Custom Software Development Guide 2023 - with free agreement template

Everything You Need To Know About Custom Software Development in 2023

19th January 2023

Table of Contents

1. What is Custom Software Development?

2. Onshore, offshore, or nearshore – what to choose?

3. Checklist to seal the deal

4. Benefits of Custom Software Development

5. Disadvantages

6. Factors to consider

7. What do custom software development services include?

8. How does a software development company operate?

9. Costing and Pricing 10. Examples of Customised Software Development 11. Key factors to include within the agreement

What is Custom Software Development?

The process of designing software according to the needs of a particular user or group of users, that includes creating, analysing, and maintaining applications of a software is called Custom Software Development. A developer is commissioned to create custom software when an organisation’s need cannot be addressed with off the shelf software. While commercial off the shelf software (COTS) targets a broad set of requirements, Custom Software Development aims at a narrowly outlined set of requirements.

Generic software development vs Custom Software Development

Generic software development means creating software for general purpose. A large number of users use this kind of software with no regard for the product quality. The development team designs and controls the process of generic development. For example, word-editing software. Custom Software Development is created, keeping the client’s needs and requirements in mind. This software is used by a particular set of users, with quality being the main criteria. Client/customer dictates the process of Custom Software Development.

In-House vs Outsourced Software Development

After deciding that Custom Software Development meets your set of requirements, the question arises who to hire? In general, you have two options: an in-house development team or partnering with an outsourcing company. Back in the day, people considered outsourcing mainly due to lower costs. That is no longer a priority now, although outsourcing remains to be significantly cheaper than in-house software development. The main reason behind outsourcing is the accessibility of top engineers and innovative technology and talent. In a nutshell, outsourcing offers a drastic cost reduction and easy scalability. It guarantees top talent and proven workflow and processes. You don’t have to waste time and resources looking for developers, you can directly hire an outsourcing company, and your work will start as soon as documentation and requirements are met. Meanwhile, building an in-house development team ensures engagement and cultural fitness. Efficient communication increases agility and flexibility. One can maintain a faster feedback loop and make changes to the product the same day. The in-house team focuses primarily on your project and is dedicated to the process. An in-house team can ensure a deeper understanding of your goals and objectives and provide results significantly.

Of course, you can also try another form of IT outsourcing – staff augmentation. In comparison to outsourcing, with IT staffing you can extend your internal team with additional experts, renting them for a few months or even years. Check out the article about the benefits of IT augmented teams to know more.

Onshore, offshore, or nearshore software development company – what to choose?

Outsourcing helps save time and money and offers staff flexibility to design Custom Software Development. Settling for outsourcing comes with a set of questionnaires. What kind of company do you want to work with? Which one suits your needs the best? Here is an idea of what to expect with these three different companies and their locations: 1. Onshore development partner: It is located in the same country; you can drive there or take a flight and organise a meeting with the company’s representatives in person. The local location offers developers a better understanding of your end-users’ UX patterns. You don’t experience a language barrier, different time zones, and cultural differences, which means an effective, undisrupted communication chain. 2. Offshore development partner: It is located in a different country, several time zones away. Different countries offer different rates for software development. You can expect a significant cost reduction. You can find a larger talent pool with incredible offers at a lower cost depending on the country’s specialisation and trends. But these come with a communication barrier, cultural differences, and more. 3. Nearshore development partner: It is located in a neighbouring country. It offers combined perks of onshore and offshore outsourcing. Low costs with easier integration of developers into your process. Same time zone with insignificant cultural differences will account for a better understanding of your goals and objectives.

7 step checklist to seal the deal

It is important to scope out before investing. Here are few checkpoints to help you make the right choice: 1. Technology stack: This includes all programming language, framework, and tools needed for software development. Choosing the right technology stack is crucial. List and define your requirements beforehand. The Front-end development stack is the part that is associated with what users see and interact with. For example HTML, CSS, JavaScript etc. Whereas the back-end deals with the logic and processing of the app, for example, Linux, Apache, PHP. Etc. 2. Software Development Life Cycle: Selecting the right SDLC outlines a set of tasks and steps that a development company follows during the development process. In a nutshell, it ensures that every task is fulfilled at every stage of the process. There are several approaches that a company can use for SDLC, but the waterfall model and the agile software development cycle are the most popular. 3. Budgeting: Budgeting is important. It is better to state your financial limits to avoid any extra expense in the future. Generally, five factors influence costing.

