A Outcomes
- What business metric improves if this succeeds?
- What user problem is solved?
- What does “done” look like in 90 days vs 12 months?
Custom Software Cost Guide
Custom Software Development Cost: Key Drivers & Pricing
Understand what impacts pricing, typical cost ranges, and how to plan a realistic software budget without guesswork.
Clear breakdown of scope, complexity, and technical decisions that shape estimates.
Realistic ranges and budgeting inputs you can use before requesting proposals.
Common cost traps to avoid when requirements evolve during development.
Table of Contents
Jump to any step
Define Your Evaluation Scope
Get vendors to quote apples-to-apples
Your selection process breaks down when vendors interpret the project differently. Start by defining:
B Scope Boundaries
- In scope: platforms, integrations, analytics, admin panel
- Out of scope: brand redesign, data migration, growth marketing
C Constraints
- Timeline (hard deadlines vs flexible)
- Budget range (even a band helps)
- Tech constraints (must use / can’t use)
- Compliance requirements (GDPR, HIPAA, PCI, SOC2)
D Decision Drivers
- Speed to MVP
- Enterprise-grade security
- UX excellence
- Domain expertise
- Total cost of ownership
Build a Shortlist That Matches Your Needs
Quality over quantity
A strong shortlist is usually 3–6 vendors. More than 6 creates noise; fewer than 3 reduces leverage.
Where to source vendors
- Referrals from people who shipped similar products
- Companies with proven work in your domain and stack
- Vendors with a “discovery-first” approach for complex builds
- Specialists (e.g., mobile, AI/ML, fintech compliance) when needed
Quick Pre-Qualification Filter (15 minutes per vendor)
Ask for:
- 2–3 relevant case studies (not “we built an app”)
- Team structure and seniority mix (who will actually work)
- Delivery model (agile cadence, QA, DevOps)
- Security posture (basic controls at minimum)
- Availability + time zone overlap
If they can’t answer clearly, don’t advance them to RFP.
3. The RFP Pack
Your biggest leverage tool
An effective RFP doesn’t ask for marketing decks. It forces specificity.
1
One-page problem statement (what you’re building and why)
2
User flows or simple wireframes (even rough)
3
Requirements list (MVP must-haves, phase 2, integrations)
4
Non-functional requirements (performance, uptime, security)
5
Assumptions and constraints (timeline, budget band, stack)
6
Data and integrations (APIs, third-party tools, data sources)
7
Acceptance criteria (how you’ll judge “done”)
8
Request format (so responses are comparable)
9
Evaluation rubric (tell vendors how you’ll score them)
Vendor Evaluation Scorecard
Weighted, evidence-based
Recommended Scoring Scale
1
Weak / unclear / risky
3
Acceptable
5
Excellent / proven / low risk
| Category | Weight | What “5/5” looks like | Evidence to request |
|---|---|---|---|
| Domain & problem understanding | 10% | Clear grasp of users, workflows, risks | Discovery notes, user flows, clarifying questions |
| Delivery capability | 15% | Mature agile, predictable planning, strong PM | Sample sprint plan, ceremonies, delivery artifacts |
| Engineering quality | 15% | Clean architecture, code standards, reviews | Coding standards, PR process, repo examples |
| QA & reliability | 10% | Test strategy, automation, release discipline | QA plan, test pyramid, bug SLAs |
| Security & compliance | 15% | Strong controls, secure SDLC, audit readiness | Policies, SOC2/ISO evidence, security checklist |
| Team composition & seniority | 10% | Senior leads, stable team, low churn risk | Named leads, org chart, resumes/LinkedIn |
| Communication & transparency | 5% | Clear reporting, risk escalation, stakeholder mgmt | Status report samples, governance model |
| Cost realism & commercials | 10% | Clear assumptions, change control, fair terms | Pricing breakdown, rate card, scope assumptions |
| Cultural fit & collaboration | 5% | Works like an extension of your team | Trial workshop, meeting dynamics |
| References & proof | 5% | Verified outcomes and long-term retention | References, case study metrics |
Scorecard Criteria Cards
Blocker Criteria (Fail Fast)
If any of these fail, pause or reject before spending more time.
- ×Won’t sign NDA (if needed) or won’t discuss IP ownership
- ×Cannot explain delivery control for scope and quality
- ×No clear dev/QA ownership for complex builds
- ×Won’t name leads / hides seniority or team structure
- ×No change control process (scope creep guaranteed)
Download the Scorecard Spreadsheet
Get the weighted vendor scorecard (Google Sheet / Excel) with all criteria and scoring columns—ready to copy for your project.
