A brief exploration of the radical differences in contract software engineering quotes.

Software companies are everywhere these days. If you add in the number of freelancers on contractor sites, craigslist, or the guy your friend knows, they are like grains of sand on the beaches. And they all get the same question every day: “How much would it cost to build an app?”

This is a question that has been addressed on a thousand blog posts, mainly by frustrated engineering firms who struggle to understand how people can ask such a question. They give answers like, “How long is a piece of string?” or “How much does a house cost to build?” These examples are designed to show that the cost of something custom varies wildly based on what the specification is. This, however, is only the most surface level answer to that question. The real cost multiplier, and the hardest part to explain and quantify, is quality.

Quality of development is not simply a measure of your experience (e.g., How nice were your agency’s offices? Did they perform frequent check-ins? Did you feel good about the process? etc.). I’m talking about the actual quality of the code itself – not just the final product’s look-and-feel.

If you are paying a lot of money (relatively speaking) for a custom built application, it should be obvious that it was made with a thoughtful user experience and appropriate graphic design, while not throwing errors or leading to dead ends. Right? Unfortunately no. Even though this should be the bare minimum, getting the basics handled correctly is rare in my experience. As sad as that is, these signs of quality are something that you can shop for. You should be able to see examples of your potential agencies’ previous work or of your freelancer’s portfolio. But you need to test them in real life, as if you were a real user, before committing. Do not believe anything you see in a PowerPoint presentation.

The biggest difference in software design company prices is the quality you don’t see. These are the tougher to articulate items. What I’m talking about here is the commitment to engineering best practices and processes, the quality of the code, and the thinking behind that code.

A decent developer can build many of the same applications that a great developer can – especially your typical business software system. It might even take the two teams the same amount of time to complete the same project. And the apps might be indistinguishable when they launch. Great code, a real belief in process and best practices, and solid team management is not as apparent in the first iteration of a product, but it becomes glaringly obvious in later releases.

As a product matures, new features are added, interactions with other systems are required, and user bases grow in size. These three fundamental points are rarely considered by your average development firm or freelancer.

When you add new features to a piece of software, you will often need to change the database structure or the APIs of the original design. These can result in large scale, breaking changes; meaning updates will break previous versions of the application. This type of work often requires huge time commitments to testing the new versions, providing triggers and fail-safes for existing users, and of course writing all new code. Top class developers on the other hand design their systems from the get go to be extensible. They plan multiple API versions from day one, have contingencies in place for breaking changes at inception. They may have already built your system to be multilingual (even though it is only launching in one language) because they know it would be a huge undertaking to add on later. They will take into account accessibility standards, security, and data optimization.

The ability to interact with systems outside of the application’s native environment is another frequently overlooked engineering problem. Abstracting your APIs with middleware might take an extra day or two at the beginning of your design process, but it might save you months of work down the line when you want to change out a data provider. Documenting the process as you go along, explaining to future developers how this should work, is easy when you’re building it. It becomes a huge task of reverse engineering if you have to do it a year later.

Finally, we should talk about scalability. A well-designed system will have architectural structures in place that are designed to expand or to leverage scalable hardware systems, while balancing the long-term costs of growing. A lesser development firm will have a “cross that bridge when we come to it” attitude or will throw expensive additional monthly hardware costs at a problem that could have easily been avoided in the design process.

Conclusion

The problem with picking a software engineering firm is that they are not going to bore you with the details of their documentation process in the sales pitch. I haven’t even touched on things like automated testing of code, good relationships with distribution partners, well qualified project managers, and penetration testing as a standard practice. The problem is that almost no one is going to include these invisible quality requirements into a specification they put out for bid. Yet, these are the strongest determining factors in the long-term success of any software project. I promise.

Your options are to have a really solid technical lead on your team to evaluate the work being done or to pick a company that does go into these details in their sales pitch. You should be aware that doing things the right way is going to cost more up front, but it will save you double or even triple the time in the future if you do it the wrong way.

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I help companies turn their technical ideas into reality. CEO @Sourcetoad and @OnDeck. Author of Herding Cats and Coders. Fan of squash, whiskey, aggressive inline, and temperamental British sports cars.

Don’t Fall Into the Trap: Why Startup Software Development Isn’t Like Corporate Development

So, you’ve left the corporate world, and now it’s time to build your own startup. You’ve probably managed dev teams before, overseen product launches, maybe even helmed some fancy project management tools that made everything run like a well-oiled machine. You’ve done this before, right? Not exactly. When it’s your startup, everything changes—and, as I’ll explain, if you assume it’ll work the same way, you’re heading for a few surprises.

