing, but in fact, it’s a simple method of delivering software applications. Planning to start a software development project? Then this guide is here to map out your journey towards a successful, working app!

In this article, we’ll explain the term “software development lifecycle” and go through its usual stages. We’ll also cover different software development life cycle models so you can get a full overview of the topic.

What Is Software Development Lifecycle?

Software development lifecycle, otherwise known as SDLC for short, is a term used by software houses to name a methodology of delivering high-quality, working software that meets the client’s requirements, deadlines, and budget. Coined in the 1950s and the 1960s, it has become a valuable tool used for thousands of applications for different industries and purposes (follow Techopedia if you want to learn more about the history of SDLC). Currently, its precise standards are covered within the ISO/IEC 12207 international norm defining the tasks required to develop software and maintain it.

A standard development cycle is divided into a couple of phases (more on that below) that define the type of tasks to get done inside them. Each task inside a project life cycle is then assigned and measured upon completion to ensure high-quality software.

Still confused? Think of the software development lifecycle as a roadmap with clear guidelines that take you all the way through the process of software engineering, from planning to maintenance. It’s also there to improve the efficiency of the development team and achieve the ultimate goal of meeting the client’s needs while staying within the budget and deadline.

What Are The Stages of Software Development Lifecycle?

The software development process is usually divided into six to eight steps. Why does that number vary? Depending on the project’s scope and deadline, some project managers may combine steps or omit them altogether. However, this act doesn’t (or shouldn’t) influence the overall quality of the product in any way, so if you hear that your development team wants to do six phases instead of seven, don’t freak out.

Depending on the SDLC model you use, these stages may be repeated as needed. An iterative model (described later in this article), for example, works in sprint-based iterations that go back and forth between the phases multiple times to deliver better results.

Let’s review the traditional distinct work phases of the entire SDLC process.

1. Planning & Analysis Phase

Careful planning and requirement analysis are crucial in delivering great software. At this stage, the customer works together with the software house team to create a detailed scope of the project and calculate the time and resources needed.

A mutual understanding of the product’s features, benchmarks, and goals can be achieved in a number of ways, including workshops, market surveys, expert consultations, stakeholders’ feedback, and more. At this moment, other guidelines are planned as well, such as quality assurance requirements, risk identification, technical scope, production environment, and others.

The result? The team gets a first insight into their future work, while the customer has a clear view of the product’s scope and expected outcomes. Most models use this stage as a starting point and later adjust the tasks to current needs. Agile methodologies have mastered this process, dividing the development time into short increments that involve a specific scope of work established right before the start.

2. Design & Prototyping Phase

The design phase involves much more than just product designers’ jobs. In software development, it’s equally important to create the visual aspect of the end product (the ‘traditional’ perception of design) and the overall system architecture behind it.

Based on the requirements gathered in the previous stage, the software house team now works on designing the product’s structure, including the communication between the elements, data flow, and optional third-party modules. The architecture is created strictly in line with the software requirement specification as well as the deadline and budget constraints determined earlier.

At the same time, the product design team works on wireframes that act as a reference point for the development team and the client. Some SDLC methodologies use rapid prototyping to achieve optimal results that can later be iterated (more on this later). Wireframes and prototypes help the development teams meet customer expectations and move through development faster. They’re a great way of getting early feedback and delivering an MVP version of the future product. Later on, the MVP may be shaped and changed according to new requirements and details.

3. Software Development Phase

Most likely the longest part of the SDLC process, the software development stage requires the most involvement from the development teams and results in a working product including all the pre-agreed features.

The actual development is performed according to the software requirement specification and the wireframes & guidelines established in the design phase. If it wasn’t done at the requirement analysis phase, the entire development process starts with translating the outcomes of both previous stages into an initial set of assignments. Then, the project manager assigns due dates and work schedules for transparency. As the development proceeds, these assignments may change, as the product is delivered according to current business goals or user feedback.

