How much does software development cost in Australia in 2024?

Quick Answer: Software development costs in Australia can range from AUD $12,000 to over $250,000 depending on the size, scope, and complexity of the project.

The right software can cure your headaches and dry your tears, but finding one that meets your precise wants and needs isn’t always possible. From providing a software as a service to managing your internal business processes or giving your clients the best possible experience, there are infinite reasons why getting software custom developed could be the best option for you.

But of course, there’s the question of budget. So how much does software development cost in Australia, and what goes into that pricing? Read on for answers to all your questions, plus some questions you didn’t even know you had.

What’s in this blog post?

• What’s the average cost of software development?
• What’s a typical software development hourly rate?
• What are the key factors influencing software costs?
• Is the cost of software development different across industries?
• How much should each software development phase cost?
• Why is software development so expensive?
• Outsourcing software development cost vs hiring a team
• How to choose the right software development team
• Custom software is a long term game
• Final thoughts on software development costs in Australia

What’s the average cost of software development?

The average cost of software development varies based on several factors. Most significantly however, are the size, type, and complexity of the software you want. Prices start around $50,000 for a basic CRM or basic app development services, and can go up to $1,000,000. Something like Grammarly is estimated to cost around $450, 000. 

While the sky is the limit, both in possibilities and in price, here are some average numbers to guide you.

Low complexity: Up to $60,000

Average complexity: Up to $90,000

High complexity: $250,000 and beyond.

What’s a typical software development hourly rate?

Just like with any service, software development services are offered by a range of providers, offering different overall services at different price points. When planning your budget, it’s important to understand the variability of overall software development cost per hour. The hourly rates charged by enterprise-level firms, for example, will be vastly different to those charged by freelancers or agencies.

Although ultimately the cost will depend on the complexity of the project and the required development hours, it is still possible to plan ahead by looking at typical hourly rates for different types of service providers.

Let’s break down typical software development costs per hour for different types of service providers.

• Enterprise class firms can charge hourly rates of AUD $577 – $1402
• Large businesses can charge hourly rates of AUD $330 – $495
• Small- medium sized businesses can charge hourly rates of AUD $123 – 330
• Freelancers can charge anywhere from AUD $40-495 per hour

Enterprise Class Firms

Enterprise companies are the major players in the market. They tend to have a significant workforce and often are engaged by government organisations and Fortune 500 companies. And naturally, their rates reflect their size. Typical projects for enterprise firms range from $500,000 to $100 million or more, and they can charge hourly rates ranging from $577 – $1402, depending on how experienced the consultant is.

Large businesses

Larger businesses are less costly than enterprise firms, but they’re still playing on a larger scale. Their hourly rates can range from $330 to $495, and depending on how many development hours a project requires, overall costs typically range from $125,000 up  to $5 million.

Small-medium sized business and agencies

The medium range of the scale is where you tend to find the best balance of cost and quality. Again, depending on the number of development hours your software requires, projects can range from $10,000 up to $5 million, with hourly rates ranging from $123 to $330 per hour.

Freelancers

Although the average rate for freelancers technically starts at around $40, keep in mind that rate is most likely for very junior or even offshore developers.

Although the prices may appear to vary quite significantly, remember that you’re not simply paying different prices for the same service. When planning your project and collecting quotes, make sure to get clear on what exactly you can expect from the service and how many people are involved. Having a dedicated account or project manager, for example, would be an additional cost however the clarity and smoothness of the project may well be worth it to save you any stress.

What are the key factors influencing software costs?

There are several factors that go into how much software development costs. You might be tempted to shop around for quotes, and by all means do that. But here’s something you need to remember: getting an accurate quote requires an in-depth discovery and scoping phase. Even if you have a clear vision for your project, the scoping process requires significant stakeholder alignment before a realistic timeline and budget can be set. If an agency or organisation gives you a quote too quickly, consider that a red flag. 

1. Project scope and complexity

The scope and complexity of the software project directly influence the development costs. Here are some key points to consider:

• Feature set: A project with a comprehensive feature set will naturally cost more than one with a minimal feature set. Each additional feature requires more development time and testing.
• Software size: Just like the feature set, the size of your software (the number of screens required) will increase the budget required. More screens comes with more design, development, and testing time.

