How Much Does It Cost to Build Custom Software in 2026? Honest Numbers from Cameo Labs

Search Google for “custom software development cost” and you’ll get pages of results telling you it’s anywhere from $10,000 to $250,000. Sure, that’s correct. But it’s also about as helpful as asking someone how much does a house cost and being told “Anywhere from $50,000 to $5 million.”.

Even worse? Most of those articles are concentrating on the wrong question. They’ll tell you how much software costs to build, but not how much it costs to build well. And this distinction is more important than debating hourly rates because over the last 25 years, since The Standish Group began tracking software project success rates, the statistics have been dismal: Only 31% of software projects are successful. The rest exceed budget, fall behind schedule, don’t fully deliver the desired features, or are cancelled completely.

Half of the budget for your average software project goes to fixing problems after the fact. Half of your budget goes to fixing problems that shouldn’t exist in the first place. When a ballpark figure quotes you an MVP at $30k, what they aren’t telling you is that low-ball MVPs typically end up costing you $90k-$150k when you account for wasted re-work, scrapped code, and doing the whole thing again with the team who knows what they’re doing.
Let’s dig into what software really costs when it’s done right.

The Real Numbers by Project Type

These price ranges are what you should expect a capable US-based or US-led team to charge to build production quality software that scales and won’t have to be thrown away in 12 months. Prices include design, development, QA, deployment, and basic project management.

Simple MVP: $200k-$350k. One platform (web or mobile, not both), 5–8 key features, user login, one or two integrations, attractive design built for actual users as opposed to a demo. Expected Time Frame: 10–18 weeks. This is what your validated idea should look like when built correctly with seasoned developers who make the proper architectural choices from day one.

Medium-complexity application: $350k-$800k. Think of a middle market B2B SaaS with established workflows. Role-based permissions, dashboards, multiple integrations (payments, CRM, analytics, email api’s), polished UI/UX. Or a consumer facing product with both mobile and web interfaces built upon a shared backend. Expected Time Frame: 4–8 months.

Large or enterprise-grade software: $1M+ Monthly recurring software costs fluctuate wildly depending on your exact pricing structure. Product with multiple platforms, AI components, HIPPA or other compliance requirements, complex data pipelines or real-time processing, integrations with legacy hardware or software. Projects this size require larger, specialized teams. Expected Time Frame: 8-14 months.

You’ll find lower prices elsewhere. There are offshore agencies in South Asia promising to build your MVP for $15k-$30k. Those prices are legitimate. However what you get for that price is junior developers, massive timezone and communication overhead, and code that almost always needs to be thrown out when it’s time to scale. You might be paying an hourly rate of $25 vs. $150+ but projects that should take 1,000 hours end up taking 1,800+ when you factor in miscommunications, rework, and project management overhead. The “savings” tend to disappear.

Why Cheap Software Is the Most Expensive Software You'll Ever Buy

Here's the number that should reframe how you think about software costs: McKinsey found that large IT projects run 45% over budget and deliver 56% less value than predicted. And 17% go so badly they threaten the company's existence.

Those aren't stats about bad developers. They're stats about bad decisions made before development starts — unclear requirements, bloated scope, wrong team structure. The Standish Group identified "poor requirements" as the leading contributor to project failure, cited in 39% of failed projects.

When companies choose a development partner based primarily on price, they set themselves up for exactly these failures. A $50,000 build that requires $100,000 in rework isn't a $50,000 project. It's a $150,000 project that took twice as long, launched late, and damaged the team's confidence in the entire process.

I've talked to dozens of founders who came to us after a failed build with a cheaper team. The pattern is always the same: the first project went over budget, the relationship fell apart, the code was abandoned, and now they're starting over. The total cost — first build, failed launch, opportunity cost of the delay, second build — is routinely 3 to 4x what it would have cost to do it right the first time.

A 45% budget overrun sounds bad. A 300% total cost when you include the failed first attempt is the actual number most people experience.

What Actually Drives the Cost

How well you've defined what you're building. This is also the largest cost driver, and most founders don't expect it. Products/projects with specific requirements and documented user flows are 30-50% cheaper than projects where the scope is "worked out along the way". Every hour your dev team spends figuring out what to build is an hour they aren't building. Unclear requirements compound- a misunderstood feature in week 2 turns into a redesign in week 8.

Investing $20,000 -$50,000 in a structured discovery phase before committing to a full build consistently saves 2 to 3x that amount in avoided rework. Companies that skip discovery and go straight to development are gambling that their assumptions are correct. They usually aren't.

Your tech stack: The decisions you make about technology in week 1 set your costs for years to come. Choose the wrong framework, programming language, database, or hosting architecture and you’re accruing technical debt that inflates every sprint. Senior team members are expensive by the hour but deliver much better outcomes early in the process. Junior developers are less expensive but consistently make architectural decisions that don’t scale and lead to costly rewrites down the road.

The number of features you commit to building simultaneously. According to research conducted by The Standish Group, 45% of features delivered in an average software project are never used. Another 19% are seldom used. Together nearly two-thirds of what you build ends up contributing little to no value to your bottom line. Each unused feature increases your cost, prolongs your timeline, and adds complexity that makes your product more difficult to maintain.

Size of your time frame: McKinsey analyzed data from over 170 software projects and discovered that each additional year spent on a software project increased cost overruns by 15%. If you estimate a project will take 12 months instead of 4 you don’t just triple your budget. Trilateral software projects have THREE TIMES THE OVERRUN RISK OF projects that are scoped correctly from the start.