The team rarely uses just one programming language. Most often, it’s a group of software engineers with various skills and experience (a cross-functional team) using a number of programming tools dedicated for delivering specific results. This approach helps to produce high-quality software that meets all business requirements. On top of that, software houses have a set of their own guidelines, standards, and tools to create software. The development team is also supported by tech leaders, project managers, and other roles that help with any bumps in the road.

4. Software Testing Phase

The code is released into a testing environment. The quality assurance team takes over to look for bugs, omissions, and other red flags inside the software. Once again, they check all features against the customer’s expectations and verify the software requirement specification.

Bugs and defects are a normal part of each development process, so you shouldn’t be alarmed by their presence. The software testing phase is designed to provide the highest possible quality in all fields: that’s why the team takes many different user scenarios under consideration and meticulously checks for all options possible. During this SDLC process, the code will probably go back and forth between the developers and QAs until it’s pixel-perfect, stable, and in line with the business requirements. If it’s meant to be combined with third-party software products, the quality assurance team will check for that as well.

The process of software testing involves all sorts of different tests, both automated and manual, like penetration tests, end-to-end tests, validation tests, and more.

Depending on the chosen SDLC model, the testing phase may occur all at once, after delivering the entire code, or interchangeably, in little increments, as more and more features are added to the software. Agile methodologies will lean towards testing during each sprint or release – more on that below.

5. Software Deployment (Implementation) Phase

It’s time to pop that champagne – the code now meets the pre-agreed software specifications! A completely developed product is ready for release to the market and deployed to the production environment. Larger products will require integrating with pre-existing systems. Developers will take one final look at the implemented system, and may work together with QAs and content writers to produce detailed documentation for it.

This stage also involves arranging an infrastructure that’ll support the new product, establishing the server and hosting provider, and creating a strategy for future deployments with product updates.

6. Operations & Maintenance Phase

The system development process is never finished. With time, unexpected bugs can be detected, upgrades may be needed, and feature enhancements might be in order. As the product is now live, the team may observe performance issues or room for improvement.

It’s wise to monitor and review the network performance, environment’s stability, and the product’s behavior after the release. As the product is moved to the final environment and tested by end-users, it needs to remain stable and fast-running. Taking this step leads to faster problem-solving and issue management in case of any changes or critical issues.

The maintenance phase is crucial to meet the ever-changing business requirements, performance standards, and user expectations. It can involve extra development work or code alterations, as well as QA input.

Other Phases

Like I said at the beginning of this section, it’s impossible to pinpoint exactly one ‘proper’ process of software development life cycle. SDLC is a guide, and depending on the project’s specification, scope, and software organization, the software development company may omit some of the phases, merge, or split them into smaller sections as needed. For example, the analysis phase may be divided into business, technical, and other aspects.

In some SDLC process models, like the Agile method, the phases like development and software testing will concur to ensure rapid application development. In others, like the waterfall model, they’ll happen one after another, linearly.

Software Development Process: The Reality

Still thinking of that roadmap comparison from the section above and wondering how this checks out if there are so many variants? You should know that SDLC is not a plan. It’s a tool that you can adjust to your current needs. A traditional perception of planning is rather stiff and leaves no wiggle room, with steps carefully taken one after the other. Most software development methodologies stay away from that concept, as it can be quite binding and unfruitful.

In the next part of this article, we’ll cover the most popular SDLC models and methodologies and explain the core differences between them.

Software Development Lifecycle Models

The number of methods is nearly infinite when it comes to the models of software development life cycle. SDLC methodology allows for a lot of flexibility, and with new ideas and methods of software development, the struggle with choosing the right provider is real.

In this article, I’ll describe these software application development methods that you’ll most likely stumble across when searching for the company to build your product.

Waterfall Life Cycle Model

Perhaps the earliest of all SDLC models, the waterfall model uses all standard phases of software development, putting an emphasis on the planning stage and detailed documentation. Its traditional perception of product development translates to sequential phases that don’t overlap. You may think of it as a ‘production line’ in a ‘software development factory’, where a part of the product is constructed and then passed on.

This model is easy to understand, plan out, and implement, however, as each phase depends on the execution and delivery of the previous one, the entire project is likely to be overdue.

