Complete Guide for Custom Software Development for your own Product Idea

Updated 31 May 2023
Published 04 Mar 2021
Rahul Mathur 2797 Views

Computer Software has changed the world and it is all around us. Nobody would have thought that within a few decades, software will become an inherent part of our lives.

You name a thing or a function in our lives, and you will find software working behind that, helping us avail the utility of that stuff. 

Softwares are basically of two types, Commercial off-the-shelf software (COTS) and Custom software. The shelf software is actually pre-designed software for a wide range of customers, various operating systems, office applications, mobile applications, browsers, etc are examples of Off shelf software, which one can purchase from the vendor and can use the given features and utilities.

However, COTS targets a wider set of requirements, that allows it to be commercially marketed and distributed. This software is designed for all customers, and there is a risk that it might not meet all of your business’s requirements.

Custom Software development

On the other hand, Custom software is made as per the requirement of a customer, which will provide tailored made features as requested by the customer.

What is a Custom Software Development

As the name suggests, it is the process of developing, designing, testing, deploying, and custom software maintenance to catering to the specific set of requirements for end-users or organizations. Custom software is developed on the basis of a narrowly defined set of requirements. 

Example of customized software

  • A hospital management system for hospitals.
  • An online banking solution for a specific bank, which is tailored and made for that bank only.
  • A restaurant’s online food delivery application.

It is carried out mostly by the in-house software development teams, or outsourced to a third-party software firm. We use similar methodologies or technologies which we use in COTS and a familiar approach is used to gather requirements, software design, coding testing, and deployment.

A custom software development process includes software ion customization, application modernization, and application management. Software customization refers to making changes in the Off-the-shelf software to cater to the requirements of individuals or organizations.

It is important for a business to work on software customization and modernization to ensure and maintain its viability.

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Custom Software Development Market Size and Stats

The market for custom software development is witnessing robust growth, propelled by the rising demand for technologies and products that facilitate digital transformation.

Customers’ demand for a superior digital experience is driving the charm of platform-as-a-service and application platforms options, which push the developers and software development firms to keep on reinventing the creative wheel.

Organizations are leveraging the capabilities of custom software solutions to not only address modern technical challenges but also transform their businesses to remain relevant in this ever-changing technology landscape. Various market trends show how custom software development will remain the most talked about buzzword in the future as well.

  • The revenue for the custom software development segment is projected to achieve US$166.20 billion by the end of 2023.
  • The revenue of the customer software development segment will show a healthy annual growth rate of 7.12% between 2023-2027).
  • The market for custom software development may reach US$218.80 billion by 2027.
  • The USA will generate the most revenue from the custom software development segment across the world and reach $82 billion in 2023.
US Custom Software Development Market
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  • The market growth will be fuelled by growing dependence on emerging technologies such as Artificial Intelligence (AI), Business Intelligence (BI), Machine Learning (ML), Chatbots, and Robotic Process Automation (RPA).
  • The demand for Custom Software development will be enhanced further due to the increasing usage of innovative technologies such as artificial intelligence, machine learning, IoT, blockchain, and hybrid architecture.
  • The BFSI (Banking, Finance Services, and Insurance) sector will have a 25% share of the custom software development market.
  • Nations such as India, Japan, and China will remain major contributors to automation solutions and emerging technologies.

Benefits of Custom Software Development

Tailor-made for the specific needs

Custom software establishes a direct relationship between the Development company and your organization. The In-house team or the 3rd party software development firm can easily adapt to the requirement and collaborate in a better fashion to develop the best solution to the problems identified.

It will remain a tailored-made software for your firm and it is unique as far as requirements, features, and ownership are concerned.

Long-term but Smart investment

Developing custom software is indeed a long-term investment, but it is a smart investment as well. It is an expensive investment since we have to start the software development process right from the scratch, but it gives a huge business value in long term.

Also, it will help us reduce extra cost, which could be invested in unnecessary additional features, and additional payment cost for licenses, hardware, and AMD functions that we may never use, that’s how usually happen in Off shelf software.

