Custom software development costs vary widely depending on scope, technology, and long-term business goals. Understand what impacts pricing, typical cost ranges, and how to plan a realistic software budget without guesswork.
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:
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?
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
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 (mobile, AI/ML, fintech compliance) when needed
Quick Pre-Qualification Filter (15 minutes per vendor)
Ask for:
- 2–3 relevant case studies
- Team structure and seniority mix
- Delivery model (agile, QA, DevOps)
- Security posture
- Availability + time-zone overlap
If they can’t answer clearly, don’t advance them to RFP.
3. The RFP Pack
An effective RFP doesn’t ask for marketing decks. It forces specificity.
Vendor Evaluation Scorecard
Weighted, evidence-based
Recommended Scoring Scale
Weak / unclear / risky
Acceptable
Excellent / proven / low risk
Domain & problem understanding
Delivery capability
Engineering quality
QA & reliability
Security & compliance
Team composition & seniority
Communication & transparency
Cost realism & commercials
Cultural fit & collaboration
References & proof
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)
Run Capability Interviews
Validate real delivery ability with the people who will lead your build
Interview #1
DeliveryProject management, planning, scope control, QA, delivery rhythm.
Interview #2
TechnicalArchitecture decisions, engineering maturity, reliability, security baseline.
Interview Scripts
Delivery Interview Questions
- 1
Walk us through your delivery cadence (weekly, sprint, release). What artifacts do you produce?
- 2
How do you handle unclear requirements?
- 3
How do you prevent timeline slip? What early warning signals do you use?
- 4
What does your risk register look like? Share an example risk and mitigation.
- 5
Who owns product decisions, and how do you collaborate to trade-off?
- 6
What does escalation look like when something is off-track?
Strong signal
They ask you hard questions and clarify assumptions.
Weak signal
They promise everything with no trade-offs.
Technical Interview Questions
- 1
Propose a high-level architecture for our requirements. Where are the risks?
- 2
How do you handle performance and scaling decisions early?
- 3
What’s your approach to code reviews, CI/CD, and branch strategy?
- 4
How do you manage technical debt?
- 5
What’s your testing strategy (unit/integration/e2e), and what’s automated by default?
- 6
How do you handle observability (logs, metrics, tracing)?
- 7
How do you secure secrets, credentials, and production access?
Strong signal
Clear reasoning, references to real constraints, and pragmatic choices.
Weak signal
Buzzword talk with no implementation detail.
Security & Compliance Evaluation
Minimum viable due diligence
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
- Vulnerability management and patching policy
- Incident response and breach handling
- Data processing locations and subcontractors
- Backup and disaster recovery approach
Compliance Signals
SOC 2 / ISO 27001
Maturity or roadmap
GDPR
DPA, minimization, retention
PCI
Payment security scope
Commercial Evaluation
Pricing, risk, and change control
Price is never just price. It reflects assumptions, risk transfer, delivery maturity, and how change will be handled once reality hits.
Common Pricing Models
Time & Materials
Best when scope is evolving or discovery is incomplete.
Fixed Price
Best when scope, acceptance criteria, and risks are clear.
Discovery + Build
Reduces early risk before committing to full delivery.
What to Require in a Commercial Proposal
- Clear rate card by role and seniority
- Named team allocation (who is actually assigned)
- Explicit assumptions and exclusions
- Formal change-control and re-estimation process
- Milestones tied to tangible deliverables
Contract & IP Checklist
Lock down early
Must-Have Contract Clauses
- IP ownership transfers to you upon payment
- Approved open-source licenses only (full disclosure)
- Confidentiality & data protection obligations
- Clear acceptance criteria and sign-off process
- Warranty and post-delivery bug-fix window
- Termination rights and transition assistance
- Subcontractor disclosure and approval
- Non-solicitation (if applicable)
- SLA for maintenance or support engagements
Handover Requirements
Do not skip:
- Source-code repository access & ownership
- Architecture & operational documentation
- Infrastructure-as-code (where applicable)
- CI/CD pipelines and environment configs
- Secure credential transfer process
If you can’t take the product in-house later, you don’t truly own it.
The Paid Pilot
The fastest truth test
A well-designed pilot reveals more than 10 sales calls.
What a Good Pilot Looks Like
Structure
What You’re Evaluating
- Communication clarity and responsiveness
- Quality of deliverables
- Ability to challenge assumptions
- Engineering hygiene
- Realistic timelines and estimates
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
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 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.