• Software complexity: Not to be confused with features and size, complexity refers to the logic required in the back end. Think about what ‘tasks’ the software will need to complete. More intricate logic generally requires more sophisticated algorithms, extensive customisation, and more lines of code.

• Integration Requirements: One of the best things about custom software is that you don’t have to worry about whether it integrates with your other systems. It’s literally designed to. Of course, the more integrations you need, the more upfront work will need to be done. But once it’s set up, the seamless interoperability is priceless.

2. Tech Stack

Building a house out of solid brick and timber won’t cost the same as building the same house out of cardboard and sticky tape. Similarly, the technology you choose will impact your overall software development costs.

Here’s how your tech stack and stack up the bill.

Open source vs proprietary software
Using open source technology where possible can be a great way to minimise your budget. They’re free to use, and it’s usually not hard to find developers who can work with them. Keep in mind that proprietary software might offer you specific features or better support. Here at Conduct, we’re platform agnostic and always prioritise open source software to get the best results for your clients. If you’re not sure, have a chat with your development team about your current and future needs and get their advice.

Frameworks and libraries
Some frameworks and libraries are easier to work with and have a large community of developers, which can speed up development and reduce costs. Others might be more powerful but come with a steeper learning curve and higher costs.

Scalability and Maintenance
Choosing a technology stack that ensures scalability and ease of maintenance can save costs in the long run, even if the initial development costs are higher.

3. Labour costs

Labour costs are one of the largest pieces in the puzzle when it comes to software development costs. Australia has a highly skilled workforce and higher cost of living which translates to higher wages compared to other regions. Let’s break down the different ways labour costs can come into play.

• Developer salaries: The software development cost per hour is normally determined by experience and specialisation. Hiring freelancers or an agency will be different to hiring a full time employee. That being said, junior developers might earn around AUD $70,000 per year, while senior developers with extensive experience can command salaries upwards of AUD $150,000 per year. Even if you outsource to an agency, they’ll need to pay their workers, plus overheads, necessary non-billable staff, and their own margin on top.
• Specialised skills: Certain projects require niche expertise, such as AI, machine learning, or blockchain development. These specialised skills come at a premium, further increasing labour costs.
• Freelancers vs. full-time employees: The question of whether to outsource or hire a team is a big one. We go into it in more detail later on in this article but for now, we’ll say that freelancers can be more cost-effective for short term projects, while hiring a team can work out to be a better option if you have a long term project with consistent requirements.
• Local teams vs offshoring: Offshoring software development costs typically come with a variety of issues which end up blowing out your anticipated budget. Common issues include poor communication and unresponsive developers, poor quality code, buggy software that needs repair or rebuilding, and blown out timeframes. Not to mention the significant efforts needed on your part to manage and oversee the project.

4. Development time frame

Time is money, and software development is no different. If your software project is large or complex and requires more time to build, the labour costs alone will increase the project cost. On any project, a longer time frame will normally allow for efficient resource allocation. On the other hand, if you’re on a tight deadline and need the developers to work overtime, even a moderately complex and average sized piece of software can be expensive.

A phased development approach with milestone payments is an effective way to manage your budget. Breaking the project into phases can help you budget incrementally and make adjustments based on outcomes, managing your budget along the way.

Is the cost of software development different across industries?

Industry is not necessarily a contributing factor to the cost of software development. The overall cost is moreso determined by the other factors, such as size and complexity. That being said, different industries often have similarities in their requirements, which can allow us to look at averages and make some general assumptions about cost.

Fintech software development services often have to take into account specific security compliance requirements. These requirements include adhering to the Australian Prudential Regulation Authority (APRA) guidelines, Anti-Money Laundering (AML) regulations, and the Payment Card Industry Data Security Standard (PCI DSS). These extra security features and legal consultations can add to the price. On average, fintech software development can range from $150,000 to $600,000.

Healthcare software will also need extra budget allocated for security and compliance measures, due to the sensitive personal data being handled. In Australia, healthcare software development can range from $25,000 for a relatively simple system to over $1,000,000. Enterprise software development, on the other hand, can range from $30,000 to $350,000.