Who’s actually going to build it: Team structure trumps hourly rates. The MIT group NANDA discovered that internal teams had about a one-third success rate. Specialized software teams had a success rate of two-thirds. The biggest reason? External teams have process discipline, architectural know-how, and pattern recognition gleaned from working with clients across various industries repeatedly.

The Costs Nobody Puts in the Proposal

Maintenance After Launch. Expect to spend 15–20% of your initial build cost going forward on bug fixes, security updates, hosting, monitoring and iterating on features. $350k to build? $50k-$70k per year to maintain and enhance. Somebody says they will maintain your software for free? They are either lying or they intend to charge you change-order rates that will make your original budget look like a bargain.

Third-Party Services. Payment processing, email delivery, SMS, cloud hosting, CDN, analytics, error logging. These things can cost $500/month to $5,000/month depending on how you use your product, and will grow with your user base.

AI. $ incorporates machine learning recommendations, natural language processing, chat interfaces, predictive analytics. Adding AI capabilities will increase your project budget by 15-30%. The premium is for costs associated with cleaning your data, choosing a model, evaluating model efficacy, and building the guardrails to prevent your AI features from hallucinating at scale.

Compliance. HIPPA, SOC 2, PCI-DSS, or other industry standards can increase project costs by $25,000 to $65,000+, due to infrastructure, documentation and auditing requirements. If you take someone's health information, financial information, or kids data, you will need to comply.

How to Get a Realistic Estimate

Start with discovery, not development. A 2 to 4 week discovery phase ($40,000-$75,000) produces documented requirements, user flows, technical architecture decisions, and a realistic estimate based on actual scope. This is the single most cost-effective investment you can make.

Scope your first release ruthlessly. What is the smallest set of features that lets real users accomplish the core task? Build that. Two-thirds of features in typical software projects deliver little or no value. Don't pay to build them.

Get three proposals and compare what's included, not just the price. Does the estimate include design? QA? DevOps and deployment? Post-launch support? The gaps between what you assume is included and what actually is will determine whether you stay on budget.

Budget for the whole lifecycle, not just the build. Development is 60 to 70% of your first-year cost. The rest is design, QA, deployment, infrastructure, third-party services, and post-launch iteration. If your entire budget goes to the build, you'll have no money left to fix what you learn after launch.

The Question That Matters More Than "How Much?"

Software development cost matters. How badly you build software matters more, though. It costs 3 to 4x more to build software badly, which is what most penny-wise buyers inadvertently end up choosing.
“Cheap” is not the right question. The right question is, “how much does it cost to build this right once and never have to pay for it again in a year?”
If you ask that question, the pricing looks different. And so do your results.

We help clients who know exactly what they want built and want it done right the first time. At Cameo Labs, we find and fix the scoping and requirements issues behind 70% of software project failures during discovery. That way, you know upfront what you’re getting into. Request a Discovery Session to see what an MVP should really cost.

FAQ: Build Custom Software: How Much Does It Cost?

How much does custom software development cost?

Build your software in US with a quality team and plan to pay $275,000 to $350,000 for a targeted MVP, $350,000 to $800,000 for a medium-complexity app, and from $1M upward for large enterprise-grade projects. It’s not unusual to get quotes from offshore vendors that seem far lower, but those low prices often come with hidden costs in time wasted fixing preventable mistakes. According to The Standish Group, half of all software project budgets are consumed on reactive rework to fix errors that could have been caught up front. In other words, the lowest price is not usually the cheapest solution.

How much does an MVP cost?

An MVP that’s built correctly should have no more than 5 to 8 key features, be for a single platform, and delivered via a clean architecture. Pricing for that kind of package starts in the mid $200K US dollars and goes up to $350,000. The project will take your developers 8 to 14 weeks to complete. If your MVP quote is over $350,000 you’re probably not building a minimum viable product, you’re building a feature-complete product. If your quote is below $150,000 start digging into your developer’s experience level and ask yourself where they are cutting corners.

Is building software in-house cheaper than outsourcing?

On average a full-time employee making an US median developer salary of $120,000 costs $120,000 to $180,000 per year just on salary. Throw in benefits, equipment, overhead, management costs, recruiting costs and more and building an in-house software team quickly becomes far more expensive than hiring an outside firm to do it for you. At $250,00 to $350,000, outsourcing to a specialized software development partner is a one-time investment. Hiring in-house makes sense if you plan on continuously adding to and evolving a product over many years. Outsourcing to a specialized software development partner makes sense if you have a clearly defined project with an end. In fact, researchers at MIT found specialized software vendors were about twice as likely to succeed as in-house teams.

What increases/decreases software development cost?

Vague requirements that cause rework eat up an average of 50% of software project budgets. Going overboard on features (55% of features go unused) can quickly spiral your costs upward. Building with AI components or complex regulatory compliance can also add significant costs. Lastly, making changes after technical development has begun will always increase costs. On the other side of the ledger, thoroughly hashing out requirements before any development begins can dramatically reduce your costs and complexity. Building an MVP with only 5 to 8 focused features keeps your project on track. And partnering with a development company that has done this before reduces chances of unforeseen setbacks.

How much does software development cost in Utah?

The average Utah software development company bills $130 to $300 per hour based on seniority and project complexity. Expect to pay anywhere from $350,000 to $800,000 for a medium-complexity project from a Utah-based development company. Rates will often be cheaper than what you’d find in either the Bay Area or New York but will still give you the timezone alignment, communication standards, and technical expertise of a fully in-country team.