In the waterfall model, the progress flows in one direction and once you put it in motion, there’s a little chance of changing anything as you discover new requirements or constraints to the product. The decision was already made, and the shift will result in missed cost estimates and a ton of work going to waste.

On top of these risks, a significant drawback of the waterfall model is the fact that the end user won’t see a working product, or even a part of it, until very late in the process. This, combined with the high chance of missed deadlines and a long time passing between feasibility analysis and product release (eight to nine months in most scenarios), may result in a software that’s already obsolete when made available to the wide public.

Currently, software houses tend to use modified versions of this methodology, like Sashimi (Waterfall with Overlapping Phases) or Waterfall with Risk Reduction to minimize these uncertainties. Still, these models don’t answer many struggles of modern software development.

Iterative Model

Contrary to the above, there’s not as much emphasis put on preliminary planning in this model of software development life cycle. The SDLC model called Iterative involves breaking a product down into small chunks (iterations) according to the current state of knowledge about the project. All of them go through the standard phases of software development (planning, design phase, software testing, and so on) quickly and are immediately deployed for transparent, tangible results.

This way, users and clients can pin down the sections that need improvement, and send the product back for the next iteration of development, reducing costs. As the project progresses and more data is discovered, the planning also adjusts to meet new challenges and constraints, working in an iterative manner as well. The iterative SDLC model allows for slight changes to be made during the development, resulting in better market adjustment. Rapid prototyping can enhance client engagement and the feedback process. However, never-ending upgrades to the basic product can eat up resources and lead to out-of-scope software. This can be easily avoided by keeping your roadmap in mind.

Software Prototype Model

Not to be mixed with the iterative model, the software prototype involves fast prototyping of products that don’t have defined requirements. This variant of the software development lifecycle relies heavily on user feedback, as it pretty much construes the scope and details of the project. Therefore, it’s great for high-risk software industry projects with changing business requirements. What’s more, it can lead to huge budget savings, as you invest fewer resources and flaws are easy to locate and fix at an early stage.

Software Prototype model is often subdivided into three types:

• Rapid prototyping (creating an MVP)
• Evolutionary (adjusting the product according to user feedback)
• Extreme prototyping (developing web applications in stages, starting with a static prototype and then moving on to simulated services and deployment).

However, this approach to software development isn’t risk-free. As the users’ needs can be easily changeable, it may take a long time to complete the ultimate version that pleases the stakeholders.

Spiral Model

The spiral model combines the best features of Waterfall and Prototype models to achieve fast application prototyping and advanced risk analysis. In this case, the team works on preliminary system architecture and design and delivers consecutive prototypes for stakeholders’ evaluation. Once a consensus has been reached, the final prototype is moved to the further stage and through the rest of the development cycles.

The spiral model enables thorough testing of each step, and even though requirements are set at the beginning, they can easily change with each iteration, reducing the business risk. Extra features may be added as needed, and continuous feedback makes this model more flexible than Waterfall. Still, you need to implement strict procedures to prevent endless spiraling and keep the clear image of the end product in mind.

V-Shaped Model

Yet another variation of the Waterfall model, the V-shaped model follows a parallel structure of tasks while keeping the traditional linear approach to software development. The emphasis is placed on the coextensive verification and validation phase, with coding right in the middle.

The robust validation phase ensures multi-level testing of all aspects of the newly-developed software. This leads to better risk management, however, its linear, disciplined progress makes it tough to introduce necessary changes at later stages. Also, working software shows up quite late in the cycle, so user feedback is harder to obtain.

This model works well for upgrading existing applications, but may not be so great for new projects that still have more question marks than actual, set-in-stone requirements.

Big Bang Model

The Big Bang Model may sound controversial, as its main characteristic is absolutely no planning. Instead, the team codes and tests as soon as they learn new requirements, which gives them a lot of flexibility, but may also bring unexpected changes and results into the project.

The Big Bang model is good for small projects with short (or unknown) deadlines and tiny teams. It works best when the job needs to be done fast, so every hour spent on planning seems like a waste of time.

