We are privileged to live in an era in which everything is possible. Any unusual idea you might have, it’s definitely doable today. However, one of the most daunting aspects when it comes to developing a new digital product is the pricing.
We all know though, that the road from an idea to a fully-functional software product is paved with a lot of questions, market research, and functionality decisions which all lead to budget estimations.
The main question is: how much will the software development cost me?
To find out how to budget or price digital products, we have to take into consideration a lot of factors. Pricing digital projects without knowing their particularities is a very deceiving and unrealistic approach.
That’s why we can’t give you exact numbers, but we can share with you the factors that directly influence your budget or pricing model.
This will help you prepare for the discussion you will have with the soft-developing team you choose to work with.
Table of Contents
These factors and tips can also be of use to business owners who use cost-based pricing to sell digital products to their customers.
Customer Research
Every product journey starts with the end user.
Conducting numerous customer researches is an important step in the process of developing a successful digital product. Through customer research, companies can gain valuable insights into the needs, wants, and preferences of their target audience. This information can then be used to tailor the product to meet the customer’s needs, create a unique user experience, and increase customer satisfaction.
Customer research can also be used to identify potential areas for improvement, new features that can be added, and changes to the design of the product that can increase its usability and appeal.
Project Requirements
The more details you can provide about what you want to achieve with your solution/product, the closer to reality the budget estimation or pricing strategy will be.
Think about functionalities, how it would respond to the user’s needs and behaviour, what you want the user to do with your application, how intuitive it has to be, how would it look, etc.
All of these details will make a big difference in evaluating the time it would take to build your app and what is the product cost.
On top of this, it saves you from “hidden costs” that may arise because of insufficient specifications that the development team couldn’t predict.
Skills Needed and the Average Pay for Each Role
Software development is a team job. A typical collaboration implies a team composed of various individuals with different skills that cover all your needs: business analysts, project managers, software architects, developers, designers, and testers.
Every one of them is awarded to the extent of his/her domain expertise and experience.
The costs will vary based on skills and the number of people involved in the application’s development. But their number will have to be evaluated by a business analyst and software architect.
You can learn more about the product development life circle in this article.
Level of Quality
Quality determines the price. When choosing a company to work with, you might want to know more about their experience.
Experienced, quality service providers are easy to find through word-of-mouth. Or, if their marketing strategy draws you to their landing pages you may want to check out their case studies that showcase their previous work. However, we advise you to go beyond and contact them to set up a meeting.
This way you can also know them in person and get a real feel of how compatible you could be on a professional level. Don’t be afraid to ask for references if you feel like it.
The hourly/daily rate could be another important aspect to consider. Don’t let yourself be deceived by price.
A lower price could mean less experience and a slower development process, or even worse – an intentional underevaluation of the project just to win you over.
If you’re up for a compromise that’s ok, it depends on your goals and digital product pricing budget.
On the other hand, if the company’s services are at a premium price, that can translate into better product quality, faster development, quality assurance, and better support. Just make sure you check all these details and then decide.
The Project’s Complexity
The costs to produce a simple product are different from those of developing a complex, scaling digital app.
It’s not the same to build a fitness application that counts your steps as one that provides a complex fitness program with training, meal preps, videos, etc.
Keep this in mind when you analyse your project with your business analyst.
Based on previous experiences and a good and clear evaluation, you should receive a detailed mapping of your idea and estimations for the project phases, duration, and possible delivery date.
The duration is important because it could be one of the main factors to influence your digital product pricing.
And time is usually directly linked to quality. If you rush the process, you may not get the desired results that you want. It is important to take your time and ensure that you are doing everything correctly in order to achieve the best quality.
A longer project also provides work for the consultant and they could make you a better offer based on this matter. It’s not necessarily a rule, but you could get to a good agreement.
Targeted Platform
When choosing the platform for your digital product, there are several factors to consider. First, you’ll need to decide which type of platform is best suited to your product.
A digital product could be:
- web only (also can be updated to be a Progressive Web App)
- mobile-only
- web and mobile
- all mobile (iOS + Android)
Here, you’ll need to consider the cost of the platform, its scalability, and the availability of user support. Finally, you’ll need to think about the user experience and the user interface of the product and make sure the platform you choose is designed to provide an optimal user experience.
Your digital product might be very specific, and only a certain type of platform will work for you.
There are different options and technologies to choose from. Based on your needs, the targeted platform(s) will also influence the final cost of developing custom software.
Cloud Hosting or Internal Infrastructure
You might prefer your digital product to be hosted locally or in the cloud.
Each option requires a different infrastructure setup and different hosting fees.
There’s also a variety of services offering hosting services. For example, we are using Microsoft Azure, which offers a lot of flexibility.
Another aspect you should be aware of is that different types of products might need more investment. A good example would be an online learning platform, which needs a lot of hosting space, due to its video content.
The cost of implementing the infrastructure can be easily overseen, but it should be a critical part of your budget.
Maintenance and Improvements
Technology evolves at a very high pace so be prepared to follow the same trend.
This means that in time the needs of your company or clients may change, so you might have to add other functionalities, and adopt advanced strategies if you want to remain competitive.
Your users’ feedback is quite important and often is a big help when it comes to making your application even better.
Changing the initial form of the software means time and time means money.
The software companies do offer support contracts after finishing the initial project, so you can either choose these options or just work punctually on the improvements that appear in time.
Always remember that maintenance is important, especially for a newly launched application.
For older software, there are always app modernization services that can save the day.
Extra Tip: Think Rational, but Also Trust Your Intuition
Now we know that every aspect we described above is very important and all of them are very rational or technical.
Though it may sound like something out of the ordinary, we encourage you to also listen to your intuition once you have analysed these factors.
Be mindful of the way your collaborators interact with you. Do you feel like they understand your needs and speak your language?
Sometimes, no matter how small or big the company is, the human touch attached to its services makes the difference.
Solutions come more quickly when all parties involved are open to different ideas and opinions, and when they work together to find common ground. Good communication also helps to ensure that everyone is on the same page and that everyone understands the issue at hand, which makes it easier to identify potential solutions.
Conclusion
To draw a line and summarize, take into consideration this “checklist” of indicators when it comes to making an estimation for your digital product pricing budget:
- requirements and specifications
- human resources implicated
- quality or compromise
- the complexity of the project
- maintenance
- human touch
These will help you keep your expectations realistic and be well-informed for a future discussion or negotiation with a software company.
Of course, there could always be certain other details specific to their own internal policy, but we believe this list can be a great pocket guide when in need.
Are you ready to upgrade your business process? Let’s talk!