If we do a cost-benefit analysis, it is easily assessed that Custom software offers huge long-term benefits, which far outweigh the problems and expenses while purchasing off-the-shelf software.

Enhanced productivity

The custom software is developed by mapping all our requirements, hence it tends to increase the overall productivity and the processes of an organization. It helps people to perform their tasks efficiently and faster as well.

Maintenance as long as required

Custom software is owned by the entity which has paid for its development. Hence, it’s up to the owner to carry out any changes, updates, or maintenance activities at any stage later.

Whereas, in the off-the-shelf software, we always remain at the mercy of the Software Vendor, who carries out periodic maintenance and updates on the software.

However, this puts our business in a vulnerable position, as we have to be highly dependent on the 3rd party software vendor, even if we know some gaps or bugs, we can’t make the necessary changes on our own.

Whereas with custom software, we can work with the Developer team, which can immediately be made the changes in the software, and we can get the schedule created for such frequent maintenance and updates.

Better Security

Commercial software is highly prone to security threats, hacking and other attacks, as it is available to a larger set of people. Its code and functionality are easily available, hence it is comparatively easy to crack the code.

Where the custom software is highly secure and well-positioned to counter any security threats. It is available to a very limited audience, and that’s why its features and functionalities are almost hidden from the people, which makes it highly secure and less prone to security threats. Hackers will stay away from carrying out any attack on custom software.

Hotel software management

Seamless Scalability

The primary objective of any business is to grow further and earn more revenue and customer base, that’s the whole idea behind starting it in the first place. Commercial off-the-shelf software may not be able to support and handle the ever-increasing business demands, due to some design issues or certain limitations.

Whereas custom software is developed while keeping all the future considerations and scalability in mind. Hence, it will be able to support any sort of scaling or up-gradation in the future, that too without having risks or challenges to the business in the future.

Better Support

Custom software offers a highly dependable and customized technical support team, that knows the software right from the beginning, as they are engaged with the development team from the scratch.

The support team knew all the in and outs of the software and they can address the day-to-day concerns of the end-users in a much more effective way, which in turn enhances the customer experience.

Read Also: – Best 15 CPQ Software for Startups in 2023

Steps to develop custom software for your idea

If we want to develop custom software for our own idea, then we must follow the given steps.

1. Evaluation and discovery

Ask yourself that does your business needs custom software. This is an important step to evaluate your requirements. Custom software development has endless potential to push and enhance your internal business process, services, products, and data with other business verticles.

It’s better to worth looking at the existing solutions with the organization before thinking or planning to buy a new solution, otherwise, we will waste our resources. The further step includes an assessment of organizational capabilities to assess the scope of work. 

– Is an internal development team capable to handle the bulk development? 

Or involvement of 3rd party required? 

The idea of Outsourcing comes into the picture only when the internal team is unable to handle it.

– Is our development team can integrate the software into our day-to-day office life process. Or will it be handled by 3rds party support

Get estimation when you have completed the evaluation of all aspects related to custom software development and you have a strong need for this solution.

2. Budget planning

In this stage, we should allocate the range of budget to accommodate any changes at a later stage of software development. Well, there is no perfect solution available that accurately applies to custom software development, it varies and it also depends on the value of the dollar which drives it in the background. 


For example, developing a dedicated customer portal could impact the business by 5%-10%, hence we have to perform an adequate estimation of project value by keeping the 5%-10% variation in consideration.

After performing such an estimation of increase and decrease in revenue you can add the cost of customer acquisition that you would be able to bear due to an increase in retention of the customer.

The final output of this brainstorming kind of exercise is enough to form a structural diagram of your budget planning. Business-oriented knowledge is helpful to make the right decision at the right time and budget capacity is best determined by a group of stakeholders who possess deep knowledge of technical aspects and business strategies.  

If you are planning to assign the project to your internal team, then we must perform a thorough return on investment analysis, that will help us understand the worth of the resources.

Do remember that we are evaluating the custom software development by keeping all the aspects in mind like possible uses, time, resources, and cost. Regarding budget considerations, while assigning jobs to any 3rd party vendor, you need to scroll through this article below.

