How to lose a lot of money with software development

How to lose a lot of money with software development

When it comes to software development, there are many typical mistakes you may make. It is not easy to handle the development process without proper budget planning. Otherwise, you will lose a lot of money, time, and effort in the process. Many businesses lose money on software development due to inaccurate cost estimates, unrealistic expectations, not cross-examining task specifications, etc. In this article, you will learn about these mistakes in detail.

  • Inaccurate cost estimates
  • Setting unrealistic expectations
  • Not selecting the appropriate tech stack
  • Attempting in-house Development
  • Hourly or fixed-fee approach
  • Failure to implement maintenance costs

1. Inaccurate cost estimates

Cost estimation is an essential factor when it comes to software development to have an under or on-target budget project. And the budget can always change because each project has specific requirements and deadlines. Making estimations is a difficult task due to several factors that affect the process. 

Those factors include scope changes, scope creep, and delays that can negatively affect the timeline and completion of the whole project. But if it is done correctly, it can be an effective and helpful tool. Otherwise, having an inaccurate cost estimation will result in a loss of a lot of money.  

2. Setting unrealistic expectations

The development team should have clear expectations about the projects they are undertaking so that they can do well on them and deliver them on time. Setting unrealistic expectations can cause problems in the planning of how much should be invested in the projects. 

For example, you cannot expect 100% team availability all the time. It is unlikely to make that happen with sick or personal leave, breaks, and company-wide sessions. You can expect about 80 to 85% of the team to work on the projects. Setting unrealistic expectations can, therefore, affect the cost estimation. It will cost you more. 

3. Not selecting the appropriate tech stack

The next way that you may lose money during the software development process is by not selecting the appropriate tech stack for the team to work on. If they are not provided with the right tools and technologies to work, it will reduce the productivity of the team, increasing the risk of project failure. Failing a project means it requires you to invest more in the process to fix it and hand it over to the clients.

4. Attempting in-house Development

Many software development companies are attempting in-house development. Even though it may seem like the cheapest way, it is expensive to develop an application on your own. It is because app development requires many things, including specialists, advanced tools and technologies, and experience in software development. It will cost you a lot of money, and therefore it will be wise to switch to outsourcing to save money.

5. Hourly or fixed-fee approach

Choosing an hourly or fixed fee approach to software development may feel like a better and more reasonable option, as you always know how much you will need to pay for the development from the beginning of the project. But actually, there is a high probability of project failure and loss of money with this choice due to many reasons. 

If a developer works for an hourly rate, you will see your bills rack up fast. Especially in cases where they have to add new features and make changes big enough to change the direction of the work and require more effort and time, they would probably ask for additional money. It could nearly double your entire budget, put you in a position where you can not take a step back, and financially ruin you.

6. Failure to implement maintenance costs

With software development, most companies focus on the writing and designing of the application. But there are maintenance costs that should be taken care of and cannot be overlooked. It is because, in the long run, it may cause problems like technological debt. The tools and technologies used should be updated and upgraded regularly to smooth the development process. Otherwise, you will have to spend a lot of money to compensate for such problems. 

So, these are some of the ways software development can cost you a lot. Everybody wants to cut costs, particularly when it comes to a significant investment like a software development project. What you can do is be prepared before starting the project rather than spending a lot during the process. 

Keep in mind the above mentioned ways you may lose your money. Software development costs can vary depending on the size and complexity of the project, the experience and expertise of the development team, and other factors. So choose the process wisely. 

Interesting Links:

What is Software Development Process?

What is Software Development Methodology?

Pictures: Canva

The author: Sascha Thattil works at which is a part of the YUHIRO Group. YUHIRO is a German-Indian enterprise which provides programmers to IT companies, agencies and IT departments.

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