Domain & problem understanding
Evidence to request
Discovery notes, user flows, clarifying questions
Delivery capability
Evidence to request
Sample sprint plan, weekly reporting, delivery metrics
Engineering quality
Evidence to request
Coding standards, PR process, review examples
QA & reliability
Evidence to request
QA plan, test coverage approach, release checklist
Security & compliance
Evidence to request
Policies, pen-test readiness, security checklist
Team composition & seniority
Evidence to request
Named team, roles, engagement model details
Communication & transparency
Evidence to request
Status report samples, governance model
Cost realism & commercials
Evidence to request
Pricing breakdown, rate card, scope assumptions
Cultural fit & collaboration
Evidence to request
Working agreement, escalation path
References & proof
Evidence to request
Customer references, metrics, case study details
Blocker Criteria (Fail Fast)
If any of these fail, pause or reject before spending more time.
- ×Won’t sign NDA (if needed) or won’t discuss IP ownership
- ×Cannot explain delivery control for scope and quality
- ×No clear dev/QA ownership for complex builds
- ×Won’t name leads / hides seniority or team structure
- ×No change control process (scope creep guaranteed)
Download the Scorecard Spreadsheet
Get the weighted vendor scorecard (Google Sheet / Excel) with all criteria and scoring columns—ready to copy for your project.
Run Capability Interviews
Validate real delivery ability with the people who will lead your build
Tip: ask for examples and artifacts (plans, reports, PRs), not just verbal assurances.
Interview #1
DeliveryProject management, planning, scope control, QA, delivery rhythm.
Interview #2
TechnicalArchitecture decisions, engineering maturity, reliability, security baseline.
Delivery Interview Questions
- Walk me through your delivery cadence (planning, weekly demos, reporting). What artifacts do you share each week?
- How do you estimate work when requirements are uncertain?
- How do you prevent scope creep? What is your change-control process?
- What does QA look like in your team (who owns it, what’s tested, when)?
- Show an example of a status report and how you surface risks early.
Strong signal
They show real artifacts (plans, reports, QA checklist) and explain how they keep scope and quality under control.
Weak signal
Answers stay generic (“we’re agile”), with no examples or clarity on change control and QA ownership.
Technical Interview Questions
- Explain your architecture approach for a similar system. Why did you choose that design?
- How do you enforce code quality (PR reviews, standards, CI checks)?
- What’s your testing strategy (unit/integration/e2e) and expected coverage by phase?
- How do you handle deployments, monitoring, and incident response?
- Describe your security baseline: secrets management, access control, logging, and vulnerability handling.
Strong signal
Clear, specific answers tied to real practices (CI/CD, tests, monitoring) and tradeoffs they can explain.
Weak signal
Hand-wavy architecture, no concrete testing plan, vague security posture, or unclear ownership.
Copy the Interview Scripts
Standardize your vendor interviews so answers are comparable, bias is reduced, and scorecard decisions are easier.
Includes delivery + technical question bank View Question Bank
Security & Compliance Evaluation
Minimum viable due diligence
Even if you’re not “enterprise,” you’re still responsible for your user data and operational risk.
Minimum Security Checklist
Ask vendors to confirm:
- Secure SDLC (security review, dependency scanning)
- Access control (least privilege, MFA)
- Secrets management (no secrets in code)
- Encryption in transit and at rest (where applicable)
- Vulnerability management and patching policy
- Incident response basics (how they handle breaches)
- Data processing locations and subcontractors
- Backup and disaster recovery approach
Compliance Signals
SOC 2 / ISO 27001
Maturity or roadmap
GDPR
DPA, data minimization, retention
PCI
Payment security considerations
If vendors can’t provide anything beyond “we take security seriously,” you’re absorbing risk.
For regulated environments or sensitive coverage (payments, healthcare, identity), use our approach to systematic delivery with audit-ready engineering and SOC 2 / ISO-aligned controls.
Download ChecklistCommercial Evaluation
Pricing, risk, and change control
Price is never just price — it’s a reflection of assumptions and risk transfer.
Common Pricing Models
Time & Materials
Best when scope is evolving. Requires strong governance and sprint discipline.
Fixed Price
Best when scope is stable. Watch for hidden buffers and change-order friction.
