January 30, 2026

How much will software development cost in 2026?

Imagine walking into an electronics store and asking:
How much does the device cost?
The salesperson asks back:
Which specific one interests you?
And you reply:
Any one. Can’t you just state the price?
That’s exactly how a software development cost query sounds without any context. And that’s why the response is usually either inaccurate or manipulative.

Custom software costs can differ by ten times or more. One business creates an MVP for $20,000 and launches the product in three months. Another invests over $200,000 in a complex platform with branched architecture, a long lifecycle, and scaling to multiple markets. Both approaches can be justified—the question is which specific task needs to be solved.

The price isn’t tied to the number of lines of code. Costs are determined by business goals, complexity level, team type, chosen stack, collaboration format, performers’ geography, time constraints, technical legacy. And a whole set of other factors that most clients don’t see at the start.

We created this guide to thoroughly break down how to estimate software development costs in 2026. What exactly affects the budget, what rates by region, how pricing models differ, which expenses are most often underestimated, and how to calculate your own budget without rose-tinted glasses.

Key Factors Influencing Software Development Costs

To estimate the real project price, it’s not enough to just count the number of team members or roughly assess the development duration. The budget is influenced by at least four fundamental parameters: task complexity, team, chosen technologies, and performers’ geography. And none of them works in isolation from the others.

Project Complexity and Scope of Work

There are no simple projects. There are those that only seem simple. Sometimes even basic functionality entails complex logic, non-standard scenarios, the need for adaptive architecture or connecting external services. The project cost includes the volume of work with data, roles, API, user scenarios. It also matters whether it’s the first product version or refinement and scaling of an already launched solution. The latter often requires more resources due to the need to maintain stability and support existing integrations.

Often the client describes the functionality in one sentence because they don’t see the full picture. For example, need to make a simple form with fields. But in reality, this form will have 5+ user roles with different permissions, need to store change history, there are links to other modules, data must be validated by complex logic, etc.

As a result, a task that verbally looked like two days of work turns into three weeks with testing, adaptation, and debugging.

Team Size and Expertise Level

The same result can be achieved in different ways. Working with scattered freelancers, between whom you constantly need to pass the ball, or with a full team of 6-8 people—this is different budgets. But also different speed, quality, control, and responsibility.

Higher expertise—higher hourly rate, but at the same time fewer errors, accelerated solutions, and more predictable results. Competence level also strongly affects efficiency: in most cases, a senior will complete a task in ten hours that a junior will drag out for a week.

But even a high level of individual expertise doesn’t guarantee results if the team doesn’t work as a single mechanism. In projects where communication isn’t set up, roles aren’t defined, and processes aren’t documented, a lot of extra time is lost. These are costs arising from misunderstandings.

Technology Stack and Platform

The same functionality can be implemented on different technologies and at different prices.

No-code is suitable for a quick prototype but won’t withstand complex loads or flexible customization. A classic stack (e.g., React + Node.js + PostgreSQL) is universal but not always efficient for specific tasks.

Separately, the platform type should be considered: development for web, mobile apps, or desktop requires different approaches, separate specialists, and often different data interaction logic.

Team Geographic Location

This factor directly affects the hourly rate. Teams from the US, Western Europe, or Singapore usually work at the highest rates: $120-200/hour and even more. Meanwhile, Eastern Europe offers engineering quality of the same level at average rates of $25-45/hour.

The cheapest options—Asia and Latin America—usually have higher risks in terms of communication, quality control, and deadline adherence.

Another important parameter is time zones. Even if the team works qualitatively, but it’s +10 hours from the client, any task stretches at least a day due to delayed responses, clarifications, approvals.

In addition, cultural compatibility matters greatly: developers from different countries can mean very different things by the same terms. We’re not talking about stereotypes; it’s more about decision-making style, responsibility format, and ability to ask clarifying questions.

Average Software Development Cost in 2026

In 2026, the market has become even more polarized: the development cost gap between the US and Eastern Europe can reach 5-7 times, while quality may not differ significantly. That’s why location choice directly affects the final price.

