If you Googled "cost to hire software development company" hoping for a clean answer—something like "£50,000 for an app"—we have bad news.
It doesn't work that way.
And if a company gives you that answer without playing ‘20 questions’ first, you should probably walk away.
The real question isn't "how much does it cost to hire a software development company?" The real question is "what am I actually paying for, and how do I get the most value?"
Because you can hire developers for £25/hour or £250/hour. But the cheaper ones might actually cost you more money.
Raw Numbers: The Cost of Software Development
Let's get the baseline data out of the way since that's probably why you're here:
Hourly rates by company type:
- Enterprise consultancies: £300-£700/hour
- Mid-market agencies (UK-based): £100-£250/hour
- Small agencies and boutique firms: £70-£125/hour
- Offshore development companies: £20-£50/hour
- Freelancers: £40-£250/hour depending on experience
Project-based pricing for common builds:
- Simple MVP mobile app: £15,000-£40,000
- Mid-complexity web application: £40,000-£100,000
- Enterprise software solution: £150,000-£500,000+
- E-commerce platform: £30,000-£200,000
There. That's what everyone else's blog post tells you.
Except those numbers are useless without context.
Because what they don't tell you is that the £25/hour developers might take 3 times longer than the £100/hour developers. Or that the £15,000 MVP quote doesn't include design, testing, deployment, or the 3 months of revisions after you realise it doesn't actually solve your problem.
The Real Costs: What You're Actually Paying For
Let's talk about what software development costs actually look like when you pull back the curtain.
1. Discovery and Requirements
Good companies charge for this. Bad companies skip it and start coding immediately.
What this includes: Workshops to understand your business, user interviews, competitive analysis, technical architecture planning, detailed requirements documentation.
Typical cost: £3,000-£15,000 depending on project complexity
Time investment: 1-3 weeks
Why it matters: Every hour spent in discovery saves 10 hours in development. Build the wrong thing efficiently and you've just lit money on fire. We've seen companies spend £80,000 building a product before realising they misunderstood a core user workflow. That £5,000 discovery phase starts looking pretty smart in hindsight.
2. Design (UI/UX, Branding, Prototyping)
This is where amateur-hour companies reveal themselves. They skip straight to coding because "design is just making it look pretty, right?"
Wrong. Design is figuring out whether your software actually makes sense before anyone writes code.
What this includes: User journey mapping, wireframes, interactive prototypes, brand identity (if needed), design system documentation, usability testing.
Typical cost: £5,000-£30,000
Time investment: 2-4 weeks
Why it matters: Moving a button in Figma takes 30 seconds. Moving it after it's been coded, tested, and deployed takes days and costs more.
3. Development (The Obvious Part, But With a Twist)
Yes, this is where code gets written. But how it gets written determines whether you're getting value or getting robbed.
A lot of code is now AI-generated. But only some of it actually gets accepted because most developers don't know how to use these tools effectively.
Translation: Some companies have developers who can build in 8 weeks what used to take 6 months. Other companies have developers with AI tools open who still code like it's 2019.
What this includes: Backend development, frontend development, API integrations, database architecture, third-party service integration.
Typical cost: £20,000-£300,000+ depending on complexity
Time investment: 6 weeks to 12+ months
The AI advantage: Companies (like ours) that have actually trained their developers on AI-assisted workflows (not just "here's GitHub Copilot, figure it out") are delivering MVPs in 8-12 weeks instead of 12-18 months.
4. Quality Assurance and Testing
This is where cheap development becomes expensive.
What this includes: Functional testing, performance testing, security audits, cross-browser/device testing, user acceptance testing, bug fixes.
Typical cost: 15-25% of development cost (£3,000-£75,000)
Time investment: Ongoing throughout development, plus 2-4 weeks concentrated testing
Why people skimp on this: Because testing is invisible. Users only notice testing when it doesn't happen—when their data gets lost, or the checkout button doesn't work on mobile, or the site crashes when 100 people use it simultaneously.
Professional companies bake QA into their process. Amateur companies treat it as optional and deliver buggy software.
5. Deployment and Infrastructure
Someone needs to set up servers, configure databases, handle SSL certificates, set up monitoring, configure auto-scaling, establish backup systems, and deploy the actual code.
What this includes: Cloud infrastructure setup (AWS, Azure, Google Cloud), CI/CD pipeline configuration, monitoring and alerting setup, security configuration, initial deployment.
Typical cost: £2,000-£15,000 initial setup, plus £200-£2,000/month ongoing
Time investment: 1-2 weeks
The hidden gotcha: Cheap development companies build things that work on a developer's laptop but break when deployed to production. You find this out at launch, which is the worst possible time.
6. Project Management and Communication
This doesn't show up as a line item, but you're paying for it. Someone needs to run standups, manage sprints, coordinate between designers and developers, track progress, communicate with you, handle scope changes.
Typical allocation: 10-15% of project cost
What you get: Regular updates, sprint reviews, someone who translates between "business speak" and "developer speak"
When this goes wrong: You send an email asking about progress. Silence for three days. You follow up. "Yeah, we're working on it." Two weeks later you discover they built the wrong feature because nobody clarified the requirements.
7. Post-Launch Support and Maintenance
Software isn't a one-time purchase. It's a plant that needs watering.
