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

Founder of Thankscrate and Data and Sons

Author of Herding Cats and Coders

Fan of judo, squash, whiskey, aggressive inline, and temperamental British sports cars.

The Million-Line MVP

A founder told me last week that his chatbot understands him better than most people he works with, and he wasn’t joking.

He had been alone in his house for the better part of a year building an app on one of the popular AI coding platforms, and he wanted me to take a look. Almost a million lines of code, one developer (him), no engineering co-founder, no senior reviewer, no nobody. The app had an ERP module, a CRM module, a custom AI agent with a name and a voice, built in mini-games (yes, really), dozens of character personas, a few landing pages, and a small army of social media accounts in multiple languages. He had not yet had a paying user, or even a free one.

He was, by the way, very excited.

(I’ve changed some details, since the pattern is what I want to talk about and not the founder. I see something close to this on roughly one out of every three sales calls now.)

What used to slow you down was the point

Building software used to be annoying for mostly good reasons. You had to hire developers, or learn to code yourself, or convince a co-founder to come along for the ride. Then, you would grind out every line, which would come at a cost (time, money, conversations, arguments, etc.)… basically friction. And that friction was not a bug, but it was like this ting that you are forced you to deal with, before adding any feature, whether the feature actually needed to exist.

Startup advice has been more or less the same for twenty years, maybe more:

  • Build something small
  • Show it to real people
  • Find out what they actually want
  • Don’t build a million things at once.

The Lean Startup came out in 2011 and we have all been quoting it at each other ever since (poorly, mostly).

This is what we talk about when we discuss “startup discipline”. It’s really not very complicated, but it can be really hard. It used to be hard because building was hard, and now it’s hard for a completely different reason.

How does one person build almost a million lines of code in a few months?

The honest answer is they don’t, the AI does, and the AI has no opinion on whether any of the code should exist.

This is the part I want to sit with for a minute, because I think it’s the heart of the problem. Imagine you’re building a startup that lets local news anchors rent out their unused toupees by the hour (try not to overthink this). You sit down with one of the AI coding tools and you say “build me a marketplace where toupees can be listed by the hour,” and the AI builds it. Then you say “actually, add a loyalty rewards program,” and the AI builds that too. Then you say “and also, add a Pokemon-style mini-game where users battle each other’s toupees,” and the AI starts coding.

It doesn’t pause or ask why, and it doesn’t say “dude, I love your enthusiasm but I am genuinely worried we are losing the plot here,” it just builds the toupee-battle-feature.

This removes the single most useful thing about a good engineering team, which is that engineers PUSH BACK. A senior developer, or a seasoned product manger, asked to add a toupee-battle mini-game to a B2B rental marketplace would slowly take off their glasses, set them on the desk, and ask one of those long quiet questions that means “we are not doing this.” The AI this is a sycophantic drone that has the eagerness of an underfed puppy to please you, and it has no glasses to take off. It also has unlimited keystrokes and believes that every single idea you’ve ever come up with is absolutely genius. At least it tells me that everything I’ve ever written or thought about is pretty clever.

A few months ago I ran into the perfect name for this, which is Slurm Coding. I used to call it AI crack coding, because the dopamine loop is very real, and I have really needed another hit of that good AI crack just one more time before I went to bed on more than one occasion. But Slurm is both more insidious in its combination of addictiveness and corporate outreach.

The MVP don’t change

Here’s what hasn’t moved in twenty years of startup thinking:

  1. Build the smallest thing that solves one specific problem for one specific person.
  2. Show it to that person (a real person, probably not your spouse, definitely not your mom, and DEFINITELY not my mom, and 100% not your chatbot).
  3. Find out what they actually do with it (which is probably not what you thought).
  4. Kill features, pivot, or double down based on what you learned.
  5. Repeat.

What’s new is that step one is basically free, and while not perfect, free is very alluring. You can build the smallest thing in an afternoon, or the largest thing if there’s no one around to tell you not to. Steps two through five still require getting out of your house, talking to humans, accepting that most of your assumptions are wrong, and throwing real work away. None of that is faster than it was in 2005, none of it is fun, and none of it scratches the “I NEED MORE SLURM” build-a-thing itch the way an AI tool does.

So a certain kind of founder just skips it, staying in the build phase indefinitely, because the build phase now feels like winning at a casino while getting unlimited free martinis. The feature ship (how to get them onto a server is someone else’s problem) the codebase grows, the agent agrees with everything. Meanwhile the only thing that actually matters, which is whether anyone wants this, goes unanswered.

It’s the founder version of Wilson the volleyball. In your unwashed isolation, you’ve made a friend, you’ve named the friend, and the friend agrees with everything you say. The problem is that the friend is also the boat, the island, and the ocean, and you haven’t actually left the house yet.

To be fair, I am not above this myself, by the way. I have, in my time, built things that nobody asked for and gotten weirdly emotional about them, but the difference is that mine were three hundred lines of code over a weekend, not almost a million lines of code over the better part of a year, which is sort of the whole point. No one asked for my William S. Burroughs poetry writing twitter bot, but I loved it anyway.

Codebases don’t love you back

Code you wrote yourself CAN hard to let go of, and code you wrote with an AI, when you are not a trad-coder, seems to be way harder. Experienced engineers seem to be more than happy to throw away AI code or rebuild it in a heartbeat. But I can see how even if you didn’t actually write the lines, but the shape of the thing is yours (you named the characters, you picked the voice, you spent months in a chair with this thing as your only collaborator), and you have feelings about it.

But one day, if you’re lucky, and it does have SOME product market fit, a real engineering team is going to need to look at your masterpiece. And they are not going to share those feelings. They’re going to tell you, as gently as they can manage, that most of it has to go. Not because they’re mean (they might actually be mean), but because almost a million lines of AI-generated code, written by one person, in one tool, with no architectural review, is never maintainable, almost guaranteed to not be secure, and almost never going to scale past the “prototype” it currently is.

So what should you actually do?

I mean, I already told you… Build the smallest thing you can, then show it to ten strangers and actually listen to them. Throw away half of what you built and build a slightly different smallest thing, and repeat until one of those things is real. Keep your runway reserved for the moment you realize you were WAY off about something important, because, like, you will be, and that moment is what your runway is for.

Use AI tools, because they are legit amazing. But treat them like a coffee machine (fast, useful, no opinions of their own), not like a co-founder or worse, a slot machine. Co-founders are supposed to tell you no, slot machines whisper “just one more hit baby!”