Founder’s guide: How to Reduce Software Development Cost

Building great software is difficult and expensive. Yet, digital companies must create software to differentiate themselves and put forth their vision. Even if a product ships as a Minimum Viable Product (MVP) instead of a full-blown platform, software development costs can quickly sink modestly funded enterprises. Follow these tips to build great software while keeping your costs in check.

1. Define your requirements clearly

Create a Product Requirements Document (PRD) that explicitly lays out the application’s functional and non-functional parts. The PRD isn’t an easy document to produce, but there’s a high cost of not having clearly defined requirements. The inability to create a PRD may indicate deeper issues like a disagreement about the vision or purpose of the application or a lack of executive support.

These are a few benefits of a good PRD:

• A clear, predetermined objective saves time and money that would otherwise go toward non-essential functionality.
• The PRD illustrates the value proposition of the product to the software development team and other project stakeholders.
• A development team uses PRD to understand what to build, the intended user personas, and the use cases the product must address. A good PRD provides the raison d’etre for the software product.
• Requirements are the basis of a successful product, as it helps your development team to transform your early concept into a fully functioning software.

An impressive PRD must include some key points such as business requirement, product objectives and vision statement, list of features, product and technical specification, maintenance/upgrade requirements and choosing a platform. Incorporating features such as quotation software into your requirements can also streamline processes and enhance functionality, ensuring that all needs are met efficiently.

2. Prioritize your features, follow the lean development strategy

Trying to have all the features in your software is not the right view to develop your product. Prioritizing features using a lean development strategy is the best way to reduce development costs and putting more focus on important features. Lean development strategy is also often referred to as a Minimum Viable Product Development(MVP). It is all about creating and deploying an app with just enough features that serve the purpose of the software and getting it used by some of the potential users.

• Having a laundry list of features does not increase the appeal of your product, aligning the features with the objective of the software makes it more attractive and cost-efficient.
• Having lots of features increases your cost and time to design, develop and test the product.
• More features also increases the cost to market the product and also increases time for users to adopt the product.
• Money saved in avoiding unnecessary features can be used in the marketing and the next iteration of the product development.
• The lean or MVP approach can eliminate unnecessary activities and as a result, it can reduce cost.

3. Do your design right

If you’re building your dream house, it may be challenging to decide if the bathroom should be larger or if the kitchen needs a different exposure. If so, your architect has plenty of tools to render 3D images from the plan to make the final product easier for you to visualize. The cost of redoing architectural diagrams and rending them is nothing compared to completing construction and then having to redo it.

Although it may not be as intuitive as the house-building analogy, For every dollar spent to resolve a problem during product design. Ten dollars will be spent on the same problem during development, and multiply it to 100 dollars or more if the problem had to be solved after the product’s release.” Thus it is essential to design the app fully before getting started with its development.

• Have the proper wireframes done for your software, defining every screen, flow and data points. This helps you to recognize and define the right features for your product.
• Use wireframing tools like Figma, Balsamiq, Sketch to convert your requirements into visuals.
• Have a very good visual designer to create a UI design representing the entire UI/UX design.
• Use tools like invision, Figma, sketch to test the entire UIUX. Create a design test group to find out any glitch in the software.
• Any post-development change in the design can cost you ten times more than the cost during the development.

4. Use the Global Shoring Model

Gone are the days when going full offshore was considered the model to reduce the software development cost. Founders and product managers have learnt the hard way that offshore model end up costing more in the long term.  Based on research and experiences, offshore development suffers with many issues like communication gap, poor design, scope creep and poor project management. There is a cultural gap as well, which makes clients spend more time explaining the vision and still not get it right.

Does going full onshore work? Not if you don’t have deep pockets. It cost 5X more working onshore,  additionally its hard to find the resources even if you have the money. So what is the solution? Solution to this problem is global shoring model. In this engagement model, the senior team is onshore and the rest is offshore. The senior team includes Project Manager, Tech Lead and UX designers and developers and testers are offshore.

• This model brings the best of both the places, the client always communicates with the onshore team, which is always easy due to the same timezone and culture.
• The onshore team will do the strategy, design and planning to make sure the right product is being built and everything is communicated.
• The onshore team works with the offshore team to explain the project. Coder and testers offshore will develop the software and communicate it back to the onshore team.
• This also makes it easier for the offshore team since all requirements, specifications are set properly.
• The model brings substantial cost savings for the founders, it costs around 20% to 30% of the onshore model and still bring the same value.

5. Decide between fixed cost vs hourly billing

Most reputable providers will let you choose between fixed cost and hourly cost for different parts of the project if you outsource.  Although it makes intuitive sense to demand a fixed cost project, the arguments below suggest that a blend of hourly billing for the design and fixed cost for the development is the most cost-effective approach.

• It is recommended to do the design process on time and material and the development at the fixed cost as this will give you the best output for your money.
• Having designers on an hourly basis will give freedom to you and your designer to think creatively and come up with best features.
• You can have an initial estimate from the designer on how many hours they expect, this will give you a ballpark number in your budgeting.
• Once you have the designs and specifications done, you can show it to any development shop to get the fixed cost estimates. It becomes easier for developers to estimate the cost.
• If you try to go for fixed cost without having proper design it will be unfair to you and your development team, especially when there is scope creep and everyone will start fighting on the specifications and the cost.
• Once you have fixed cost for development, you can link it to milestones and then pay the money as milestones are done.
• The hourly cost is recommended for the software product where initial specifications can not be defined much and require substantial amounts of research and development.
• No one can really estimate the efforts for R&D types of projects, so it is better to be hourly based on those projects with some estimates in place.

6. Do the testing yourself

You might be thinking why should I do the testing myself, that should be the role of the development team. Well, the development team can do the entire QA process but that might be more expansive for you. You can have the outsourcing team do the smoke testing and sanity testing, while you can do the user acceptance testing or performance testing. UAT is not a tough task for founders to learn, can be done by watching some tutorials.

• Learn to do detailed testing yourself to save the cost on testing and encourage the development team to be more quality-centric.
• If you don’t have time or skills to do your own testing, then hire a manual tester, you can find a good tester on Upwork for $15-20/hour.
• Do the testing for every release build.

Final Thoughts

Software products have become the need for every business to achieve their vision and survive in the competitive digital business world.  You might need a custom website or mobile app or enterprise ERP software to manage your business, so reducing software development costs is definitely a priority for every business. Following the above cost reduction guide and hiring a reliable software outsourcing team will help you reduce your software development cost and get the best out of your resources.