How Much!. The true cost of software development… | by Daniel Payne | Jun, 2026 | MediumSitemapOpen in appSign up<br>Sign in

Medium Logo

Get app<br>Write

Search

Sign up<br>Sign in

How Much!

Daniel Payne

5 min read·<br>Just now

Listen

Share

The true cost of software development, updated for the world of AI.<br>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.<br>In my experience things that took a month now takes a day, however the daily price has gone up a bit.<br>Prototype was $30,000 is now $1,800 in 3 days<br>Go To Market was $900,000 is now $60,000 in 10 Weeks<br>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!<br>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 UnsplashYou 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.<br>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.<br>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”<br>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.<br>Prototype …$1,800<br>Go to Market …$60,000<br>Market Leader …$180,000<br>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.<br>Marketing , quick introduction to The Four Ps<br>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.<br>Product<br>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.<br>Placement<br>You need to get your idea in-front of people, through social media, advertising or face to face sales (cold calling, conferences and introductions)<br>Packaging<br>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.<br>Price<br>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.<br>Rough Product Costs<br>Prototype = One Developer (1 Person) @ 3 Days & $1,800<br>Proof of Concept = One Developers (2 People) @ 6 Days & $7,200<br>Go to Market = One Developers (2 People) @ 10 Weeks & $60,000<br>Market Contender = One Developers (2 People) @ 4 Months & $95, 000<br>Market Leader = Two Developers (3 People) @ 6 Month & $180,000<br>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!<br>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.<br>Prototype<br>Full Stack Developer , builds everything<br>Project Owner , working for free as tester and providing direction<br>Proof of Concept<br>Backend Developer, creating data storage, rest or graphQL interface and setting up basic cloud environment as virtual machines.<br>Frontend Developer , building user experience and implementing client side state management<br>Tester , doing manual exploratory testing and some automated backend testing<br>Project Owner , providing direction and coordinating project tasks<br>Go To Market<br>Backend Developer, creating data storage, rest or graphQL interface and setting...