Startup founders often fall into a dangerous trap when starting a software project from scratch: thinking it’ll be just like building software inside an established company. Here’s why it’s not—and some advice on how to navigate the differences.

1. Switching from Product Manager to Teacher

In an established company, a software team already has two things that give them a serious edge: an existing market and a deep understanding of the business. They’re working within a proven model. Developers in that environment know what questions to ask, can fill in gaps intuitively, and likely understand why they’re building what they’re building.

At a startup, however, your devs are going to need a whole lot more context. They’re not working with familiar requirements—they’re working with your vision, which may be abstract at this stage. If your development team doesn’t understand why something matters, it’s a recipe for ambiguity and frustration on both sides.

Advice: Think of yourself less as a product manager and more as a teacher. Your job is to make sure they understand the core problems, not just the features. Teach them why each requirement matters, help them visualize the end-user, and create that shared language for decision-making. It might feel tedious, but it’s essential to avoid future misalignment and expensive rewrites.

2. Beware of Perfectionism — It’s the Budget Killer

In a large company, products with an existing user base often have to be polished. Features need to be rock-solid, invoices have to be perfect, and everything needs an audit trail. Startups, however, have a different goal: get an MVP in the hands of users fast. It’s a classic trap for first-time founders—focusing on “perfection” and “polish” before knowing if the business model even works.

Startup perfectionism is budget poison. It’s shocking how quickly adding “nice-to-have” features can chew through funding, especially if you’re paying a dev team to build things like automated invoicing or churn management before you’ve even proven people want what you’re selling.

Advice: Ruthlessly strip down your MVP. If a feature doesn’t help you validate your market, it goes on the “later” list. Keep the scope laser-focused on what helps you test your business assumptions. Let the non-essential features wait until you know you have customers who’ll use them.

3. Zen and the Art of the Startup Pivot

Building software for a startup means embracing one cold, hard truth: the business model will change. According to research, 93% of successful startups pivot at least once (and often more). Imagine being asked to go out and passionately sell something that you know might not look the same next year—or next month. It takes a level of zen acceptance that your original idea will likely morph, but that’s what keeps you flexible and ready to capture new opportunities.

For founders, that requires a mindset shift. You have to believe in your product, while also knowing you might be building the “wrong thing” in some way. The focus should be on preserving capital and brainpower for what’s next. The game is less about proving you’re right and more about staying adaptable.

Advice: Budget with pivots in mind. Set your burn rate assuming you’ll need to make big changes. Don’t let ego get in the way of listening to the market, and keep enough gas in the tank for at least one big strategic turn.

4. The Hard Work of Being Your Own “Internal Customer”

Here’s another big one. In a corporate environment, you have internal customers—departments or stakeholders with specific goals that align with the overall company mission. For a startup, the only customer you have is you. You don’t have a preexisting feedback loop from various departments, and you don’t have established success metrics. You have to create that from scratch.

Advice: Start by building an internal customer profile based on your target market, then use that to set clear goals and success criteria for your dev team. If you’re focused on, say, usability for early adopters, set KPIs around usability testing and build from there. By acting as your own “internal customer,” you’re setting a clear direction and saving your team from working in a vacuum.

5. Get Ready to Build AND Sell

Corporate software development often has the luxury of a separate, dedicated sales team to deliver the product to the right audience. As a startup founder, you’re both the builder and the seller. That means you’re not just iterating on software—you’re iterating on messaging, product-market fit, pricing, and maybe even distribution models.

Advice: Factor in time for sales-ready iteration in your dev cycle. As you build, keep track of how each release or update affects the user experience. Ask yourself if the changes make your pitch clearer or simpler and how they align with the current market’s needs. Ultimately, this approach will help you bridge the gap between building the product and ensuring it’s market-ready.

Conclusion

Building software as a startup founder requires a whole different toolkit than you may be used to. You’re part-teacher, part-salesperson, part-zen master, and always the chief budget officer. By recognizing the unique mindset shifts and traps of startup software development, you’re positioning yourself—and your team—for the best chance of success. Focus on creating clarity for your team, set ruthless priorities, embrace change, and never lose sight of the fact that the first version is just the beginning. In the startup world, adaptability isn’t just a skill—it’s the entire game.