Discovery + Build
Paid discovery reduces early risk. Works well for complex products.
What to Require in Commercial Proposal
- Rate card by role (and seniority)
- Named team allocated to your project
- Assumptions list (“If this quote assumes X”)
- Change control process (how scope changes are handled)
- Payment milestones tied to deliverables (not dates alone)
Get the Pricing Comparison Tables
Download commercial evaluation templates with rate card format and assumptions checklist.
Contract & IP Checklist
Lock down early
This is where many teams get burned — especially on IP and handover.
Must-Have Contract Clauses
- IP ownership: you own the work product upon payment
- Open-source usage policy: disclosed, approved licenses only
- Confidentiality and data protection
- Acceptance criteria and sign-off process
- Warranty / bug-fix window
- Termination and transition assistance
- Subcontractor disclosure and approval rights
- Non-solicit (if relevant)
- SLA (for support/maintenance agreements)
Handover Requirements
Don’t skip these:
- Source code repo access and ownership
- Documentation (system architecture + runbook)
- Infrastructure as code (where feasible)
- CI/CD pipelines and environment config
- Credential transfer process (secure)
If you can’t take the product in-house later, you don’t truly own it.
Get the Contract Checklist
Download the IP ownership clause checklist and handover requirement templates.
The Paid Pilot
The fastest truth test
A well-designed pilot reveals more than 10 sales calls.
What a Good Pilot Looks Like
Structure
Duration: 1–3 weeks
Output: tangible deliverable
Includes: sprint plan, backlog, acceptance criteria, demo
Ends with: recommendations + updated roadmap + risk list
What You’re Evaluating
- Communication clarity and responsiveness
- Quality of deliverables
- Ability to challenge assumptions
- Engineering hygiene
- Realistic timeline and estimation
If they “look great” in sales but slip in a pilot, you saved months of pain.
Make the Final Decision
How to pick confidently
Simple Decision Meeting Format
-
Review scorecard totals AND blocker list
-
Compare top 2 vendors on: Risk (delivery/security), Maintainability and quality, Cost realism and transparency
-
Choose the vendor with the best risk-adjusted value, not the lowest quote
-
Align on governance: cadence, reporting, decision makers, escalation
-
Start with discovery/pilot if the scope is complex
Vendor Red Flags
Don’t rationalize these
-
“We can start tomorrow” with no discovery and no questions
-
Won’t introduce the actual tech lead until after signing
-
Vague QA approach (“we test everything”)
-
No examples of delivery artifacts (status reports, sprint outputs)
-
Refuses to document assumptions in the quote
-
Over-promises on timeline without trade-offs
-
No defined change control or scope management process
-
Hesitates on IP ownership or repo access
Vendor Evaluation Templates
Copy/paste ready resources
A) Scorecard Spreadsheet Columns
- Vendor name
- Category
- Weight
- Score (1–5)
- Weighted score
- Evidence link/note
- Blocker? (Y/N)
- Risk summary
B) Reference Check Script (10 minutes)
- What did they build, and what was the outcome?
- Was delivery on time? If not, why — and how was it handled?
- How was communication and transparency?
- How did quality and maintainability hold up six months after?
- How did they handle bugs, scope change, and pressure moments?
C) RFP Question Bank (High Signal)
- What assumptions are you making about scope and constraints?
- What are the top 3 risks you see, and how would you mitigate them?
- Show a sample delivery plan for the first 4–6 weeks.
- How do you ensure code quality and prevent regression?
- What security controls are standard in your delivery process?
- What is your approach to documentation and handover?
Frequently Asked Questions
Common questions about vendor evaluation
How many vendors should I evaluate?
Shortlist 3–6. Run deeper evaluation on 2–3. If you evaluate 10+, you’ll lose consistency and speed.
Is a discovery phase really necessary?
For anything beyond a simple build, yes. Discovery reduces misunderstandings, improves estimation, and surfaces risks early.
Should I choose a local, nearshore, or offshore vendor?
Choose based on the combination of overlap hours, communication maturity, seniority, and governance — not geography alone.
How do I avoid being locked into one vendor?
Own your repos and accounts, require documentation, enforce handover clauses, and avoid proprietary frameworks without clear justification.
Download the Vendor Evaluation Framework
Get instant access to: weighted scorecard spreadsheet (XLSX), RFP pack template, delivery & technical interview scripts, reference-check script, and contract clause checklist.