As this approach can get quite messy, it’s best to use the Big Bang model with experienced, yet flexible team members (a cross-functional team) who can deliver results quickly and work with little to no input from the stakeholders. It’s also great for academic or practice projects.

Agile Life Cycle Model

The buzzword of modern-era software development, Agile methodologies are great for time-sensitive projects requiring a lot of user feedback. As it’s a disciplined process, many companies introduce roles like Scrum Master to ensure a well-organized, goal-oriented development model.

The Agile development model puts the customer first, accepting the inevitability of changes being made mid-project. It combines continuous iterating with robust testing for high quality of the end product and reduced risk; this philosophy divides the project into small sections of work lasting between 1 to 4 weeks.

Usually, if Scrum methodology is also used, each of these periods (called sprints) shares a pattern of kick-off meetings, planning, daily sync, release, and review. This way, the team and the client always have a clear understanding of the upcoming development phase and can adjust the conditions, scope, and process as they go.

The Agile model puts an emphasis on people and interactions between them, caring not only for the result, but also for the dynamics of the team and a clear communication between its members. This is a rare, yet valuable approach that helps to reduce communication gaps, misunderstandings, and time wasted on non-efficient problem reporting. It also ensures constant stakeholder engagement.

Models like XP (Extreme Programming) derive from Agile: XP focuses on the simplicity of development and often mixes the role of a developer and a tester. Another sub-model, Kanban, uses a special visual board to reduce the development time and improve the workflow. This method actually originated in Japanese manufacturing, where visual cues were implemented to prevent inventory pileup.

Other SDLC models

There are many models of software development life cycle. SDLC is a wide concept, and many companies and teams have introduced their own battle-tested methods based on hundreds of software development projects delivered.

Other popular SDLC models are:

• RAD (Rapid Application Development) model, which is similar to the Iterative model, but allows for separate deployment of each iteration;
• Dynamic System Development model, which derives from RAD, but focuses more on user involvement;
• FDD (Feature-Driven Development) model, which is a variant of the Iterative model that bases the project life cycle on features required for the end product;
• DevOps security model, which incorporates the Operations phase into the development loop for instant feedback during the design and implementation stage;
• Lean model, which focuses on easily-changeable software developed efficiently, with less workflow and a smaller budget.

How To Achieve High-Quality Software With SDLC

Regardless of the SDLC model, you choose, introducing some practices to your software development process will help you achieve high-quality results in a timely manner.

Team Communication

Highlighted in the Agile model, this really can’t be overemphasized. Each project will benefit from efficient team communication, as well as the relationship between the team and the customer. Even if you’re not a fan of Scrum or Kanban methodologies, get inspired by the wide pool of soft-skill tools they involve, like daily meetings or retrospective meetings that help solve problems and reduce hold-ups. These have all been battle-tested and bring real value to the project, even if they sound bizarre at first.

Transparency

Make sure that both parties stay on the same page at all times and speak about their expectations during each phase of software development. Let it be simple updates or complicated pivots – this easy rule is a real lifesaver and will cut you loads of extra time spent on fixing bugs and mistakes that weren’t communicated properly.

Continuous Integration

Patching different code snippets at the last minute will almost certainly result in missing deadlines and a lot of stress. Instead, implement continuous deployment and integrate each change into the system as soon as you deliver it to ensure total compatibility and reduce the risk of extra work needed to be done at the last stage.

Version Control

Better safe than sorry! Keep all the code secure and in a single location to prevent any leaks and chaos. Simple security measures such as encrypted Internet connection, logged access, and backup systems can go a long way if something goes wrong. Also, implement a change management system to track individual code input and keep safe, finalized versions of the product separately from unstable ones. Track changes carefully and allow your developers to collaborate on the same codebase.

Fruitful Partnership

Take some time to choose your software development outsourcing company carefully: look through online reviews, testimonials, and portfolios. You can also consider using a video testimonial software to access professional video testimonials – these can provide a more realistic feel for how past clients found their experiences.

Set your own set of expectations towards your partner (including budget and deadlines), and, above all, talk to your candidates!