  • Location of the software development firm.
  • The kind of developers are required as per the needs of your software.
  • Functionality and features you want in your software.
  • Design and the user interface of your software.
  • A platform for running the app: IOS, Android, or web apps.

4. Pricing model: Time, material, and price are the main parameters of a package. Ensure that the company provides services within the required time within a discussed budget. You will find two pricing models in the market these days: Time & Material or Fixed Price. 5. Risks and management: Several things go wrong during the development of your software. It would be best if you were on top of any crises that might occur during the process. Here is the following risk you might come across:

  • Ownership of source code: while negotiating the contract with the development firm, make sure to include ownership agreement
  • Deadlines: keep a regular check on the process to ensure that every deadline is met.
  • Budgeting: keep in mind to have room for unexpected expenses during budgeting.
  • Expectation: it is possible that the final product does not meet your expectation. Be clear about your requirements and expectations.
  • Miscommunication: be precise about your needs and demands. Miscommunication can be a common issue when outsourcing to an offshore development firm.

6. Final product: The basic development process consists of six main stages. Keep in pace with the process to make this endeavor stress-free and efficient.

  • Strategy
  • Feature list
  • Technical requirements
  • Development plan
  • Development of the application
  • Launch

7. Sealing the deal: The product quality depends on the development company. Make sure to find a software developer who you trust, access them. See if they fit your requirements. While finalising, you will need to sign the following three contracts: NDA, SOW, and MSA.

Benefits of Custom Software Development

Custom Software Development aids to your unique set of requirements. It has the following benefits: 1. Customisation and efficiency: It is customised to your brand’s needs and is designed according to your specification. It includes every requirement and functionalities you might require to reach peak activity. It is effective and efficient. 2. Scalability: Customised software can be easily scaled. With growing and changing business, Custom Software Development offers scopes for future needs and requirements. You can incorporate any tweaks and turns into the application. 3. Lower integration costs: Unlike commercial software, you can build custom software to integrate the pre-existing environment and infrastructure. It builds on the existing legacy of the application and saves you the cost of integration. Commercial software also incurs recurring fees, it might seem cheap at first, but it can be quite expensive in the long run. In contrast, Custom Software Development does not ask for recurring charges. 4. Profitability: Custom Software Development can make money from PPC, and their license can be sold to other organisations. 5. Independence: Custom Software Development offers freedom from the commercial software vendors. The software belongs to your company. You control it in its entirety; you own it. 6. Uniqueness: Custom Software Development offers uniqueness. Your product and business are set apart from its competition in the market. It gives your brand a unique identity. 7. Security: Custom Software Development gives you the power to choose which data-security technology or protocol is ideal for your needs and requirements. Off-the-shelf software is more vulnerable to hackers and malware.


People tend to overlook the cons of Custom Software Development only to be blindsided at a later date. 1. Expensive: Custom Software Development is expensive. The project is generally associated with a higher upfront cost. Keep your budget in mind. 2. Time-consuming: Custom Software Development is time-consuming. The design, setup, and implementation require time. Do not opt for Custom Software Development if you are looking for short and immediate solutions. 3. Requires high technological proficiency: Custom Software Development requires relatively high technical proficiency. You need to have strong technical support within your organisation with the necessary skill set for configuring custom software. 4. No competitive advantage: Custom Software Development comes with no competitive technological advantage. It limits the use of technology and offers a competitive advantage to others.

Factors to consider

1. Productivity: Hiring a service specifically designed to develop software according to your requirements will increase productivity. 2. Competition: Custom software development firms have industry experience. They know the market and understand your needs and requirements to make your application unique and market effectively. They give you a competitive advantage. 3. Expertise: Technical expertise and skills are important. Prioritizing this ensures effective and efficient handling and results of your project. Skills to enhance the user experience and functionality of the software are necessary. 4. Quality and security: The quality of your software and its data security will build a brand and attract more eyes. Regular testing and maintenance to ensure zero security breaches and protection against malware and hackers will go a long way. 5. Customer Experience: A custom software will act as a feature to leverage more customers for your business. The portal will also enhance customer experience and interaction between your brand and them.