IoT software development can range from $10,000 all the way up to $5,000,000, while educational software development can range from $15,000 for basic features like simple quiz tools or flashcards, $80,000 for medium complexity software with interactive content, ranging up to advanced custom platforms reaching $150,000 and beyond.

How much should each software development phase cost?

Each phase has different requirements and comes with different possible ways to make sure you’re getting the right price and good value.

Phase 1: Requirements engineering, project planning, and UX design

In this phase, the project team will go through the foundational work that sets the project up for success. This can include analysing your short and long term needs, estimating constraints and risks, auditing your current tech stack and processes, and gathering functional requirements to plan the software features. By the end of this phase, you’ll have completed UX designs which show how users will interact with the system and a project roadmap with budget and resource estimates.

On average, this phase takes up around 10% of the total project cost. If you want to make sure you’re not over-paying for this phase, the key is to engage and trust experts.

• Engage stakeholders and end users to make sure their needs and expectations are taken on board during this planning phase. Ignoring their requirements or feedback may lead to expensive redirections down the track.
• Trust the development team with the requirements list. A clear list of requirements sets the project up for success, while Inaccurate, incomplete, or ambiguous requirements can lead to significant delays or redevelopment down the track. 

Phase 2: Architecture and UI design

In this phase, the project team will complete software architecture design and UI design. Software architecture design is like taking your requirements list and turning it into a blueprint that shows all the different modules and layers, how they integrate, the algorithms they need to function, and the data structures used. Most people are more familiar with UI design, which is what the software looks like to end users.

You can expect this phase to take up 5-10% of the total project cost. To use this budget efficiently and effectively, there are a few steps you can take.

• Try to take a modular approach to your software development. This will make it easier to evolve your software and launch new functionalities while minimising disruption.
• Unless a completely unique UI interface is part of your competitive advantage, sticking with premade templatised UI designs will help you keep your costs down. Why build something from scratch if you don’t need to?
• Talk to your software development team about whether there are any parts of your legacy software that can be reused. This has the potential to save you money and reduce risk.

Phase 3: Software coding

Now that your project team knows what your software needs to look like and how it needs to function, it’s time to do some coding. Front end development can take up to 25% of your project budget, while back end development can take up to 40% of the budget. It might sound like a lot, but this phase is where the bulk of the work takes place.

So how can you reduce your software development costs in this phase?

• Establishing development and delivery automation environments can significantly reduce development costs. Professionally implemented CI/CD processes, for example, can help with fast and accurate testing, integrating, and deployment.
• Talk to your development team about using ready-to-use cloud services where possible.. These services are often available for things like data management and analytics, storage, event processing, and integration.

Phase 4: Quality assurance

The quality assurance phase is when the project team runs tests and makes sure the software meets all the functional and non-functional requirements. You’ll get a report with any issues that come up during the testing, and you can expect this phase to take up 15-20% of the total project budget.

To reduce the costs for this phase, you can look into testing automations. If they’re feasible for your software, they can significantly reduce testing time (and therefore cost).

Although we’ve listed this as Phase 4, the process will have elements of quality assurance running throughout. The earlier an issue is found, the easier and cheaper it is to fix.

Phase 5: Deployment and maintenance

Finally, it’s time to get the software available for use. This phase can include installation, any final customisations, creating user guidelines, and conducting user training sessions or creating other handover materials. Once launched, you’ll still need some routine maintenance to handle any bug fixes, requirement changes, security gaps, and optimisation.

The general rule is to expect to pay 15-20% of the original development cost per year for maintenance.

Why is software development expensive?

The largest expense when it comes to software development is simply the cost of labour. Done well, custom software development costs will involve detailed analysis, research and planning on top of the actual development time to ensure the end result is functional, scalable, and appropriate for your needs.

Aside from the elements mentioned above, here are some other unexpected factors that can contribute to your overall project costs.

System integrations

Bringing new software into your organisation is like introducing a new species into an ecosystem. You can plan and experiment, but you don’t always know how everything will interact and what you’ll have to do to make the systems work together smoothly. Here at Conduct, we audit your tech stack as part of our discovery phase to make sure that any solution we build will integrate seamlessly with your current ecosystem.