SDLC: Key Takeaways

SDLC is an excellent way of running, analyzing, and improving the process of developing software. It guides you through all the phases of creating software, from planning to maintenance, and helps you pin down potential problems, hold-ups, and bottlenecks along the way, showing you how to fix them.

The basic SDLC process covers: planning & analysis, design & prototyping, development, testing, deployment, and operations & maintenance.

You can use a variety of models of tested software development life cycle. SDLC models include a traditional Waterfall model and more modern, flexible philosophies such as Agile methodology (with sub-methodologies like Scrum and Kanban that put more structure and detail to the process). Variations like Iterative, Prototype, Spiral, V-Shaped, and Big Bang fall in the middle, as they introduce more space for mid-project changes but are not as adaptable.

Each of these models has a wide portfolio of finished projects. Getting to know them closely will allow you to understand your project’s needs better and make an informed choice.

Why Outsource In The First Place?

The Earth revolves around the Sun. Hopefully, we can agree on that.

Metaphorically though, it certainly revolves around money.

That is especially true when it comes to business. Most business decisions are heavily influenced by finances, whom to hire, which market to move into, or how big of crypto loans you may need to make your ideas come to life. And of course, whether the business itself succeeds or fails is measured by market capitalization. So once again — by money.

It comes as no surprise that business owners look for ways to grow their revenues and limit expenses. And that’s where software outsourcing comes into play.

With software outsourcing — that is, when you employ external software development services to handle any of your projects — you can lower the overall costs of software development and save both time and money. While it also gives you access to global talents, streamlines the processes, and lets you focus on your business’s core strengths, cost–reduction is the reason more often cited (70%), as shown by the 2020 global outsourcing survey.

Can Outsourcing Really Save The Budget?

Doubtful? Then let’s compare the overall costs of hiring an in–house team versus via a software development company.

In–house Software Development

Office Space

Before you can start the hiring process, you have to set up office space for your future employees. The average cost for office space in the US by square foot is between $8–$23, and since the average size of an office in the US is 1,400 square feet, the average price might fall between $11,200–$32,200.

Of course, the total cost of renting space differs across cities and countries. In the US, New York is definitely the most expensive, beaten only by Hong Kong on the global scale, and with Tokyo and London hot on its heels.

Besides putting the desks together with matching chairs, it’s also important to include access to a private kitchen, lounge area, meeting rooms, and most importantly, parking space. Which of course will generate additional costs, but will keep your employees happy in the long–term.

One way of lowering the office space costs is to consider sharing co-working spaces with different businesses, but this might be risky when dealing with sensitive information on a day–to–day basis.

Hardware & Software Infrastructure 

When you have space, you need to fill it with hardware and software infrastructure, which may include: computers, programs, subscriptions, servers, and so on, depending on your needs. But you also have to pay for general things as well, such as basic utilities and office supplies, which may need regular maintenance, repair, or even replacement after a few years of use. Should you need to allocate resources, for example, for efficient Kubernetes workloads management, you’ll be in for additional costs.

Hiring And Recruitment

By that point, the office should be ready to welcome new employees onboard. What kind of expenses should you expect?

First, the recruitment. Depending on the process, there might be some costs involved if you’re not doing it on your own — that means hiring recruitment specialists or agencies to help you out in securing the best local developers for your software development project.

In Germany, the average recruitment cost is $5,732, while in the US it’s $4,129, and in the UK — $4,258.

Then come the usual costs that surround the hiring itself. These include the base salary, taxes, insurance, and fringe benefits, from paid sick leave and a retirement plan to access to welfare & recreational facilities, depending on the country.

According to research done by UHY, the international accounting, and consultancy network, the average employment costs on a global scale are now almost 25% of an employee’s salary. The highest costs can be found in Europe, while the lowest are in Canada, Denmark, India, and the US.

Furthermore, due to the impact of the pandemic on the workplace, additional benefits might become a new standard — such as extended remote work opportunities or even child care options. Not mentioning the hand sanitizers and disinfectants which quickly became a necessity used several times every day.

