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Cost of New Product Development: Estimation and Examples

How much does it cost to develop a product? Cost calculation depends on many factors: the main project requirements, scope of work, product goals, and budget limitations. It’s usually defined in the discovery phase, which is managed by the team of Project Manager, Business Analyst, Software Architect, Designer. The team composition depends on the project complexity and size.

By considering product development cost examples, you can see how much your future product or exact functionality will cost. Certainly, each project is unique and product development costs may vary. Despite this, in this article we want to shed light on these questions — based on our successful project case, we will explain the whole process of software development, factors that affect the cost of development and pitfalls that clients may face.

Cost estimation based on a successful project case for a Law firm Laurus

Who our client is

Our client is a law firm Laurus based in the UK. The company provides a variety of legal services. It focuses on legal aspects arising in property and asset management. The company has many branches across the country and specializes in services such as purchasing property and protecting family interests and assets of individuals or business entities.

What pain points our client had

The client faced a challenge of collecting and transferring information between the branches. Mostly, the client data was collected by email or phone, which usually took a lot of time. Operating the workflow manually, the client faced extra costs, excessive communication, labor-intensive and time-consuming operations.

The effective process of navigating clients through all legal aspects needs to be secure and fast. That was hardly achieved by previous manually based working processes. No wonder, monthly operational expenses were high. Thus, the solution was to introduce a digital model for redesigning some old features and implement them in a new app.

What solution we offered

After investigating the client’s pain points and the internal workflow, it was decided to create a cloud-based platform with two Ul applications and a shared API. The process of development was divided into two main stages.

In the first stage, our task was to create a dashboard that would provide management of the real estate deals, secure sharing of documents and information within the operation, and payment processing. That would significantly reduce the manual paper process and regular cost, provide easier access to the needed data and shorten transaction time.

To create a CRM system that helps to manage customer profiles, we set out to do the following:

  • provide data management
  • do calculations of the detailed deal cost for the clients
  • get ID checks and verification
  • create a payment gateway
  • develop scheduling of an operational database
  • build a client database

Each of these services is part of the final product which aims to automate all types of communication with customers, manage customer orders and data, and reduce company costs.

Now let’s discover what important factors influenced the cost most.

What affected the cost

The software development process starts with a technical assessment and proceeds to wireframing, prototyping, designing, developing, testing, and launching. Here we will highlight the following key points that we consider most effective for a project budget:

  • Development of features and components. The basis was initially built to later allow modifications to suit specific needs in order to make them reusable. Reusable components are highly important for product development as they allow scaling and changing parts of the product in the future.

  • Design customization. The database elements were created under the custom design to provide customized performance and the payoff for the work. Customization is a tool that is worth investing in, as it opens up the necessary functionality, eases up the working process for employees, and allows scaling in the future.

  • Two-step verification system. This tool was created on the basis of existing service for providing a second level of sign-in security. If the first step is successful, a user can move to the second level and verify the identity as a legitimate one. In many industries, two-step verification is an essential precaution. Real estate and law business involve web security risks, that is why we were ready to assist our client and provide the best solution for security.

Any new product development cost will always be determined by the project complexity. Creating unique features improves the performance of your application, but affects the budget of the product. Thus, before announcing you are ready to start the development phase, you need to think over the project goals and their core functionality.

Complex functionality

To give an answer to the question ‘How much does it cost to develop a new product?’, first we have to split the process to separate parts. Based on the client's initial request and the approved app development plan, our project was based on building three main components:

  • admin portal
  • client portal
  • administration, management, and support

Implementing each of the components involved front-end and back-end programming focused on creating an agile and customized solution. Here is a list of features and the amount of time spent on implementing the following elements:

The firm Laurus - Cost of development-2.webp

Here we pointed out the main stages of our development process to show you how much time is needed to implement certain features. When you set out the development process, you need to know that building some unique functionality, its customization and configuration may significantly affect the cost of new product development.

How to make the cost lower: Finding the right vendor

Product development cost estimation is usually based on the hourly rate and total hours spent on the project development.

The average engineers’ hourly wages vary in different countries. You may save from 40% to 70% of total costs by hiring developers from Eastern Europe or particularly Ukraine, where the cost of the services is lower but the quality is high.

Map-3.webp

So, how much does it cost to create a product? If you have a brilliant idea of a project, it is necessary to take into account that location of the development team matters — it will affect the total project cost. Thus, the question of choosing the right vendor becomes most relevant. Compare the salaries of software engineers, their experience, and expertise to choose the best team to meet your needs and budget.

Team involved in the project

Once the business requirements and the project scope are determined, the next step is gathering a team. A developer team can have as many specific roles as necessary. While working on the Laurus project, we involved the following team:

  1. A project manager is a person who is responsible for project sprint planning and implementation, as well as risk, conflict, scope, and change management. The right management approach guarantees the control of the backlog items and their timely status change.
  2. A DevOps is an engineer knowledgeable about system administration, programming, using cloud technologies, and automation of a large infrastructure. In addition, they know how to operate systems, provide security, and increase system resilience.
  3. A Quality assurance engineer is a person responsible for finding and fixing bugs before product launch. They also provide quality improvements and initiatives to achieve tactical and strategic goals in the development process.
  4. Front-end developers are engineers who create graphic user interfaces for web applications by using different programming languages. In this particular project we used NodeJS and Ruby.
  5. A back-end developer is an engineer who implements server-side development. They create databases, scripting, website architecture, back-end functionalities, and features accessed by a user through a front-end application or system.
  6. A software architect is a person who is responsible for system functionality and performance, such as resilience, reuse, comprehensibility, scalability, security, technology, and constraints.
  7. Team/Tech Lead is a decision-maker – a software engineer who sets programming direction, technologies, and libraries which are used. They ensure that all the members of the team follow the technical decision and approved development strategy.

Building loyalty and trust

Building lifelong customer relationships is a core value of our team. We do our best to provide high quality and ensure that our clients are satisfied. We are proud that our relationship with the Laurus firm has turned into a trustworthy and successful partnership. We have been collaborating for three years and continue developing their software products. Here is the feedback that we’ve got:

Laurus.webp

Final words

When answering the question ‘How much does it cost to make a product?’ you should take into account many factors that obviously make the estimation more precise. With an experienced software development team, it is possible to cut costs, develop top-notch solutions, and scale or automate business. We take care of software development for startups to help small and medium enterprises to minimize their expenses while making market-ready software products. If you have an idea, drop us a message and we will analyze your project, calculate your product development cost, gather a team, and deliver the project in time.

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