3. Choose the Right Software Development


After doing a thorough analysis of budget and investment capacity now it’s time to understand the capabilities of our in-house team and to determine which technology and software development methodology we would be employing to proceed with the further development process.

Waterfall Model

It is the oldest and proven model for Software development and is often called as ‘Traditional Software Development Model’. It follows a well-structured linear approach and it works on a simple principle, ‘You finish one stage and only then you can start the next one, as the next stage is highly dependent on the earlier stage.

Agile development –

It is a method to break development phases into various constituents and to get frequent feedback to move towards the desired and appropriate version of the project.

It’s an effective and fast-paced method of software development that requires regular monitoring and offer incremental feedback from the customer, which helps us make the necessary improvement. Here the development team can work rapidly and cover a lot of activities in one go while being able to be closely monitored to ensure the project never goes off track.

Agile development


This methodology helps organizations and developers to Fastrack their software development process, and this methodology can be applied to any critical business process as well. The Scrum team starts the project with initial planning, then detailed planning and analysis follow.

The scrum team was created and consists of resources with cross-functional capabilities, who contribute in different steps like requirement analysis, software designing, software coding, automation testing, and installation. Scrum is a highly flexible method, where any change in the user’s requirements is addressed rapidly and reflected in iterative sprints.

DevOps –

It is a holistic approach based on agile software development methodology, which incorporates multiple processes into single and streamlined processes ie. design, development, and software deployment.

In other words, we can say that it is a set of practices that integrates IT operations and Software development, and its sole objective is to shorten the overall software development process to offer efficient and high-quality software.

Read Also:- How to Enhance the DevOps with Automation Testing

Scaled Agile Framework (SAFe) –

SAFe was originally derived and designed to build agile development methods and principles for large-scale organizations.

SAFe follows an approach of custom software development process that decentralizes the capability of making decisions and precisely assigning roles and responsibilities, and various sorts of activities and processes which are more focused towards process goals and objectives to ensure all business stakeholders are aligned and engaged.

The prime feature or the main advantage of SAFe is that it can handle multiple teams and employ a top-down approach to accommodate and manage the complex layers of administration and oversight. 

Rapid Application Development (RAD) –

RAD is another Agile-based methodology that accentuates active software and feedback of the consumer over streamlined and strategic planning.

This concept is helpful in dividing software development projects into small sub-units or individually controllable parts and allows you to make decisions and work on them appropriately and swiftly.

RAD also has a disadvantage, in that it demands highly skilled resources to execute the software development. The speed of this execution may hinder the opportunities to receive customer feedback and work on them.

4. Chose the right Technology

There are many Technology Stacks, methodologies, and APIs that can play an important role in the custom software development project. Please go through the below-mentioned points to know more about the most usable technologies that can be used to develop custom software for an idea.

Technology Stack

A technology stack is an important constituent of a software development process, it can make or break the product if we don’t make the right choice. It includes all development frameworks, programming languages, tools, and best technology for software development.

Choosing the right set of Stack and defining them beforehand is critical for the success of the project, as we have to decide the kind of expertise we need, only on the basis of the Stack we are going to use. If you are a non-technical person, then we would recommend taking expert advice for this step, as this has a cascading effect on cost, time, efforts, and ultimately the viability of the product.

Surely, if you are a non-technical founder yourself, this part is going to be tricky for you. Also, never choose a Technology stack just because your competitors are using it, always make a sound choice after performing a thorough analysis of all the aspects of your proposed product.

Broadly we can divide the Stacks in two types-

Front End Stack – 

It contains the programming language, framework, and tools to design the front-end elements of your application. The front end part contains the User Interface, gestures, look and feel of the software, which helps the end-user to interact with the software and fulfil the requirements.

If we want to develop a web application, we may choose CSS, HTML, JavaScript, Angular JS, React JS, etc. If we want to develop mobile software, then we may use Swift (iOS), Kotlin (Android), or simply Java.

Back End Stack

The back end of the software holds the data, it makes the transaction happen between the users’ device to the server side and vice versa. It helps in processing by empowering the programming logic.