Hourly Rates by Regions

According to Codebridge (2026) data, average software development rates by regions look like this:
North America (US, Canada): $120-200/hour
The most expensive market with a high level of expertise, local legal advantages, and full compliance with security standards. Primarily used for enterprise projects in finance, healthcare, defense.

Western Europe: $90-150/hour
Highly qualified engineers, strong government support for R&D, high compliance with standards (GDPR, ISO 27001, etc.). Often work with fintech, energy.

Eastern Europe (Ukraine, Poland, Romania, Czechia): $25-45/hour
Optimal price/quality balance. Strong technical base, Western collaboration culture, high-level English. One of the most popular regions for creating SaaS, AI prototypes, blockchain platforms, cloud-native services.

South Asia and Latin America (India, Bangladesh, Brazil, Mexico): $20-35/hour
Large talent reserve. Suitable for tasks with massive code volumes, technical support, back-office. However, management, communication, and implementation quality levels require separate verification.

The cheapest doesn’t mean the most advantageous. Team choice is a balance between hourly software development price, experience, management quality, convenient time zones, language, and cultural compatibility.

Software Development in Ukraine in 2026

Ukraine has remained one of the most popular directions for outsourcing and custom software creation for several years in a row, and in 2026 this trend is intensifying.

Competitive Rates and Quality

Since average hourly rates for Ukrainian developers usually range approximately from $25 to $80 per hour, this makes Ukraine balanced in price and quality compared to the US or Western Europe.
These rates reflect the real market situation, from junior developers to seniors with experience in complex projects.

Technical Base and Ecosystem

Another reason why Ukraine is so attractive for software development is its deep technical base. The country has a large pool of engineers in various directions: from frontend and backend to machine learning, cloud solutions, mobile development, and IoT. This allows closing projects with a wide spectrum of requirements within one country without the need to split the team across locations.

Regulatory and Communication Compatibility

Ukrainian companies often work with clients from the EU and US, adhering to international security and data management standards. English proficiency among developers has significantly grown in recent years, facilitating communication and reducing risks of misunderstandings during development and knowledge transfer.

Main Centers and Talent

Ukraine’s IT industry is focused in several major tech hubs: Kyiv, Kharkiv, Lviv, Dnipro, and Odesa. These cities have developed communities, high education levels, and active professional life: conferences, meetups, and programming schools. This creates a cohesive ecosystem that attracts foreign companies and startups from around the world.

Choosing a Ukrainian contractor to develop software allows you to:

obtain high-quality development at lower rates than in the US or Western Europe;
attract specialists with deep technical skills and a high level of English;
build teams that work within convenient time frames;
reduce unproductive communication and management costs.

These advantages affect the overall price not only through the hourly rate but also through overall efficiency, speed, and result quality.

How Much Does Custom Software Cost in 2026

There are benchmarks that help understand the order of numbers depending on the product type.

Below is a typical budget range in 2026 according to analytical reports.

Project Type	Global Budget (USD)	Ukraine / Eastern Europe (USD)	Comment
Simple corporate website/landing	5,000-15,000$	3,000-8,000$	HTML/CMS, no complex logic
MVP (web / mobile)	20,000-80,000$	15,000-45,000$	Limited functionality, 1-3 months work
Mid-complexity B2C app	60,000-120,000$	30,000-70,000$	Several user roles, basic integrations
CRM / ERP for internal processes	80,000-180,000$	50,000-100,000$	Custom logic, reporting, access rights
B2B SaaS platform (multi-tenant)	150,000-300,000$	80,000-180,000$	Payments, subscriptions, multi-level architecture
Integrated systems with ML / Big Data / IoT	from 200,000$	from 100,000$	Requires separate ML pipeline, DevOps, custom infrastructure

It’s important to understand that the hourly rate isn’t the main efficiency factor. A $150/hour team can deliver the product faster, more stably, and without rework than a $25/hour team that works mechanically without strategic thinking. You need to consider not only direct costs but also the price of errors, delays, risk underestimation—which often arise precisely when working with cheap teams.