Onboarding, Training, Professional Growth

Next on the list is onboarding. It might be surprising, but the average cost of the onboarding process in a small to medium business is $400 per employee. This includes the offer packs, preparing the necessary equipment, and time spent on bureaucracy and showing the new employee the ropes.

Then it’s time for training. Even if you hire experienced professionals in software development, learning the work culture, understanding the ongoing processes, and getting to know fellow workers will take some time. In some cases, it might even take 1 to 2 years for the employee to become fully productive in the new environment, according to Training Industry Quarterly.

And if you want to retain your employees for that long, offering help in their professional growth — encouraging self–development, providing opportunities for mentorships, and providing access to various courses — may make a difference in turnaround. This way, you show that you care about your employees and that there’s room for their careers to advance. All that though might require additional costs, especially in eventual pay raises that come with higher qualifications.

Losing Money

In some situations, money might be slipping through your fingers without you even realizing it.

With most contracts, you don’t only cover the software development costs themselves, but also all the hours spent in–seat. For example, if your company works on a project–to–project basis, there might be stages in the workflow where your senior software developers or software engineers — or any other employees, take your pick — are not utilized to the fullest extent. Due to circumstances, they might not be even able to work on their tasks, waiting for resources or their teammates’ input first.

And if your employee goes on sick leave or simply on vacation, you have to pay for that as well. Of course, these things are important in the long run for keeping that turnaround low, but it’s something to keep in mind.

There also might be trouble when firing your employees. In some countries, like in Poland, the notice period can last up to 3 months, while in Germany — up to 7, depending on the length of the employment. For the employer, that means they can have a person on board that most probably isn’t as motivated as others to do their work well, which in turn might lead to monetary losses.

How Does The Shadow Of Remote Work Affect The Overall Cost?

During the pandemic, many employees were forced to work from home. In the US, that amounted to 71% of people working remotely in sectors where that was possible, which take up 56% of jobs.

It’s hard to say whether the trend will stay for long, but there’s a chance that telecommuting will prevail in certain sectors, mostly in the IT industry, Finance and Insurance, and Management. This could potentially mean lowered costs in office management, but in return, it requires providing the employees with appropriate hardware and software equipment to comfortably work from home, as well as programs, applications, or even intranet for proper task management. To fully utilize them, you might have to pay for subscriptions or even create your own intranet with the help of a software house, following the example of ib vogt.

Some companies even went one step further during the pandemic, deciding to cover the costs of the internet and telephone for their employees. After that, laws were enacted in certain places — like in ten states of the US — that force employers to reimburse employees for remote work expenses, similarly to the Netherlands, with Poland following their example.

So even though there might be some opportunities to save money in certain places, there might be some expenses in others to balance it out.

Outsourcing Software Development

All of the above doesn’t really apply to outsourcing. You don’t have to care about salaries, benefits, workspace culture, or office maintenance. What are you paying for then, exactly?

Payment Models

The only thing you’ll be invoiced for is the work itself, without having to stress over the little things. Most of the time, outsourcing companies offer two varied ways of payment for their software development services: The Fixed Price Model and the Time and Material Model.

The first one, the Fixed Price Model, assumes that payment will be either invoiced in pre-defined milestones or before and after the project, with the payment split into two parts in different percentages. This model is well–suited for software development services with straightforward and easy-to-predict processes, as well as for those whose goals and requirements are clearly stated and not up to change.

Business owners choose the Time and Material Model when they want their project to be scalable and flexible enough to employ changes throughout the development process or when it’s hard to measure the scope. In this scenario, the only thing you pay for is the time of the development team, as well as for any additional resources required.

Both models ensure that you pay for the output, not the time spent in-seat, and only for that.

So How Much Is That?

There are no universal prices set around the globe for hourly rates of software developers just like there are no set prices for specific projects. Each company sets its own rates, and even infamous, cheap outsourcing destinations, such as India, you can find surprisingly high rates. Just like you can find relatively cheap software development in countries known for being expensive.

Why do the rates differ so much? First and foremost, each country has a different economic situation with varied wages and living standards. Thus, the prices constantly fluctuate, in response to what’s happening on the macro and microscale.