Here we can use the LAMP (Linux, Apache, MySQL, and PHP) stack, which is the oldest and one of the most popular stacks available in the market. People also use the MEAN stack (MongoDB, Express.js, AngularJS, and Node.js) which uses JavaScript for powering up the programming logic.

People who are comfortable with Microsoft, choose Microsoft stack, which includes the framework along with MS SQL Server, C#, Microsoft Azure, Win.JS, ReactXP, etc. So, choosing a backend stack is a critical decision, as it may impact the overall efficiency and performance of the proposed product.

Open Source –

The open-source word itself means something available without any restrictions. Here the software code is available for everyone, who can make the necessary changes and make custom changes per business requirements.

There is a benefit of using open-source code, software developers can avoid the use of proprietary products, which may hinder the capability of software interoperability at any later stage.

Here are a few examples of open-source software which include Drupal, Apache, Linux, and PostgreSQL. Although there are various open-source software solutions available across all the verticals of software development.

Cloud-Based Development –

Software development in the cloud-based environment offers a wide range of benefits. The Cloud vendors not only offer the next level of security and availability by keeping a focus on limiting hardware failure, but they also offer huge computing capabilities and an almost unlimited amount of storage.

Cloud also offers the seamless ability to deploy and host your software development in the cloud, where they provide innovative functions required for software development, like coding, software design, testing, and integration. Cloud can enhance the overall software development process and make it highly available for the end-users.

Artificial Intelligence

Artificial Intelligence offers software the ability to learn, handle and take decision taken just like a human being. ML (machine learning) algorithms are used to improve user experience and AI-based applications like natural language processing (NLP) can convert text to speech and speech to text which enhances the application accessibility.

Artificial intelligence may help you in finding neared café to driving automatic cars soon. AI would help us in managing and controlling operations at stock for delivering true medical reports. Some are the listed example of AI which can reduce unnecessary efforts for simple task completion.

In the medical field, AI-based assistance can handle multiple jobs like repetitive and complex tasks, everyday applications and error reduction, etc. 

Blockchain –

Blockchain is been considered a secure ledger that is digitally linked, which reduces the cost of the transaction and offers next-level security solutions compared to traditional solutions provided by bank regulatory bodies. Developers can use Blockchain ledgers to design and develop solutions that can handle secure transactions for eCommerce or financial institutions. 

Blockchain development

Mobile Applications

Smartphone has become a vital part of any business and the presence of a small handheld device can provide a quick platform for business owners and their consumers’ interaction because nowadays everyone is targeting new or existing consumers through a smartphone.

Everyone has the internet and a smartphone, so making a mobile presence is quite important for any organization across any domain. Mobile-based applications provide a way better and more immersive user experience if we compare them with browser-based web applications, it also offers high-precision integration with different applications and services on different platforms.

5. Design

It is a pre-eminent component of the custom software development process. This stage is known for conceptualizing the proposed solution, it includes several activities to create the detailed architecture of the software to meet the specific software requirements.

The architects and project manager define the standards and workflows and devise the software design together with database design and structure.

In this stage, we develop a visual model, which explains the functionality of the proposed software and also defines the software/hardware components of the custom software.

6. Scheduling

Once we have allocated an adequate budget, we have selected the necessary methodology and technologies, the next important stage is Scheduling. It is a project management sort of task, where we have to create a schedule to ensure organized team efforts and resource utilization.

This would include the creation of milestones, that will list all the key deliverables and answerable business stakeholders.

It is important to have everyone on board and aligned with the project schedule, though there are chances of delays or diversion at the later stages, however, if the schedule is well defined, such changes can be countered well. A clear and well-defined schedule would help us accomplish software development in time.

7. Build Phase

So now we have reached the final phase of custom software development, so all tedious and difficult tasks have been completed this phase is crucial because here things could go awry if not managed quickly and efficiently.

It’s recommended that the team focused on achieving the milestones on time and follow a scheduled timeline to complete all jobs accordingly.  And for that, we should always encourage our teams to move in the right direction and provide frequent updates to all the stakeholders.