Data migration

Do your existing systems have data that needs to be moved over to your new one? Data migration is a straightforward process that requires some complex groundwork. Your development team will have to figure out translation rules, write the scripts, decide how your new system will store the data, then run tests and adjustments to make sure the migration all goes smoothly.

Outsourcing software development cost vs hiring a team

In a study run by Deloitte, 70% of the businesses they surveyed said that in order to save money, they would outsource software development costs. It’s no wonder the global IT outsourcing market is expected to reach USD $425.19 billion in 2026, a massive jump from USD $342.6 billion in 2023. But why is outsourcing so popular, and how do you know whether you should outsource or hire a team?

Hiring a team comes with significantly higher overhead costs. In the simplest terms, hiring permanent staff and bringing your software development capabilities is only worthwhile if you know you’ll have enough ongoing work to keep them busy. In-house talent is only more cost effective by the house, so it only works out better for your bottom line if you’re playing the very, very long term game.

Outsourcing software development costs, on the other hand, gives you much more flexibility. You can engage an agency or a team only for what you need. When you find a good team to partner with, one of the greatest benefits of outsourcing is being able to access their scalable resources. For example, here at Conduct, we most often have a more involved relationship with our clients for the initial software development project, then scale it back to manage the necessary ongoing maintenance and support. If our clients later decide to undertake another project or make a significant update, our flexible resources can make it happen.

How to choose the right software development team

It can be daunting trying to choose a software development team to partner with. After all, the team you choose can make or break your projects.

Just like anything you outsource, look for a team that has all of these qualities:

• The technical skills to build your your requirements
• Significant experience in your niche
• Robust stakeholder and project management processes
• The knowledge to guide you through difficult decisions
• You get along with and can easily work alongside
• Look at their case studies and talk to their references
• Think about value as well as cost

It’s always a good idea to have a face to face chat with a team you’re considering working with so you can ask them about costs, timelines, processes, workflows and discuss any post-launch support and maintenance options.

Other ways to reduce your costs

Run your project efficiently

Want things done well the first time? Invest a little more time and a little more budget into the planning phase. Clearly defining and prioritising your features and requirements will help avoid expensive redirections down the track.

Go Agile

There’s a reason Agile is the preferred project method for software development. If you’re not familiar with it, it breaks down the development process into small, focused sprints. The sprints mean the developers can put all their focus onto specific features and functionalities, delivering them to a high standard before moving onto the next piece.

Test, test, test

Fixing bugs after your software has been implemented is infinitely harder and more complicated. Testing along the way minimises expensive post-launch fixes.

What about offshoring?

Tempted to offshore software development costs in order to save money? You’re not alone. However, offshore teams typically come with a variety of issues, including poor communication and unresponsive developers, poor quality code, buggy apps that need repair or rebuilding, and blown out timeframes– all of which end up blowing out your anticipated budget. Not to mention the significant efforts needed on your part to manage and oversee the project.

Custom software is a long term game

Custom software should be approached like a long term investment. Done well, with the appropriate foresight around long term scalability and flexibility, it will accommodate your organisation’s needs and support your growth for many years.

Scalability means making sure your software can support growth as well as slow periods. It means being flexible enough to adapt to your evolving needs and the modifications, updates, and changing integrations that may come too. Scalability isn’t something that you can add on down the track, which is why investing in a more experienced team is worthwhile. Investing more up front for the strategic consideration of programming languages, tech stack, and architecture will reduce your ongoing costs for years to come.

Final thoughts on software development costs

In conclusion, navigating the world of software development costs can be complex, but understanding the factors at play can help you make informed decisions. From the project’s scope and complexity to the choice of tech stack and labour costs, every element influences the final price tag. While custom software development costs represent a significant investment, approaching it with a long-term perspective ensures that the solution will grow and adapt with your organisation, delivering value well beyond the initial deployment. Engaging a skilled and experienced development team, prioritising thorough planning and testing, and considering the right balance between local and offshore resources can help manage costs while achieving a high-quality result. Remember, the right software is an asset that, when built well, can transform your operations and drive your success for years to come.