Taking that into account, it’s easy to see how outsourcing can help you save money if you’re smart about it. By analyzing your financial situation and comparing available options, you can gain a lot of value by spending less.

But how much is that, exactly? It really depends on too many factors to clearly measure once and for all, so let’s look at the average rates across the countries and compare them.

Average Hourly Rates Of Software Developers Around The Globe

The table above explicitly shows the astounding difference between countries in how much software developers can actually make. But how accurate is that data? It depends on how many people have shared their information about their careers, what industry they worked in, and other factors. It’s also good to keep in mind the effects of the pandemic on the labor market. Currently, with the world struggling to recover from the pandemic, the wages in the majority of countries — like in the US, Italy, Canada or France — have actually risen. And with certain sectors doing better than others, those fighting for great employees might have a higher competition than usual.

To cross-check this information with how the firms price their work, let’s look at Clutch.

As of today, you can find 18,897 firms listed under “Top Custom Software Development Companies”, and only 7,657 post their development rates. Thanks to the easy filtered search, we can quickly check the average hourly rates entered by such companies.

To look at those numbers from a different perspective, let’s see how that translates into percentages.

This data shows some correlation with the average rates in the IT services posted above, but it’s still noticeably higher. It does follow the general trends of the outsourcing market: Western Europe, North America, along with Scandinavian countries, fall into the higher pricing ranges when compared to South America, Asia, and Eastern European countries. But even in a famously cheap outsourcing destination such as India, you can find surprisingly high offshore software development rates. How can we explain that?

We can assume that every software development company on Clutch caters to clients from well–developed countries, and thus they can raise their rates accordingly; so that their employees are appropriately compensated and yet stay attractive on the outsourcing market. Many of them present themselves as global software development companies, for whom the time zones and cultural differences are non-existent, providing their IT services to clients from all over the world.

So when you’re hiring offshore developers by average hourly rate, you can expect more than 75% of them to cost less than $99 per hour.

Custom Software Development Cost Per Project

Let’s assume you’re more inclined towards the Fixed–Price Model or you would like to know the final cost. Clutch once again will help us out in our estimations, where you can filter through the software development companies by budget. Let’s see what they set as a minimum price per project.

Let’s look at these numbers again, but in percentages.

The majority of projects, 33% of them, start with a $5,000 label, while there’s also a big chance of finding options at even cheaper price ranges. And there’s a 83% chance of getting your price estimated below $25,000.

The Conclusion: How much do you have to pay for software development outsourcing?

If you want to hire offshore developers per hour, you can expect 57% of them to cost below $50 and 75% cost below 99$.

If you want to outsource a whole project to a software development company, you have a 61% chance of having to pay less than $10,000, and 83% of paying less than $25,000.

Outsource Software Development with MPC

Taking the above into consideration, pricing at MPC stays at an average level while still providing sustainable quality based on the years of experience in delivering in–house products. And while we’re striving to reach challenging goals, learning how to optimize our work and how we can improve even more our services, we keep in mind our client’s financial restrictions and we respect their decisions influenced by it.

Average rate at MPC stays at $50. It varies depending on the skillset, position, and seniority level. A full stack senior developer with 6 years of experience under his belt will surely be a larger cost than a mid QA engineer. And in this market like any other, the supply and demand will come into play as well. Recently, we’ve noticed a big increase in popularity in JavaScript based technologies, therefore salaries of those specialists increased significantly, resulting in higher hourly rates.

At the same time, the average Fixed–Price project doesn’t require any different budget than what the market usually does. Vast majority of new projects we’re facing are MVP versions of applications that fill in some niche. The amount between $15,000 and $30,000 allows us to provide value to the end user, challenge the idea, and in many cases, even monetize to expand the solution later on.

Key Takeaways

Software development can be done in two ways: in–house, that is with your own team, or by partnering with a software development company that specializes in a niche relevant to your business. Both options come with costs in different areas, so there is no right choice for everyone. It all depends on the circumstances. That’s why each business owner should analyze their own situation first and deduct which software development model is more beneficial and convenient.