The distribution of software development costs in 2026 looks like this:

Discovery and design (10-15%)
UI/UX design (10-20%)
Development (40-60%)
Testing (10-15%)
Management, DevOps, documentation (5-15%)

This distribution is averaged, and in each specific case, the percentages may shift. For example, for an MVP, the design and documentation share is often reduced, while for enterprise solutions, the weight of DevOps and QA stages increases.

Fixed Price or Hourly Payment: What to Choose in 2026

Don’t be surprised, but nowadays businesses are less concerned about the cost itself than about flexibility: which model will harm the project less if plans change? Because that’s what distinguishes fixed price (Fixed Price) from hourly payment (Time & Materials): the ability to respond to changes, not just counting hours or spec pages.

Fixed Price is when the budget and scope of work are approved upfront. The team commits to delivering the entire volume for a fixed amount. This format suits short, clearly described tasks. For example, a landing page, basic MVP, audit, or design system creation. Risks are minimal if the company knows exactly what it wants.

But in reality custom software development inevitably involves plan changes. The spec written at the start becomes outdated before the first release. And then Fixed Price becomes a trap: every new requirement triggers budget recalculation, delays, and approvals.

Imagine: the company agreed on Fixed Price at $40,000. The spec is written, but after a month, it turns out another user role is needed. Seems like a small edit, but it requires reworking authorization and access system, adapting the interface, testing all scenarios. The change costs another $6,000, but it’s not in the contract. Bargaining starts, or technical debt accumulates.

And if there are five such small edits? The client loses flexibility, the team gets frustrated, the product launches raw or delayed. That’s why most experienced teams in 2026 work on Time & Materials or a hybrid model.

Time & Materials (T&M) is an hourly model where the client pays for actual work done. It offers more transparency, control, and flexibility. But also more responsibility: without proper management, the project sprawls like water on sand.

In fact, most successful projects in 2026 use a combined approach: Discovery and planning on Fixed Price, main development on T&M. This reduces risks, preserves flexibility, and avoids spending months on a detailed spec that will change anyway.

Hidden Costs Most Overlook

Even with a clear development estimate, it doesn’t mean the software budget is truly final. The main client mistake is focusing only on development. Real software costs also come from ancillary expenses often left out: from servers and security to legal risks and post-release maintenance.

Post-Release Support

Launch isn’t the end, but the beginning. Projects most often fail not during development, but after launch—when users behave differently than expected, or bugs missed by QA emerge, or OS updates break logic, or new regulations force architecture changes.

What is included in typical support:

correction of bugs and logical errors;
updating libraries, dependencies, SDKs;
technical adaptation to new versions of iOS and Android;
UX refinement based on customer feedback;
updating functionality in line with changes in business or legislation.

According to market analytics, annual maintenance costs can amount to 15–25% of the initial development budget.

For example, if software development cost $100,000, then yearly support, upgrades, and fixes may cost $15,000–25,000 per year.

In other words, these are not optional extras you can overlook, but a core part of the product lifecycle and a significant cost category.

Infrastructure and deployment environment

This is the actual technical platform that ensures the product runs and operates reliably.

Such expenses include:

hosting and server resources (e.g., AWS, Azure, Google Cloud);
CI/CD (Continuous Integration/Continuous Deployment) – an automated system for delivering updates: secure and fast transfer of changes from the development environment to production;
monitoring and logging;
security: WAF (Web Application Firewall), backups, DDoS protection;
CDN (Content Delivery Network) is a system that stores copies of a website or application on servers around the world so that users can access content faster, regardless of their location.

How much does it cost:

simple MVP from ~$100/month;
average SaaS $500–1,500/month;
products with high availability and load requirements – $2,000/month and above.

Many product owners still believe that hosting costs $5/month on a shared server. But this is a myth: the real costs of modern infrastructure are much higher and depend on load, security, and fault tolerance.

Third-party services and integrations

Modern software rarely exists in a vacuum; it connects to dozens of third-party services:

payment gateways,
analytics,
e-mail distribution,
real-time databases,
integration with artificial intelligence.

Many of them start with a free plan. But as soon as users appear, bills appear too. On average, $500-2000 per month is a typical check for a SaaS product (online service) for 6-12 months of life.

