Understanding Hidden Costs of Software Development
Many businesses now refuse to keep IT departments in-house. They prefer to outsource their development needs because it’s easier and…cheaper. Or is it?
Recently, it has become common for software development costs to exceed the expected budget. Some surprise costs sprout from within, while the rest are caused by many external factors.
Most agencies offer app development cost calculators, helping business owners predefine budget expenses. Yet, some details are difficult to calculate. Let’s talk about them.
Hosting Expenses
In 2019 alone, the global outsourcing market was assessed at $92.5 billion. It is expected to reach $397.6 billion by 2028. The share of IT outsourcing is over 65% and keeps growing. Hosting costs are anticipated but are challenging to calculate beforehand. They typically occur from hosting the servers for a solution: push notification servers, email servers, integration servers, analytics servers, and more, depending on the app type and its core functionality.
Whether you’re hosting your solution in the cloud or working with an agency that delivers SaaS or a product, you’re paying a monthly fee. Though it looks easy to calculate in this case, there will still be unexpected post-launch expenses and additional charges once your software starts scaling.
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Software Maintenance
Maintenance costs are often the main expense item. Once your software is out, you will start receiving user feedback, which will help you focus on project improvement. With time, you will consider the possibility of scaling, which means adding new functionality, new user roles, and new integrations to your existing software. Also, bugs will appear to need fixing. This all means that you will need to have a fixed or on-demand team to answer all the queries, which means more expenses.
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Security Expenses
Building secure software is one of the core requirements. But it’s also necessary to continuously maintain and increase security over time. Security is the key factor influencing the safety of business funds, customer data, and brand reputation. So, your team has to update the software, introduce new technologies, and perform regular check-ups to prevent hackers from targeting your project. An IT team safeguarding your solution is expensive and another hidden cost that few businesses consider when setting their budget for software development.
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Staff Education
This is a typical expense if software is developed for an internal team. Most businesses focus on software development, neglecting the need to allocate money to train their staff to use the software. Moreover, imagine your staff is already trained, but some employees decide to quit. For your business to continue working successfully, you must hire and train new team members, which means spending more money.
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Code Refactoring
It’s a common practice to turn to code refactoring to boost the maintainability, quality, and performance of a solution. This process is durable and generates hidden costs if poorly managed during the development. In a perfect environment, developers allocate some percentage of their effort and time to refactor code that occurred after adding new features and addressing customer-facing issues. If not done in time, the absence of code refactoring triggers delays in delivery timelines.
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Technical Debt
The worst thing about technical debts is that they accumulate silently and suddenly pose substantial hidden costs. As with any other debt type, this one should be paid off in due time; otherwise, it will lead to undesirable consequences. What is a technical debt? It encompasses all compromises and shortcuts made during actual development to reduce costs and meet deadlines. Eventually, these decisions result in weakness in architecture, suboptimal code, and postponed advancements that prevent further scalability and high performance.
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Marketing Costs
It’s not enough to have a good IT solution. If no one knows about it, it doesn’t matter how helpful or up-to-date it is. For this, you need to have an in-house marketing team or a hiring agency to generate brand awareness around your software. Developing a comprehensive marketing campaign and investing in business development and public relations is another chunk of the budget that most businesses underestimate.
Summing Up
Possible reasons why the final software development budget differs from the initial one are diverse. It may be the lack of development team experience, poorly written requirements, scalability plans that the business forgot to discuss, or a myriad of other factors. But hidden costs account for a major chunk of those expenses. And though it may be hard to pre-calculate them, you can start with the cost of a marketing team’s work, monthly payments for server hosting, and the budget for a fixed team for support. Thus, you’ll have a clearer idea of the true numbers before a single line of code is written.
