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How Much Should a Small
Business Budget for
Software Development?
by Des Moines
Businesses
If you’re running a small business, you already know that investing in the right tools can make or break your success. But when it comes to custom software development, the big question is:
How much should I budget for this?
The short answer? It depends! Software development costs can range from a few thousand dollars to hundreds of thousands, depending on factors like complexity, features, and the team you hire. But don’t worry—this guide will break everything down so you can plan your budget without the guesswork.
Let’s dive in below.
How much should I budget for this?
The short answer? It depends! Software development costs can range from a few thousand dollars to hundreds of thousands, depending on factors like complexity, features, and the team you hire. But don’t worry—this guide will break everything down so you can plan your budget without the guesswork.
Let’s dive in below.
1.Type of Software You Need
Not all software is created equal! The price depends on whether you’re building:
Each requires different levels of development, which affects pricing.
A simple business website
A mobile app for iOS and Android
A complex internal business tool
A cloud-based SaaS product
2.Complexity & Features
The more features and customizations you need, the more time and resources it will take.
Examples of features:
Basic website with contact form
eCommerce website with payment integration
AI-powered recommendation system
4.Your Development Timeline
Need your software yesterday? Rushing a project costs more because developers may need to work overtime or prioritize your project over others.
Pro tip: The more planning you do upfront, the less money you’ll waste on unexpected changes.
3.Who You Hire Matters
Your budget will change based on whether you work with:
Freelancers (affordable, but may lack reliability)
Small agencies (great for custom solutions, moderate pricing)
Large agencies (high-quality, but $$$)
In-house developers (long-term investment, best for scaling businesses)
Why Does Software Development Cost Vary?
No two software projects are the same, which means pricing can be all over the place. Here’s what affects the cost:
Software Development Cost Breakdown
Now, let’s talk numbers! Here’s a rough estimate based on different project types:
- If you need a simple tool, off-the-shelf software may be a more cost-effective option.
- If you need something custom (built specifically for your business), expect higher costs.
1.Define Your Goals & Must-Have Features
Before reaching out to developers, ask yourself:
This will help you prioritize and avoid overspending.
What problem am I trying to solve?
What features are absolutely necessary?
What features can wait for future updates?
2.Set a Budget Range (Not a Fixed Number!)
Instead of saying, “I have $20,000 to spend,” think in terms of a range:
Ideal budget – What you’d love to spend
Stretch budget – The max you’d spend if needed
3.Get Multiple Quotes & Compare Options
Talk to at least three different developers or agencies to see what’s possible within your budget. Ask for detailed breakdowns so you understand where your money is going.
4.Plan for Ongoing Costs
Software isn’t a one-time purchase! Don’t forget to budget for:
Maintenance & bug fixes ($100 - $5,000/year)
Hosting & cloud storage ($20 - $500/month)
Future updates & feature improvements
How to Estimate Your Small
Business Software Budget
Follow these steps to create a realistic software budget:
Start with a Minimum Viable Product (MVP) – Build only the core features first, then add more later.
Use open-source tools – Many free libraries and frameworks can speed up development.
Outsource development – Hiring developers in other regions can save up to 50%.
Leverage low-code or no-code platforms – Ideal for simple software solutions.
Avoid custom development when possible – Sometimes, existing software can meet your needs at a fraction of the cost.
Ways to Save Money Without Sacrificing Quality
Example: Instead of building a custom CRM system, consider using HubSpot or Salesforce and customizing it to fit your needs.
If your budget is tight, here are smart ways to reduce costs without cutting corners:
Final Thoughts: Make Every Dollar Count
Budgeting for software development as a small business doesn’t have to be overwhelming. The key is to plan ahead, define your goals, and make strategic decisions about where to invest.
Software costs vary based on complexity, features, and team.
Set a budget range, not a fixed number.
Start small, build an MVP first, and scale over time.
Get multiple quotes and plan for ongoing costs.
Let’s chat! Simply fill out the form below to book a free consultation with Softvoya today!