How much does custom software cost? Prices, cost factors and total cost of ownership

Custom software is built around a company and the way it works, rather than adapting an off-the-shelf product to it. That promises processes that fit precisely, but it immediately raises the question of budget. There is no one-size-fits-all answer: a single automation can cost a few thousand euros, an extensive platform with many user groups several hundred thousand. This guide puts the ranges into context, explains how the price is made up and shows why the total cost over the years is the more important figure. As of September 2026.

Price ranges by project type

We calculated the following figures with the same cost model that our project cost calculator uses, and checked them against published market prices of German agencies. All prices are net, including project management and quality assurance.

At the lower end are clearly defined projects. Process automation with a workflow automation platform such as n8n costs about €2,250–4,500 for a single workflow, an integration between your ERP and online shop about €4,500–8,500, and a website chatbot about €7,000–13,000. A web application starts at about €16,500–29,000 for a simple internal tool, while a customer portal with ERP integration comes to about €45,000–81,000. An app with sign-in, back end and integration costs about €50,000–89,000.

Platforms and systems that have grown over time reach six figures: a platform or SaaS solution comes to about €115,000–210,000, extensive native apps to about €150,000–270,000, and modernising a monolith to about €120,000–220,000. How these figures come about for individual project types is explained in more depth in our guides How much does an app cost? and How much does a web application cost?.

How the price is made up

At its core, software development is paid for by effort. The price results from the number of person-days required and the hourly rate. The Freelancer-Kompass 2026 published by the platform freelancermap offers a market benchmark: “Across all IT disciplines, the median hourly rate is 95 euros”^*, and 90 euros in software and web development. These, however, are the rates of self-employed freelancers. Agencies and IT service providers charge more: according to market data from the benchmarking specialist Metrics, providers charge a European average of 805 euros per day in 2026 for a developer with more than three years of experience and 1,192 euros for a senior developer with more than seven years – roughly 100 and just under 150 euros per hour respectively. In return, they cover more: a team spanning concept, design, development, quality assurance and project management, cover during holidays or illness, and responsibility for the overall result.

The effort itself depends above all on scope, that is, on the number of screens, workflows and features. Public registration, single sign-on or finely graded roles require additional logic and testing. Every integration with an ERP, CRM, accounting system or shop takes effort, especially when a system has no modern interface. High requirements for availability, security or compliance increase the effort, as does a tight deadline that calls for a larger team. Existing designs and clear requirements reduce it.

Why sound estimates are ranges

Every piece of software is unique, and anyone building it for the first time discovers requirements along the way that nobody knew about beforehand. How big the risk is was shown by a 2012 study by McKinsey and the University of Oxford, which analysed more than 5,400 IT projects. Large projects with an initial budget of over 15 million US dollars overran their budget by 45 percent and their schedule by 7 percent on average, while delivering 56 percent less value than planned. The longer a project was scheduled to run, the more the additional costs rose.

Projects at mid-sized companies are smaller, but the lesson still applies: a single figure before the project starts suggests a certainty that does not exist. A range makes the open questions visible and narrows as the requirements are described more precisely. It is even more effective to split a project into stages that each deliver usable results. That way, priorities can be adjusted before the entire budget is committed.

Fixed price or time and materials?

Closely linked to the estimate is the question of the contract model. A fixed price promises budget certainty, but it requires a detailed specification that is settled before the project starts. Every later change becomes a change request, and a provider has to build the risk of unknown requirements into the fixed price. With time and materials, you pay for the work actually done. Priorities can be adjusted continuously; this requires trust and transparent progress reporting.

In practice, a hybrid often works well: a fixed scope for a clearly defined first stage, such as a prototype or an MVP, followed by flexible further development within an agreed budget. This keeps the risk manageable for both sides, and new insights feed into the next stage instead of breaking a contract.

Buy or build: total cost of ownership is what counts

The development price is only the beginning. In his book “Facts and Fallacies of Software Engineering”, the software researcher Robert L. Glass showed that maintenance typically accounts for 40 to 80 percent of total software costs. According to Glass, most of it is caused not by bug fixes but by enhancements, that is, new requirements arising from day-to-day use. Anyone planning custom software should therefore set aside a budget for operation and further development from the outset. Our guide Ongoing software costs describes how these costs are made up.

The same calculation applies when comparing with off-the-shelf software. Licences look cheaper at first, but there too, customisation, integrations and fees add up over many years. Custom software pays off above all where a process sets the company apart from its competitors. For everything else, an off-the-shelf product is often the better choice. How to make this decision is the subject of our article Off-the-shelf vs. custom software.

How to cut costs without compromising on quality

The biggest lever is the scope. An MVP with the most important features is in use sooner and shows which ideas prove themselves in everyday work. Not every problem needs an application of its own: sometimes it is enough to connect existing systems via an interface or to automate a workflow with a workflow automation platform such as n8n. Proven building blocks for sign-in, payment or file storage save effort that nobody needs to reinvent.

Saving in the wrong place, on the other hand, gets expensive. Missing tests, a makeshift architecture or doing without documentation do not show up at go-live, but years later, when every change takes longer than the one before.

Conclusion: budget as an investment decision

What custom software costs depends less on the technology than on scope, integrations and quality standards. If you plan the project in stages, work with ranges instead of false precision and look at the costs over the entire lifetime, you make a sound investment decision.

That is exactly where we support you. In our IT consulting, we work out with you whether in-house development, an off-the-shelf product or a combination is the right way forward, and split the project into sensible stages. As your partner for software and app development, we then implement it and, if you wish, keep it running. The project cost calculator gives you an initial cost range in just a few minutes.

Sources

• freelancermap: IT-Freelancer Stundensatz 2026: Das verdienen IT-Experten, July 2, 2026 (in German)
• CIO: IT-Berater-Tagessätze 2026: Das Ende der Preisrallye, March 11, 2026 (in German)
• Michael Bloch, Sven Blumberg, Jürgen Laartz: Delivering large-scale IT projects on time, on budget, and on value, McKinsey, October 2012
• Robert L. Glass: Facts and Fallacies of Software Engineering, Addison-Wesley, 2002

* Our translation of a quote from a German-language source.