There's no single price: custom software costs the hours it takes times the team's rate, plus infrastructure and maintenance. As a reference, a US software developer earns a median of $135,980 a year, about $65 an hour in salary alone (BLS, 2025). A three-person team working for three months adds up to roughly 1,500 hours.
So be wary of any range that doesn't come with a scope. Your real number depends on what the system has to do, what it connects to, and who makes the decisions. Here's each piece, so you can read a quote without guessing.
How is the cost of custom software calculated?
Every serious quote is built from the same pieces:
| Piece | What moves it | How to see it in the quote |
|---|---|---|
| Development hours | Scope, integrations, and security | Estimated per module or workflow |
| Hourly rate | Team seniority and type of vendor | Rate per role, not a blended average |
| Testing, documentation, and deployment | How demanding your industry is | Separate line items, never implied |
| Infrastructure and licenses | Cloud, servers, and per-user licenses | Monthly cost, in your company's name |
| Maintenance | Updates, security, and improvements | Monthly or yearly cost, in writing |
An example for scale: three people for three months add up to about 1,560 hours. At $65 an hour, the salaries alone for a US team pass $100,000, and that's before benefits, management, testing, and the vendor's margin. A nearshore team lowers the rate, not the hours, so scope is still the biggest lever. If you're evaluating a team in the region, see our guide to nearshore development from Honduras.
What drives the price of custom software?
- Scope and integrations. Connecting to a banking core, a payment gateway, or an existing inventory system costs more than building something standalone. That's usually where the real work is.
- Security and compliance. Strong authentication, audit trails, encryption, and security testing add hours, and in banking or healthcare they aren't optional.
- Team seniority. A senior team bills more per hour and usually costs less overall, because it makes fewer mistakes.
- Who decides what gets built. A project without a product owner on the client side runs long.
- Infrastructure. Servers, cloud, and licenses carry their own monthly cost, separate from development.
Why do two quotes for the same project vary so much?
Because they rarely quote the same thing. On a UK business forum, one founder received proposals from £600 to £20,000 for a single project. The difference wasn't talent. It was what each vendor left out.
That's how the cheap quote becomes the expensive rewrite: testing, documentation, deployment, or security are missing, and the bill shows up six months later. Before comparing numbers, ask every proposal to answer:
- Does it include testing, documentation, and production deployment?
- Are the code and accounts in my company's name?
- What does a scope change cost, and who approves it?
- What happens after launch: support, updates, security?
What are the hidden costs of software development?
The build is only the first invoice. The ones that follow:
- Maintenance: security updates, new library versions, and small improvements, every month and every year. Get the cost in writing before you sign. It's what our platform management service covers.
- Scope creep: it's the norm, not the exception. In PMI's 2018 Pulse of the Profession study, 52% of projects experienced uncontrolled scope changes. Agree up front how each change gets quoted and who approves it.
- Per-user licenses: every new hire raises the bill.
- Platforms that charge rent: a Central Texas home builder was paying about $60 a month in hosting and plugins just to keep a WordPress site alive. After we moved it to a static site in its own AWS account, the plugin bill disappeared and mobile performance went from 35 to 99. Read the case.
How do you lower the cost without lowering quality?
Deliver in phases. Instead of waiting for a perfect launch, we find the workflow that hurts most, put it in production, and keep iterating on the live system.
- For one financial institution, we re-architected a tutorials portal with more than 10 million views in one week instead of rebuilding it from scratch. Read the case.
- For a regional bank, we delivered two end-to-end transactional flows in six weeks by reusing modules that already existed. Read the case.
And improving the system you have usually beats rewriting it. We explain why in the 2026 Playbook.
Fixed price, hourly, or subscription?
| Model | Works when | Risk |
|---|---|---|
| Fixed price | Scope is locked and won't change | The vendor pads the price to protect itself |
| Hourly | Scope is uncertain | Without controls, hours grow |
| Subscription | You need development, support, and infrastructure every month | Requires a partner who stays accountable |
At Andes we work under the Sidekick model: from $1,000 a month, with a bank of hours you spend on whatever your operation needs. An honest caveat: if you have one perfectly defined project with a hard end date, a fixed price may serve you better.
Is AI making custom software cheaper?
Partly. In Stack Overflow's 2025 developer survey, 84% of developers use or plan to use AI tools, but 46% don't trust the accuracy of what they produce. AI saves hours of writing and adds hours of review. We redesigned our own website in two weeks with AI-assisted design, reviewed by hand module by module. Read the case.
AI speeds up writing code. It doesn't decide what to build, how it connects to your operation, or who answers when something breaks.
Want a range for your project?
Book a technical consultation: we size your case and give you a clear range, without the red tape and before you sign anything.
Sources
- U.S. Bureau of Labor Statistics, Software developers (Occupational Outlook Handbook, May 2025): https://www.bls.gov/ooh/computer-and-information-technology/software-developers.htm
- PMI, Scope Patrol (Pulse of the Profession 2018 data): https://www.pmi.org/learning/library/scope-creep-rising-11308
- Stack Overflow, Developer Survey 2025: AI: https://survey.stackoverflow.co/2025/ai
- UK Business Forums, Costing custom web development and software: https://www.ukbusinessforums.co.uk/threads/costing-custom-web-development-and-software-for-your-startup.420149/