How to reduce software development costs?
16.03.2023 | 1 min read
Looking at the market today, the average cost estimate of a development process ranges between 30,000 USD for a small application to 100,000 USD and more for a complex solution. As the cost of software development continues to increase, it is essential that your team makes software cost factors play on your side. Cost estimation must include time and scope but if I were to choose the single most important element to include here, it would be the Product Delivery Manager. Why? Because PDMs make sure you have squeezed every bit of value from each dollar you spent.
More than that, PDM brings an unparalleled level of expertise and experience that can actually help reduce development costs, while still delivering a top quality product. With the ability to manage resources, prioritize tasks, and ensure quality assurance, a PDM can be the difference between a successful project and a costly disaster.
Mission: reduce the average cost of software development
There are three big drivers for building a sustainable business:
- Product-market fit
- Scaling quickly
And the reality is that 9 out of 10 startups fail because they can’t build an effective strategy and operations around those drivers. The role of Product Delivery Manager is to help achieve those three, while reducing the overall software development cost. Engaging a PDM is on average around 10% of the software project cost. The paradox here is that a development team run by a PDM actually saves you money that would be otherwise spent on hourly rates and development time of new software.
Looking at the statistics of the 10Clouds teams and based on our experience with various clients, we can see that going for product development with our PDM brings hefty ROI that helps your product succeed on the market:
...and reap the long term benefits
Just reducing the custom software development cost in itself is far from being an indicator of project success. As you can see, there is plenty more at stake.
- Lowering the risk of failure
- Accelerating time-to-market
- Improving customer and stakeholder satisfaction
- Greater competitive advantage and business value focus
- Transparency and control over the results with data-driven delivery
- Fast response to change
I will describe those in more detail to show you that any cost breakdown of a software development project should be qualitative in nature.
But before we get there, let's write it once again: having a PDM onboard decreases the overall cost and increases the chances of delivering the product on time while maintaining the budget. The cost of adding PDM is around 10% of the whole team time, but actually saves you a lot, by properly managing the tasks and priorities. PDM is also responsible for the higher team retention due to the solid team management skills: team’s morale and productivity. Top that with the agile iterative approach and you have an excellent recipe for success.
Software development price is not set in stone. Depending on the type of project and development team, the estimate can greatly differ. But what we know is that adding a 10Clouds PDM to your team can on average increase Completion Ratio by 30% and reduce Development Cost by 25%.
If you want to dive deeper into the indicators that affect the cost to develop a software solution with or without a PDM, here's a reference.
Now, let's return to the scope of benefits we mentioned above. Engaging a Product Delivery Manager means a lower software cost estimation - plus all of the below.
Lowering the risk of failure
Proper risk management allows you to spend time on the innovation and making your customers happy. It helps achieve objectives and to manage the average software development cost. Investing in the risk management processes will secure steady delivery, support the internal processes, prioritize work and achieve milestones without disruption. The role of a PDM here is crucial. Not only are you lowering the overall cost of the project, but these pro-active processes make sure that risks are properly managed and mitigated against, before becoming issues. Your business has real time visibility into the status of risks at every stage in the project management process. What’s more, a series of mitigating actions can be implemented to manage out risks and limit their impact on the quality and final delivery of your projects. By managing risk at every stage of the projects lifecycle, from initial enquiry through to final delivery, you will ensure many happy customers by delivering more projects on time and to budget, every time.
Thanks to the agile approach we are able to adjust the development of your product to the situation. We create a Minimum Valuable Product (MVP) so you are able to verify if your solution is something your users can’t live without and then adjust it, if needed, via continuous cycle of inspection and adaptation. This way of managing projects/products makes it easier to make pivots and answer to the customer needs without exceeding your budget and stretching resources. Make a difference, gain confidence and knowledge faster and accelerate your product with the best market fit. Simply.
Exceptional agile prioritization and planning methods make it possible to first develop the most important features, secondly, verify them on the market through frequent release cycles, and thirdly: adapt to the market’s feedback. Getting faster insights means lower overall cost of the development and delivery of better and faster results - with an agile approach and a PDM on board it is possible.
Improved customer and stakeholder satisfaction
Thanks to the frequent feedback received from the clients, we are able to create a product that actually answers their pain points. We can improve client satisfaction through customer service touchpoints, reducing time to resolution or/and proper prioritization of the issues coming in. This, in turn, can lead to unlocking revenue that would otherwise have churned or opening to new product ideas. On the other hand, taking care of all the stakeholders might be crucial to the further development of your product, as well as getting fundraising. Agile tools make it more clear who is responsible for what and how things should be done.
Greater competitive advantage - maximizing product value
Markets get filled in quickly and to break through the noise you need to have a unique selling point. Development efforts should consider it from the onset. You will also need to get to your customers before your competition does. Well executed project management can help you set up goals that bring business value and create that competitive edge by staying on top of the market’s demand. A marketable software creation should fill the void. Our PDMs will set up the metrics, create a strategy and choose management tools guaranteeing your product’s success in a measurable manner, no matter the type of software.
Transparency and control over the results with data-driven delivert - your assurance policy
Development time and cost of your software product is not all. When it comes to the success of your product, you want to know how it’s performing in a measurable way. Whether we are discussing net retention, cohort retention or even a monthly churn, our team knows how to measure what matters and how to use these findings to drive your product to the best product-market fit. Accurate goal setting and respective KPIs by our PDMs will lead to higher revenue, lower cost of delivery, faster risk mitigation, and satisfaction of you own software development team.
When you estimate the cost of software, think of culture too. We believe that a culture of teamwork is one of the biggest success factors. Agile frameworks, such as Scrum, provide effective collaboration tools to foster more direct communication and self-management of software developers. This translates to a higher productivity and satisfaction in the delivery team. With agile, your team communicates in a transparent manner, sharing the progress and blockers every day. This way the team can tackle them in an efficient and rapid manner. Thanks to this ongoing process of inspection you can track the progress of the delivery and adapt to the situation.
Fast response to change
Traditional management methods are making pivot a very costly and difficult operation. Agile on the other hand is a great way to adapt to the circumstances with short release iterations (up to 1 month). Whether the market is changing, your clients’ tastes do, or maybe your organization goes through a transformation, with agile you are able to rotate at any point. This possibility of rapid change is one the key factors for a product's success. My advice would be to further replace a Project Manager with a Product Delivery Manager to give the entire development process a boost.
Software development cost estimate is not only about here and now. Depending on the complexity of software and the size of the project, we can calculate the cost in such a way that the actual development process is cheaper, even though we initially pay extra for the PDM. It's because factors that affect the costs and timelines stretch beyond the starting budget. By removing obstacles that would occur had we not employed a PDM, companies save 25% costs on average. That is a result not to be overlooked.