Regular and effective communication will clear all doubts of team members and you would be able to meet the project schedule efficiently. By adhering to the defined schedule and guidelines, we would be able to meet all targets and won’t impact the budget and timelines. Which is more important and visible in every aspect of the custom software development cycle. 

How To Calculate Average Software Development Cost?

Nowadays, custom software development services are of much prominence as they put a massive impact on the sustainability, profit generation, and growth of businesses.

However, it is also important to consider the budget if you are vouching for custom software development services, while you can work on numerous other factors to gain the much-needed competitive edge of the business. 

We utilize the following methods to estimate the cost to develop custom software:

Analogy Method

In this method, we assess and determine if the software project is like one of our previously delivered ones, then we apply almost similar cost projections.

However, we do make some supplementary calculations to factor in the differences in the features available and the technology stack used. This is known as the most precise and quickest method to estimate the customer software development cost.

Ballpark Method

In this method, we determine a rough estimate based on market price and customers’ business requirements. We utilize this method when client requirements are not precise, ideation is not clear, and the client is not sure about the financial viability of their project.

If the initial ballpark numbers look promising, then we further dig down, capture additional details and make precise custom software development estimate.

Cost of Custom Software Development:

We have the following factors that can influence your decision while calculating the cost of custom software development:

Software Developer Experience and Skills

It is the fundamental factor that can impact the overall cost of custom software development. It includes the experience and skills of the software developers, software testers, and project managers you have hired.

To keep the cost under check, you must determine the tangible requirement of your software project, how many software professional you need actually, and what sort of modern skills are needed to complete the software development cost.

Software Platform and Planning

It is another vital parameter that plays a significant role while evaluating the cost of custom software development. You need to determine the technology stack, software licensing cost, and cloud-related costs while calculating the overall project cost.

Similarly the cost of choosing a specific platform (Android, iOS, Windows, Linux) or cross-platform can also influence your project cost.

Project Delivery Time

Project delivery time is certainly a vital aspect when you estimate the cost of your custom software development. You need to precisely define project milestones and delivery schedules to ensure your project development costs are not escalated.

If your software project needs to be completed in a restricted time frame, then you have to engage more developers and testers to work aggressively to meet the project delivery deadlines, but in the process, the project development cost could be escalated unprecedently.

Project Complexity

The complexity of custom software is another aspect that influences your project pricing. The complexity of the project depends on the rationale of the project idea and the underlying technique you are using for the software development.

Apart from that keeping an outsourcing team or dedicated custom software development team may attract additional costs for the project. If project components are reusable, then the cost will be in control, but if the project needs distinctive and creative components, then the cost might escalate due to additional efforts.

Software and User Functionality

The more functions and features the software has to inspire, the more you have to shell out for the software development process. Depending on the device compatibility, displays, interface, or a number of modules,  the cost of software development might escalate if you want to capture a wider user base with innovative capabilities.

If you want to incorporate modern features, then you need skilled developers and additional efforts, which ultimately increases the project cost.

Geographical Location

It is an important factor that drives the cost of the custom software development process. The geographical location of your outsourcing partner affects your budget cost as the development costs in different countries could be different based on various factors.

For example, the cost to develop custom software in the USA and Europe will be on the higher side, whereas building software in India and other Asian countries could be on way lower side.  Hence, it is always recommended to choose the location as per the intended budget to keep the overall cost in control.

Hiring Models and Structure

You can choose numerous hiring models based on your project requirements. The most common one is a dedicated team model, where you get a team where the number of developers could be increased and decreased as per the project needs.

This model is suitable if your project requirements are variable and the business demands new aspects in a very short period. Another method is the fixed price method, where the development cost estimation is done before the kickstart of your project. In this model, your project workflows are based on the price timeline and structure defined earlier. 

If we precisely analyze the above-mentioned factors, the average cost of custom software development could range from $25,000 to $80,000 depending upon the actual business and functional requirements.

Choose a suitable Custom Software development organization.

There are a couple of factors, that need to be evaluated before selecting the right Software development company, which offers Custom Software Development. Some of the below-listed factors should be in your customer development team/organization.


It’s an essential factor that plays an important role in every software development stage ranging from Design to Prototyping– it’s necessary and essential for churning out the values from the custom software project.