Another important category is integration with the client’s internal systems (ERP, CRM, warehouse databases). These are not only technically complex but also often poorly documented, which increases the cost.

Licenses, certifications, and legal expenses

This is a separate category that is often overlooked due to negligence:

licenses for third-party SDKs or components (more common in fintech, healthcare, and edtech);
security certifications required for working with corporate clients;
legal advice on privacy policies, storage, and processing of personal data.

These costs can be either one-time or recurring, depending on market requirements, region, and product application.

If a company does not include this in its budget, it simply postpones inevitable costs until later, which will hit at the worst possible moment: when the team has been disbanded and the product is already in the hands of users.

How to Reduce Costs Without Sacrificing Quality

Saving money is good — but it should always be guided by common sense. Real losses don’t start with large budgets, but with poor decisions.

So what can actually reduce costs without hurting the product?

1. Start with a Discovery Phase

This is a short pre-project phase where the contractor’s team helps define what exactly needs to be built, for whom, what risks exist, which architecture fits best, and what the realistic cost will be.

The average cost of this phase ranges from $3,000 to $7,000. The potential savings: tens of thousands.

Without Discovery, companies often overestimate the importance of certain features, overlook technical constraints, and underestimate integration complexity. Most importantly, they move into development with vague requirements.

The result is constant rework, shifting deadlines, budget revisions, and disappointment in the team. This is a common pattern in projects that skip the Discovery phase.

2. Build an MVP

The market doesn’t wait for perfect solutions — it tests hypotheses. Instead of building everything at once (and never reaching release), it’s smarter to launch a Minimum Viable Product. This first version helps validate demand, collect feedback, and avoid investing in unnecessary features.

An MVP doesn’t mean raw or low-quality. From a financial perspective, it’s a way to limit risk. A full-scale product often requires 6–12 months of development and a large upfront budget before real demand is confirmed.

An MVP, on the other hand, allows you to invest only part of the budget and get early market signals: whether users engage with the product, what they’re willing to pay for, and where problems arise.

Very often after an MVP launch, it turns out that users actively use only 20–30% of the planned functionality. The rest can be postponed or removed from the roadmap entirely — saving a significant share of the future budget.

3. Don’t Add Unnecessary Features

Any feature that “might be useful someday” can cost several thousand dollars. If there’s no clear reason for it, it shouldn’t be included in the first release. Don’t build an internal chat if an existing solution can be integrated. Don’t develop a custom CRM if a configurable off-the-shelf system will do the job.

To avoid feature overload, teams often use a simple filter: every feature must answer at least one of two questions.
First: can the user complete the core action without it?
Second: does it impact revenue or user retention?

If the answer to both is no, the feature should not be part of version one. This approach reduces development scope without reducing product value — and can cut costs dramatically.

4. Work with a Product-Minded Team

Some developers simply implement what they’re told. Others help think through decisions: they advise, flag risks, and suggest alternatives.

Such teams may cost more upfront but are far more cost-effective in the long run. They don’t just log hours — they co-create the product and deliver comprehensive digital transformation services.

The difference between executors and partners becomes especially clear over time. A team that doesn’t participate in decision-making will usually implement requirements literally — even if this creates technical debt or limits future scalability.

Product-oriented teams, by contrast, design solutions with future change in mind. This may slightly increase initial costs but significantly reduces expenses for scaling, support, and further development six or twelve months later.

Real savings are not about spending less — they’re about not wasting your entire investment in custom software. It means thinking not only about what development costs, but also about what mistakes cost. This mindset is what distinguishes businesses that keep growing even in difficult times.

Get an Accurate Budget Estimate for Your Project

After reading this article, you may already have a rough idea of your software project budget — or you may have even more questions. Both are completely normal: even the most experienced CTOs cannot always name an exact budget right away, because every project is unique.

That's why we're offering a free express session from IWIS:

online meeting with an analyst;
clarification of tasks, roles, goals, and priorities;
basic budget by phases (Discovery, MVP, support);
selection of the optimal format for cooperation;
approximate team composition and implementation schedule.

We will prepare an assessment tailored to your specific task, without generalizations.

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