How to Minimize Software Project Estimation Cost?

The rise in the cost of software development has consistently been a worldwide trend for a lot of years now and would continue the status quo. The continuous increase of the cost of off-the-shelf and custom software development has posed serious issues for organizations in general, and the entire software development field in particular. 

software project estimation cost

For all organizations these days, having a software solution is a necessity, yet costs continue to skyrocket. As these companies seek to create cutting-edge software for growth, determining the budget as a whole is somewhat tricky. Thus, regular interaction and obtaining a budget estimate is highly recommended. 

This makes room for added expenses that could arise all of a sudden in the process. Aside from the cost estimate, companies should also find ways to minimize expenses in the process of developing a software solution. Lowering the cost is a complex process that consists of a lot of diverse factors in various development environments. 

Tips to Minimize Overshooting Costs in Estimates

In the process of estimating a custom application development process, overshooting and sometimes undershooting is easy. And, it could either cost you a customer or lessen your profits and could even make people frustrated. So, to minimize the estimation cost, here are several tips to make sure you stay on track. 

1. Choosing the right people: This seems pretty straightforward, but the reality is that it is not always so. Those who estimate the project should be the ones to do the work. They could use their previous experience and determine any red flags that could come up. 

2. Making the most of the discovery and learning stage: Clear any doubts as much as possible by working in the team, and as early on as possible. 

3. Breaking down work into smaller chunks: Moreover, you should also put them on sticky notes. The smaller the task, the better for you to do an estimate on how long it would take. This has truly improved the accuracy of software project estimates. 

4. Using historical data from projects done in the past: Record in detail the time spent on each aspect of your projects. Later on, the data and information gathered would be extremely helpful to build realistic estimates. 

5. Detailed analysis: If there is no one on the project analysis team that knows the job you need to estimate well, you could talk to others in your organization or seek information from external consultants. 

6. Score every task with an inaccuracy risk level and complexity point: Talk to the customer on ways to minimize inaccuracy and complexity. Perhaps you have to spend more time doing research and discovery or build a proof of concept for assumptions verification. 

7. Minimize bottlenecks: When planning and performing work, consider cutting back on the dependencies between people and make certain that there would be no bottlenecks that increase the project’s time and costs typically, and which, more often than otherwise, could be avoided. 

8. From the beginning, you should involve a QA team: Early testing in the development life cycle will pay off. This is because bugs or errors could already accumulate during the design or the requirement phase. If you are unable to catch them at this phase, they would disseminate throughout your whole project. 

9. Hiring a Proactive Team: You need a development team that challenges and advises you during the development process. There are instances that smart technical decisions during the planning stage could significantly lower costs while providing the same business value. 

10. Outsource: Software outsourcing to a professional service provider helps you save on costs. Since you won’t be hiring your in-house development team, you could avoid paying salaries, perks, taxes, workspace, benefits, software and hardware costs, and a lot of other overhead expenses. 

Keep in mind that before outsourcing your software development you should make sure that the cooperation will be effective. In order to do so, you can make a list of questions to ask before outsourcing, which will help you to find out what expectations you have and how the vendor will guarantee success.

Why Creating an Accurate Cost Estimate is Important?

In any custom software development service process, there are a lot of reasons why cost estimation is critical. Let’s check out a few of them. 

  • It helps in defining the effort of the team that you have to put into the project and the exact work scope. In turn, this could help you come up with an adequate price that you would present to your customer. 
  • Provides clarity to the team and the client, which helps define and make an agreement regarding milestones. 
  • It helps in understanding the factor that drives the costs in the software development project. One benefit is that prioritizing backlog tasks becomes easier effectively and smartly, with the use of an ‘Impact/Effort’ analysis. Essentially, it would look like this:

What Causes Software Development to Overrun?

The following are some reasons why some development projects end up exceeding the budget. 

1. Frequent changes: To avoid failure, discuss the project scope in as much detail as you can. Software Development teams could have some assumptions about what you are trying to build, thus it’s your job to clarify the project scope early on. 

2. Inadequate proper planning: This is key in software costs estimation. To be accurate, you should know the requirements as well as all the tasks required to accomplish the project within the costs specified. Planning is a vital step in the allocation and management of resources. 

3. Lack of communication: This problem could develop in a couple of directions: micro-management, or under-communicating, and over-communicating. For any software project to be successful, clear communication is paramount. 

4. Role testing underestimation: Some organizations forget that testing is a major phase that occurs before the actual work, while code is in production. If you do not test your product, then you could risk releasing a buggy kind of software, and then overrun the budget when you attempt to fix that error. 


Cost reduction in software development could be achieved with the help of the tips mentioned above, strategies, and tools. Let’s summarize a few critical points:

  • The increasing cost of software development is a major challenge in the industry. 
  • A big portion of the development project failure always has been a major concern for organizations as well as service providers. 

Minimizing the estimation cost of your software project helps prevent from overrunning your stipulated budget.  

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