Rapid software development will make you act quickly, something that is helpful in situations, where you have to alter the project course or discover another element that you need to incorporate at the last moment.

Quality –

We should pay more attention to ensuring high-quality code, for that even if we pay more, it will be highly beneficial in the long term, as it will prevent us from doing any sort of rework to fix the broken code. A quality code is quite easier to maintain and update for any custom software work in the future.

Stable code – 

similar to the quality code, the stable code refers to a bug-free code that is thoroughly tested by the Quality testers. Here we have to look for established organizations with enough experience in making and testing stable code.

Reliable User Experience

The seven factors that describe a good user experience are Usable, Useful, Credible, Findable, Desirable, Valuable, and Accessible. Your software’s user interface should have all these 7 attributes to enhance the user experience.

Payment Structure

Before outsourcing the project to a 3rd party software development vendor, we have to carefully think about whether we sign the contract via a Flat project fee, or we will make the payments on a part-time or hourly basis.

Both payment structure has their own merits and demerits, so please take the decision based on a thorough analysis.

Team Location

Locations of the developers play a major role when taking the decision of employing the 3rd party vendors. If we are based in major cities, we may have to pay exorbitant costs while working with the local talent.

If we are comfortable enough to hire remote developers, who are based at geographically different locations, we may see a huge drop in the software development cost, however, we have to pay more attention to software quality control.

It a quite a challenge to maintain software quality standards while working with remote developers, but quality could be achieved by employing Industry’s best practices and frameworks.

mobile app development


Our first piece of advice is, please don’t let the unknown scare you. Please have trust in your idea and have self-belief, then start with the software development journey with the steps mentioned above.

If we keep all the aspects in mind and use the correct strategy, then we will be able to develop a wonderful product roadmap, which may revolutionize the Technology world, just like Windows, iMac, Facebook, or Twitter.

The market for Customized software has been growing in leaps and bounds, there is a massive rise in the demand for custom software development and people with the right skill set and expertise.

Custom software development company offers numerous benefits and cost and effort advantages as well. An increasing business using the minimum amount of time would help you to see in many directions to grow your business. Well, the demand for custom software development will keep rising in near future too.

Custom Software Development – FAQs

  • How can custom software help grow my business?

    Custom software enhances the productivity of your business by transforming your business workflows as tailored solution caters to your business requirements. Custom software also offers a higher degree of personalization, reliability, and better technical support for your business, as developers understand all the modules as they have developed them. It also helps them to reduce downtime and recover from any technical error in lesser time.

  • Why custom software development is important?

    The biggest reason for building custom software is that your organization requires a bespoke solution to address its unique needs. Custom software enables businesses to operate tailor-made functions, workflows, and data to fulfill the intended objectives. Custom software enables businesses to implement any changes at any time they require, incorporate brand-specific information, and take corrective actions by applying feedback from the end-users.

  • How much does it cost to develop custom software?

    The cost to develop custom software depends on various factors such as the technology stack used, time taken, features and functions required, geographic location of the development team, the number of professionals engaged, and many more. Typically, the cost to develop custom software can vary from $30,000 to $50,000. However, the actual project cost could be calculated after considering all the above-mentioned factors.

Rahul Mathur

Rahul Mathur is the founder and managing director of ARKA Softwares, a company renowned for its outstanding mobile app development and web development solutions. Delivering high-end modern solutions all over the globe, Rahul takes pleasure in sharing his experiences and views on the latest technological trends.

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Mayuri Desai

Mayuri Desai


The app quickly earned over 1,000 downloads within two months of launch, and users have responded positively. ARKA Softwares boasted experienced resources who were happy to share their knowledge with the internal team.

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Abdullah Nawaf


While the development is ongoing, the client is pleased with the work thus far, which has met expectations. ARKA Softwares puts the needs of the client first, remaining open to feedback on their work. Their team is adaptable, responsive, and hard-working.

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I started my project with Arka Softwares because it is a reputed company. And when I started working with them for my project, I found out that they have everything essential for my work. The app is still under development and but quite confident and it will turn out to be the best.