Developing software can be expensive.
According to GoodFirms Research’s survey, the average cost of developing software is about $36000.
And the cost varies. It is dependent on various factors, such as:
- The complexity of the product: The more complex the product, the more expensive will be the development.
- Expertise: Complex projects would also require people with specific expertise and high qualifications. Research suggests that 13.10% of IT companies face a tough time finding and hiring the right developers for the project. This could escalate the development costs further.
- Location: The location of the developers can also influence the cost of the product. According to Payscale, a junior developer in North America might charge $95-100 per hour, while in Asia, the cost could vary from $20-30 per hour.
- Other costs: Product development costs also depend on the platform for which the product is developed, the complexity of the UX and UI design, and the complexity of testing.
Given how expensive and complex the entire process of software development is, most companies would want to develop a product while keeping a close eye on the money spent.
In this blog, we will look at a few ways in which companies can reduce their product development costs.
How To Spend Less On Product Development
- Develop MVP
Minimum Viable Product (MVP) implies understanding the customer’s interest in the product before developing it entirely. It helps companies to focus on building a basic prototype to get early feedback from target customers. They can concentrate on tweaking the product based on customer’s feedback rather than spending resources and money on developing a product that may not be useful to customers. Developing an MVP will also help companies to gauge if the customer finds the product useful and plug the losses.
- Use open-source tools
According to Linux Foundation Consulting clients, open-source software can save 20% to 55% of costs over commercial software. A survey by Black Duck shows that nearly 80% of businesses are running some of their operations on open-source software. So, what makes it popular among companies? Open-source software is flexible and easily scalable and does not cost license fees. It also reduces the cost of deploying and maintaining the software. That’s why companies like Netflix rely on open-source software completely. It helps them to save costs on operating systems and testing framework and focus on their core offering – content.
- Outsource to the right vendors
Outsourcing product development is one way of reducing costs. Companies can save costs on hiring and training people with expertise. However, companies must choose the right vendors for developing the product. Companies can end up burning their fingers if the vendors do not understand their requirements correctly or do not have product development expertise. Trust and accountability cannot be traded for low costs. Here are a few things that companies must do.
Outsourcing product development is one way of reducing costs. Companies can save costs on hiring and training people with expertise. However, companies must choose the right vendors for developing the product. Companies can end up burning their fingers if the vendors do not understand their requirements correctly or do not have product development expertise. Trust and accountability cannot be traded for low costs. Here are a few things that companies must do.
- Ask if the vendor has worked on a similar product before. This will give you an idea if the vendor has the expertise, knowledge, and skills to deliver a good product.
- Ask for references from the vendors and conduct independent reviews to gauge the general sentiments about them from previous customers. Dissatisfied customers could be a red flag not to sign a deal with the vendor.
- Check if the vendor understands the requirement completely.
- Ask questions on what technologies do they use, how will they manage emergencies? The process they follow to develop software, etc. The more you understand the workings of the vendor, the easier it will be to work with them.
- Most importantly, get clarity on post-development maintenance and support. Ask the vendors about their charges and other details to avoid any shocks in the future.
- Document the requirements and communicate clearly
Any ambiguity during product development could prove to be disastrous. The best way to avoid it is by documenting the entire product development plan from start to finish and ensuring that all teams involved in the development have it with them. Documentation ensures that all teams are aware of their role in the plan. It saves time and costs for development. It is also essential that the development team informs the project manager about the potential issues in the plan. It will help companies save on unnecessary waste of time and costs.
- Focus only on essential features
Any ambiguity during product development could prove to be disastrous. The best way to avoid it is by documenting the entire product development plan from start to finish and ensuring that all teams involved in the development have it with them. Documentation ensures that all teams are aware of their role in the plan. It saves time and costs for development. It is also essential that the development team informs the project manager about the potential issues in the plan. It will help companies save on unnecessary waste of time and costs.
- Reduce prototyping duration
Prototyping is important. However, the continuous process of developing a prototype, testing it, and re-developing it can be a time-consuming process and expensive too. Companies can fix this problem by reducing the prototype duration. Technologies such as Python are known to help in rapid prototyping. These technologies can help companies to optimize their product development process and improve the quality of their product.
- Adopt agile methodology
We work in a fast-paced environment where customer’s demands change frequently. What worked two months may no longer be relevant in today’s context. Companies cannot waste time or money on developing a product for a year. They have to do away with the old model of product development and adopt the agile methodology. Agile methodology helps companies to develop and test their product at every stage of the development and seek customer feedback early on. This helps them to save costs on rework.
- Automate whatever possible
Human errors and low productivity can add to product development costs. Companies should automate whatever is possible. For example, companies can automate workflows so all the teams involved in the product development can be notified when there is a new task or pending task to be completed. Similarly, they can use automated tools for quality assurance testing. The objective should be to remove all scope of human errors and ship an error-free product to the customers within a short duration.
Optimize the costs
With smart project planning, using the right resources, and by leveraging the right automation tools, companies can save costs on development. While saving development costs is crucial, companies must also ensure that there is no compromise on the final product. A case in point could be Boeing’s 737 Max. The U.S. regulators found that Boeing had outsourced their software work to lower-paid contractors with little experience in the aerospace industry and laid off experienced engineers to cut costs. This change led to deadly crashes. Such incidents can also damage the reputation of the company. Hence, it’s vital to keep customer-centricity and reputation at the center while developing cost-effective products.