Blog Software Development Hidden Costs of App Development - The Anatomy of Product Development ServicesHidden Costs of App Development - The Anatomy of Product Development Services
When considering the most economical approach to product design and development, decision-makers often choose between building an in-house team and engaging external service providers. Sincerely — if your company has the resources to form its own team, that is definitely the way to go! However, it’s important to consider the full spectrum of costs associated with maintaining such a team. Beyond the considerable share of expenses that salaries represent, there are extensive costs that companies like ours absorb. So, before posting the first recruitment advert, continue reading to discover the ‘hidden’ costs of assembling your own team and understand the entire cost spectrum.
Table of contents
Breakdown of General Costs of App and Software Development
The singular salary of a developer or product designer can be dissected into the following components:
- Base Salary: The net amount an expert receives on their paycheck.
- Overtime Pay: Some projects may necessitate extended hours, leading to considerable overtime expenses.
- Bonuses and Incentives: A necessity for competitive offers in a very competitive market.
- Mandatory Contributions: These include social security, health, retirement, unemployment insurance, and payroll taxes.
Then, there are operational costs associated with providing your experts a proper place and tools, so they can focus solely on doing their job most efficiently.
- Equipment and Technology: Essential tools, software licenses, and devices are required for hassle-free operation.
- Workspace and Utilities: Office space and utilities for the team - even if your team works mostly remotely, offices are where organizational culture is built, and as Peter Drucker once said, ‘culture eats strategy for breakfast.‘
- Travel and Accommodation: Costs incurred for office visits, conferences, or client meetings.
Again, we come back to expenses that are very strongly related to company culture. If you want to keep the best talents around, you can’t offer them mediocrity in any area, just as you can’t offer it to your clients and partners if your goal is to grow and improve your business. That’s simple, but… expensive.
- Professional Development: Ongoing training is critical, especially with emerging technologies like Generative AI.
- Administrative and Support Services: High-quality administrative support is vital for working with top talent.
In Poland, employees typically receive 26 vacation days, 10 sick days on average, and 13 public holidays annually. These non-working days are essential for well-being but contribute to the company’s non-productive costs—responsibilities that we take on, allowing our partners to remain worry-free. If a Boldare employee working on a client’s product goes on holiday leave, we provide another specialist at a similar level to continue work on the project and ensure continuity of service for the client. This approach helps maintain efficiency and minimize work disruptions, even in the absence of the original team member.
Before any expert is ready to be onboarded to your team, they must go through our internal onboarding and recruitment process. The industry average for hiring a software engineer is one month, but at Boldare, our Talent Pool allows us to shorten this process to just one week. In other words, our process is quite flexible when it comes to hiring new employees, but even so, everyone must be properly onboarded before joining a client’s team. And last but not least — only about 75% of a consultant’s time is directly billable, according to industry standards.
General Company Costs
This category, often overlooked, includes:
- Management Costs: The resources required to manage a development team.
- Marketing and Branding: Building a brand perception that appeals to clients and potential employees alike.
- Research and Development: Critical investment for staying current, exemplified by the Generative AI revolution. Boldare’s dedication to R&D includes forming a dedicated AI team among other investments.
- Administrative, Financial, and Legal Costs: Fundamental for any business operation.
Clients opting for Boldare benefit from a comprehensive service package. With one payment, every phase of app development is covered, from the initial concept to the final launch, eliminating the unforeseen expenses typically associated with in-house operations.
Conclusion
In-house development may initially seem advantageous, but it’s crucial to consider the hidden costs of software development, both financial and operational. If your organization is prepared to manage these challenges, in-house development can be a suitable choice. Alternatively, engaging a company like Boldare offers the benefit of handling all costs, both apparent and concealed, allowing your organization to focus exclusively on its core business activities. This approach presents a practical solution for those seeking to avoid the complexities of in-house development.
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