Custom software pricing is notoriously hard to estimate without a detailed spec — yet most organisations need a rough figure before they can get board approval to write the spec. Here's how to think about cost at each stage of a project.
The four cost components of any software project
- Discovery and design: Requirements gathering, UX wireframes, system architecture. Typically 10–15% of total project cost.
- Engineering: Frontend, backend, APIs, database, integrations. The largest single cost — 60–70% of total.
- QA and testing: Functional testing, integration testing, performance testing, security review. 10–15% of total.
- Deployment and handover: Infrastructure setup, CI/CD pipeline, documentation, team training. 5–10% of total.
Cost by project type (2026 UK market rates)
| Project type | Typical range | What it includes |
|---|---|---|
| Internal tool / ops dashboard | £8,000–£25,000 | Single workflow, auth, data display, basic CRUD |
| Customer-facing MVP | £20,000–£50,000 | Core feature set, auth, basic integrations, deployed |
| SaaS product (v1) | £45,000–£120,000 | Multi-tenant, billing, admin, integrations, auth |
| E-commerce platform | £30,000–£90,000 | Product catalogue, cart, payments, order management |
| Enterprise system | £100,000–£500,000+ | Complex workflows, ERP integration, compliance, multiple user roles |
Day rates: what you're actually paying for
Custom software is billed on day rates multiplied by time. Understanding what drives day rates helps you evaluate quotes intelligently:
- UK/US senior engineer: £600–£950/day
- UK/US mid-level engineer: £400–£650/day
- Eastern Europe senior: £250–£450/day
- South Asia: £80–£200/day
A 10-week MVP at UK rates (2 engineers, 1 designer, 0.5 PM) costs roughly £120,000. The same spec with Eastern European engineers might cost £45,000–£60,000. The question isn't just cost — it's communication overhead, timezone, quality assurance processes, and what happens when something goes wrong.
The three phases where costs overrun
1. Integration work: Connecting to third-party APIs (payment gateways, CRMs, ERPs, data providers) almost always takes longer than estimated. Every external API has undocumented edge cases, rate limits, and inconsistent error handling. Budget 30–50% more than your initial integration estimate.
2. Auth and permissions: If your system has more than two user roles with different access levels, the permissions model becomes complex quickly. Role-based access control (RBAC) systems with custom rules can double the authentication complexity.
3. Data migration: If your new system needs to import existing data from another tool, spreadsheets, or legacy database, data migration is almost always underestimated. Messy, inconsistent legacy data requires transformation logic, validation, and testing that adds weeks.
Ongoing costs after launch
Build cost is a one-time expense. Ongoing costs are recurring:
- Hosting: £50–£800/month depending on architecture (serverless vs dedicated, traffic volume, storage).
- Maintenance: Security patches, dependency updates, minor bug fixes. Budget 10–15% of build cost per year.
- Feature development: Real products require ongoing iteration. Budget separately for the roadmap beyond v1.
- Support: Who handles production incidents? An SLA with your agency, an internal team, or self-managed?
Use our Software Project Cost Estimator to build a budget range for your specific project. For a broader framing of when custom software is worth it versus buying a platform, see Custom Software vs Off-the-Shelf.