What breaks after launch:
- Bugs that slipped through testing
- Security vulnerabilities that need patching
- Server issues and performance problems
- Third-party API changes that break integrations
- Feature requests from users
- Scaling issues as traffic grows
Typical cost: £1,500-£8,000/month for ongoing support
Alternative: Pay nothing monthly, then pay £5,000 every time something breaks
Most companies offer maintenance retainers. Some bail after launch and leave you stranded. Choose wisely.
Hidden Costs of Hiring Software Development Agencies that Don’t Work
The Cost of Time Zones and Communication
Hire a team offshore to save 70% on hourly rates, then spend 10 hours a week on asynchronous communication because your working hours don't overlap.
Time zone differences aren't insurmountable, but they have a cost. Questions that take 10 minutes to resolve in real-time take 24 hours over email. That extends timelines, which extends costs.
The workaround: Find companies that have structured their operations around overlapping working hours. Octogle's staff augmentation model, for instance, has global developers working hours that overlap with UK/US/UAE time zones specifically so this doesn't happen.
The Cost of Bad Requirements
You think you know what you want. You describe it. The developers build it. You see it and realise that's not what you wanted at all.
This happens constantly, and it's expensive. Every change request after development starts costs 10x what it would've cost to catch in the requirements phase.
How much does this cost? Figure 30-50% timeline extension on projects with poor upfront requirements. That £40,000 project becomes £60,000. The £80,000 project becomes £120,000.
The Cost of Technical Debt
Technical debt is what happens when developers take shortcuts to hit deadlines. The code works, but it's messy, hard to maintain, and will cause problems later.
It's like buying a house with foundation issues. Sure, it's cheaper upfront, but you'll pay for it eventually.
How much does this cost? Hard to quantify, but businesses spend 20-40% of their engineering capacity dealing with technical debt. That's developers spending half their time fixing old problems instead of building new features.
The Cost of Scope Creep
Scope creep is when your project quietly expands beyond the original plan. "While we're at it, can we also add..." happens all the time.
How companies handle this:
- Fixed-price contracts: Changes trigger change orders and additional fees. Pro: predictable. Con: inflexible.
- Time and materials: You pay for changes as they happen. Pro: flexible. Con: budget can spiral.
- Hybrid models: Core features are fixed-price, changes are billed hourly. Pro: balanced. Con: requires trust.
Figure an extra 20-30% budget buffer for scope changes if you're doing anything beyond the most trivial projects.
How Location Affects Software Development Costs
Let's talk about the offshore versus onshore debate, because this is where people make expensive mistakes.
UK-based development: £80-£150/hour
Western Europe: £60-£100/hour
Eastern Europe: £30-£60/hour
India/Asia: £20-£45/hour
On the surface, hiring Indian developers at £25/hour versus UK developers at £100/hour looks like a no-brainer. You save 75%! Except...
What you trade off:
- Communication: Time zone gaps, language barriers, cultural differences in how feedback is given/received
- Speed: Things that take one meeting in real-time take three days over email
- Quality control: Harder to verify quality remotely; you need strong processes
- Legal and IP protection: Different legal frameworks, harder contract enforcement
When offshore works brilliantly:
- You have technical leadership who can manage remote teams
- The company has proven processes for remote collaboration
- They've invested in overlapping work hours
- They offer trial periods so you can verify quality before committing
When offshore fails spectacularly:
- You're non-technical and can't evaluate quality
- The company treats it as a cost-cutting exercise, not a partnership
- Communication is entirely asynchronous with no overlap
- There's no local presence or accountability
The companies crushing it with offshore models aren't just "cheaper." They've solved the coordination problem. We've trained developers specifically for Western markets. We've structured their operations around time zone overlap. We've invested in quality control processes.
That's the difference between Octogle-style staff augmentation (AI-trained developers, managed placements, overlapping hours, instant replacement guarantees) and hiring random developers from Upwork and hoping for the best.
The 3 Pricing Models for Hiring Software Agencies
Fixed-Price Projects
How it works: You agree on scope, timeline, and price upfront. The company delivers for that price regardless of how long it takes.
Best for: Well-defined projects with clear requirements. MVPs. Rebuilds of existing systems.
Typical cost: £15,000-£80,000 for MVPs at modern agencies; £150,000-£500,000+ at traditional UK agencies
The gotcha: If requirements change (they will), you trigger change orders. Every change costs extra. This model punishes flexibility.
Who this works for: Non-technical founders who need budget certainty and have done enough discovery to know exactly what they need.
Time and Materials (Hourly/Monthly Rates)
How it works: You pay for actual time spent. Developer works 120 hours at £80/hour = £9,600. Done.
Best for: Ongoing development, evolving products, exploratory work, maintenance.
Typical cost: £2,500-£4,500/month per developer (staff augmentation); £100-£250/hour for agencies
The gotcha: Budget can spiral if not managed carefully. You need discipline and someone tracking hours/progress.
Who this works for: Companies with technical leadership, ongoing development needs, or unclear requirements that will evolve.
Dedicated Team (Hybrid Model)
How it works: You hire a team for a set monthly fee. They work exclusively on your project. Scope can flex, but team size and duration are fixed.
Best for: Medium to large projects, product companies, businesses scaling development.
Typical cost: £8,000-£20,000/month for a small team (2-3 developers, PM, QA)
The gotcha: You're paying for capacity whether you use it or not. If your roadmap stalls, you're still paying for the team.
Who this works for: Funded startups, companies with clear product roadmaps, businesses that need sustained development velocity.
If you're not sure which model is right for you, connect with us for a free consultation.
