Custom Software Development: The Complete Guide
Want to have custom software developed? Learn everything about costs, process, provider selection, and what to look out for.
Jonas Höttler
Custom Software Development: The Complete Guide
You have an idea for software that doesn't exist. Or your processes are too special for standard software. Then custom software development is the solution. But how does it work? What does it cost? And how do you find the right partner?
This guide gives you all the answers.
Table of Contents
- When Custom Software Makes Sense
- The Development Process
- Realistically Estimating Costs
- Finding the Right Development Partner
- Successful Collaboration
- FAQ
When Custom Software Makes Sense
Good Reasons for Custom Development
1. Your process is unique
- No standard software covers it
- Workarounds cost more than a custom solution
- The process is your competitive advantage
2. You have specific integration requirements
- Many different systems need to be connected
- APIs of standard software aren't enough
- Real-time synchronization needed
3. Scaling is planned
- Per-user costs with SaaS become too high
- You need full control over performance
- Special data storage requirements
4. Compliance requires it
- Industry-specific regulations
- Data must be on your own servers
- Audit trails and special security
Warning Signs: When You Should NOT Develop Custom
- You don't know your requirements precisely yet
- Budget under €30,000
- You need it in under 2 months
- An 80% solution already exists on the market
The Development Process
Phase 1: Discovery & Conception (2-4 Weeks)
Goal: Understand what needs to be built
Activities:
- Workshops with stakeholders
- Analyze and document processes
- Write user stories
- Check technical feasibility
- Make architecture decisions
Result:
- Requirements document
- Wireframes / Mockups
- Technical concept
- Project plan and estimate
Cost: €5,000-€20,000
Phase 2: Design (2-4 Weeks)
Goal: What does the software look like and feel like?
Activities:
- UX Design (flows, wireframes)
- UI Design (visual design, styleguide)
- Prototyping
- User testing
Result:
- Clickable prototype
- Design system
- Final UI for all screens
Cost: €10,000-€30,000
Phase 3: Development (2-6 Months)
Goal: Build software
Methodology: Agile sprints (2 weeks)
Per Sprint:
- Planning: What gets developed?
- Daily standups: Progress and blockers
- Development: Write code
- Review: Demo to stakeholders
- Retrospective: Improve process
Result:
- Working software increments
- Documentation
- Automated tests
Cost: €30,000-€200,000+
Phase 4: Testing & QA (Parallel + 2-4 Weeks Final)
Goal: Ensure everything works
Test types:
- Unit tests (automated)
- Integration tests
- End-to-end tests
- User Acceptance Testing (UAT)
- Performance tests
- Security tests
Cost: Included in development + 10-20% extra
Phase 5: Deployment & Launch (1-2 Weeks)
Goal: Get software live
Activities:
- Set up production environment
- Data migration
- User training
- Go-live with support
- Set up monitoring
Cost: €5,000-€15,000
Phase 6: Maintenance & Evolution (Ongoing)
Goal: Keep software alive and improve it
Activities:
- Bug fixes
- Security updates
- Small improvements
- Support
Cost: 15-25% of development costs per year
Realistically Estimating Costs
Hourly Rates in Germany
| Role | Hourly Rate |
|---|---|
| Junior Developer | €60-€90 |
| Mid Developer | €90-€120 |
| Senior Developer | €120-€160 |
| Tech Lead | €140-€180 |
| UX Designer | €80-€120 |
| UI Designer | €70-€110 |
| Project Manager | €90-€130 |
Project Costs by Complexity
| Project Type | Timeline | Cost |
|---|---|---|
| Simple Internal Tool | 2-3 months | €30,000-€60,000 |
| Web Application (MVP) | 3-4 months | €50,000-€100,000 |
| Complex Platform | 6-12 months | €100,000-€300,000 |
| Enterprise System | 12-24 months | €300,000-€1,000,000+ |
What Drives Costs Up?
- Integrations: Each interface = effort
- User Types: Admin, user, guest = different views
- Platforms: Web + iOS + Android = ~2.5x
- Regulations: GDPR, financial compliance, etc.
- Performance: High load, real-time requirements
- Legacy: Connection to old systems
Don't Forget Hidden Costs
- Project management on your side
- Testing and feedback rounds
- Data migration
- Training
- Ongoing maintenance
- Hosting and infrastructure
Finding the Right Development Partner
Options Compared
| Option | Advantages | Disadvantages | Ideal for |
|---|---|---|---|
| Freelancer | Cheap, direct | Failure risk, limited capacity | Small projects |
| Small Agency (5-20) | Personal, flexible | Limited breadth of expertise | Medium projects |
| Large Agency (50+) | Broad expertise, security | Expensive, less personal | Enterprise projects |
| Offshore | Cheap | Communication, variable quality | Budget-critical |
| Nearshore | Good value | Small time difference | Cost optimization |
Selection Criteria
1. Relevant Experience
- Similar projects in portfolio?
- Technology stack fits?
- Industry knowledge available?
2. Team and Process
- Who specifically works on the project?
- What does the development process look like?
- How is communication handled?
3. References
- Can you talk to previous clients?
- Are the portfolio projects verifiable?
4. Cultural Fit
- How does communication feel?
- Are your questions answered well?
- Is there chemistry?
Red Flags
- Fixed price without discovery
- No dedicated contact person
- Unrealistic promises
- No references possible
- Everything is outsourced
Successful Collaboration
Your Role as Client
1. Provide Clear Requirements
- What should the software do?
- Who are the users?
- What is the business goal?
2. Be Available
- Give quick feedback
- Answer questions promptly
- Participate in meetings
3. Make Decisions
- Designate one decision-maker
- Have scope discussions
- Accept trade-offs
Set Up Communication
- Weekly status meeting (30-60 min)
- Sprint demos every 2 weeks
- Slack/Teams channel for quick questions
- Jira/Linear for tasks and bugs
Ensure Quality
- Actively use sprint demos
- Test yourself, don't just get reports
- Give feedback early and often
- Document changes in writing
Conclusion
Having custom software developed is a significant investment - in time, money, and attention. But if you do it right, you get exactly the software your business needs.
At Balane Tech, we develop custom software for businesses. From idea to launch, agile and transparent. Contact us for a free initial consultation.
FAQ
What does it cost to have custom software developed?
Simple tools from €30,000, web applications €50,000-€100,000, complex systems €100,000-€500,000+.
How long does development take?
MVP: 3-4 months, full product: 6-12 months, enterprise: 12-24 months.
Fixed price or time & materials?
Time & materials is usually better: more flexibility, more realistic estimates. Fixed price only with very clear scope.
Who owns the code?
Regulate contractually! Standard should be: After full payment, everything belongs to you.
Do I need an internal tech contact?
Recommended but not mandatory. Without an internal tech lead, the agency should take this role.
What happens after launch?
Plan maintenance: 15-25% of development costs per year for updates, bugfixes, small extensions.
