How Much!

How Much!

Daniel Payne

5 min read

·

Just now

\--

Listen

Share

The true cost of software development, updated for the world of AI.

Since the advent of agentic software development things have change a lot, so I thought it would be a good idea to update this article.

In my experience things that took a month now takes a day, however the daily price has gone up a bit.

Prototype was $30,000 is now $1,800 in 3 days

Go To Market was $900,000 is now $60,000 in 10 Weeks

Market Leader was $2,600,000 is now $180,000 in 6 Months

Think of that, you could disrupt a whole market with a good idea for less than $200k, that’s unthinkable a few years ago!

You have got a good idea for a software product, how much is it going to cost to get it built. In my experience it still costs about $2500 per person per week to get talented people to work for you, plus another $500 in tokens.

Photo by Tezos on Unsplash

You are either going to pay contractor prices or full time employee costs with all the associated recruitment, office and social payments. You can outsource, but the company you outsource too will also have to pay the same costs to get good people, plus they will add a layer of management costs as well.

You could try hiring from a low tax environment to save money. But how good is the education system there, will they be producing people of the caliber you need. If there are any skilled people there they will soon move to the big cities and bright lights to capitalize on their talents.

You could hire people for less, there will definitely be someone for hire. They will turn up for work, but what happens when you let them loose on a keyboard? There is an expression for that in my country “Pay peanuts get monkeys”

The bottom line is that you will easily spend $100,000 getting a product to the market and developing the traction needed to generate profits. Here are some estimates on product development costs, double the cost for all the other expenses of developing a business.

Prototype …$1,800 Go to Market …$60,000 Market Leader …$180,000

If this is still too daunting, check out the 1000 Fans at the bottom. No, it’s not the one that involves taking your cloths off, but is a description of how you can make a living with 1000 people who are really fans of your product.

Marketing , quick introduction to The Four Ps

You will need to spend roughly half your budget creating a product. The rest of your budget is about getting your product in-front of people and facilitating there ability to use it productively.

Product

You need to build a software product, there is a bit more detail below on the people you will need to help you do this.

Placement

You need to get your idea in-front of people, through social media, advertising or face to face sales (cold calling, conferences and introductions)

Packaging

You will need to get a visual designer to make your product look good, you will also need an ancillary information website and possible some training videos to ensure users get the full benefit from using your product.

Price

This is not as important with software as it is with a physical product like a car or clothing. But you will need to include some sort of variable cost (it’s your raw materials) in the mix. If you have 1000 users in your country, you will have a different cloud cost to supporting 5 million globally distributed users. These cloud costs can escalate out of control very quickly, you will need to budget for them.

Rough Product Costs

Prototype \= One Developer (1 Person) @ 3 Days & $1,800

Proof of Concept \= One Developers (2 People) @ 6 Days & $7,200

Go to Market \= One Developers (2 People) @ 10 Weeks & $60,000

Market Contender \= One Developers (2 People) @ 4 Months & $95, 000

Market Leader \= Two Developers (3 People) @ 6 Month & $180,000

In addition to the developer you normally need a domain expert to guide development. You will need to double these costs, as this is only the product cost, there are other P’s in the marketing mix needed to make a profit!

The roles are still the same, however AI takes over Developer and Tester, and a person guides that AI workflow. The project owner and manager stays as a human roles, as they require judgment that LLM can not offer.

Prototype

• Full Stack Developer, builds everything
• Project Owner, working for free as tester and providing direction

Proof of Concept

• Backend Developer, creating data storage, rest or graphQL interface and setting up basic cloud environment as virtual machines.
• Frontend Developer, building user experience and implementing client side state management
• Tester, doing manual exploratory testing and some automated backend testing
• Project Owner, providing direction and coordinating project tasks

Go To Market

• Backend Developer, creating data storage, rest or graphQL interface and setting up basic cloud environment as virtual machines.
• Frontend Component Developer, building the design system to get a constant high quality look and feel. This is used by the experience developer.
• Frontend Experience Developer, using the design system in conjunction with client side state management to produce high quality user interactions.
• Exploratory Tester, doing manual exploratory testing and managing the requirements for automation testing.
• Automation Tester,automation tests to ensure any changes do not break the project, this is often called regression testing.
• Project Manager, coordinating project tasks and managing costs. Including use of management tools like critical path analysis to ensure the project stays on track
• Project Owner, providing direction and coordinating development of marketing personas.

Market Leader

• DevOps Developer, setting up cloud environment such as kubenties clusters, and managing the deployment pipeline.
• Backend Persistence Developer, creating data storage, rest or graphQL interface. Performance tuning for high workloads, as well as CQRS development.
• Backend Interface Developer, creating rest or graphQL interface. Performance tuning for high workloads.
• Frontend Component Developer, building the design system to get a constant high quality look and feel. This is used by the experience developer.
• Frontend Experience Developer, using the design system in conjunction with client side state management to produce high quality user interactions.
• Exploratory Tester, doing manual exploratory testing and managing the requirements for automation testing.
• Automation End to End Tester,automation tests to ensure any changes do not break the project, based around user interface manipulation.
• Automation System Tester,automation tests to ensure security and performance, especially focused on the Backend interface.
• Project Manager, coordinating project tasks and managing costs. Including use of management tools like critical path analysis to ensure the project stays on track
• Project Owner, providing direction and coordinating development of marketing personas.

1000 Fans

If you have a thousand people paying you $50 a year you can have a comfortable lifestyle somewhere away from the big city. Many independent musicians, artists and craft workers all get buy with 1000 loyal fans.

If you can climb up the learning curve to build software, this might be a good way to go. There are some interesting cloud based Low Code options available that will make it easier to create your product.

Check out the article below for some inspiration.