What do custom software development services include?

1. Open-source software coding to increase productivity by reusing software components. 2. Cloud-based development to enhance experience both on-premise and cloud-native software. 3. Artificial Intelligence to imitate human decision-making and learning skills to improve the development process. 4. Block-chain for secure transactions across the software to eliminate cost and exposure caused by third parties like banks. 5. Low coding to enable non-coders and native developers to develop software quickly at a lower cost. 6. Analytic technology and methods to analyze data and improve the predictive capacity of the software. 7. Mobile Applications are a must-have requirement nowadays. Connective mobile apps enrich the user experience.

How does a software development company operate?

A software development company works through several stages and tasks to provide the final product needed by the client. They research and understand your business. Look for problems and sort out solutions. They brainstorm for ideas to make your product unique and effective. Here is the basic framework of the development process: 1. Software strategy: Formulating a strategy outlining your requirements. Determining the purpose and objective of the software, its target audience, competition in the market, etc. 2. Feature List: List the features you want on your software, prioritizing on the first need basis. Features that are most important without which you can’t launch your product comes first. The features that will enhance user experience and interaction with the software are also crucial. 3. Technical requirements: Here, at this stage, a basic source code is created. The flow and data passage, user flow diagram for screen-by-screen navigation, and wireframes are designed. 4. Development Plan: This is the schedule and timeline of the development process. It consists of the estimated time required for the whole process. It is further broken down according to the requirement of features. The development plan also influences scheduled meet-ups and extra tasks. 5. Development of the software: This territory belongs to the development firm. The firm operates according to the itinerary planned and decided beforehand. You must review the process and provide feedback during this process. 6. Launch: Final stage is the launching of the product. Before the launch, the software is tested for load testing and technical maintenance to fix bugs and errors. 7. Improvement: Customer support and analysis of user feedback will provide you with multiple opportunities to improve your software. It is important that you constantly update your software with new features and bug fixes.

Costing and Pricing

The cost mainly depends on the requirements of the project. The following are rough averages to get a basic idea of costing while budgeting:

  • Simple applications and software take about 2 months to complete. They cost around £18,000.
  • Medium-sized applications cost around £35,000 within the period of 2 to 5 months.
  • Complex software can take up to £40,000.
  • Innovative and highly complicated applications take up to 6-12 months. They can cost up to £75,000.

Different requirements and customisation might add up to different pricing and budgeting. But, here’s a surprise! If you work with Logicsofts, you will get a minimum of 20% lower price than the average costing.

Examples of Customised Software Development

You will mostly notice a vast number of business owners and executives using Custom Software Development. Here is a list of applications of Custom Software Development services:

  • B2B Account Management
  • Online Medical Patient Interface
  • Student Portals for schools and universities
  • Customised E-commerce solutions
  • Management and scheduling tools
  • Financial website account logins
  • Volunteer coordination pages
  • Travel and hospitality sites
  • Public sector domains
  • Media and Entertainment pages

Key factors to include within the Custom Software Development agreement

Every company seeking help or service from another business or company is bound to sign a legal contract. This B2B contract between two companies for software development services is called a software development agreement to avoid future disputes and establish legal duties of both parties. A Custom Software Development agreement should contain the following key factors: 1. Developer’s duties: Here, the duties of the developer are established. It states an agreement of engagement from the developer’s side as per the mentioned specifications by the client. 2. Delivery: The deadline for the project is mentioned here. The software should be functioning under the specification on or before the delivery date. 3. Compensation: Here, the cost of the service is established. The client should pay the company a decided hourly rate. A maximum total fee and budget of the project are also mentioned. 4. Intellectual property rights in the software: Here, both parties acknowledge that all the property rights, incorporating copyrights, trademark rights, will belong to the client. The developer can assert no such claims on the product. 5. Flexibility: The developer offers flexibility with the best of their efforts regarding any reasonable changes asked by the client. This also outlines terms and conditions regarding the delay in the deadline that might incur due to the changes. 6. Confidentiality: Here, they address the non-disclosure component of their agreement. 7. Developer’s Warranties: The developers represent and warrant the client development and delivery of software with no violation of any other agreements. 8. Indemnification: the developer agrees to defend, protect and indemnify the client against all lawsuits on the software and any cost and fees that might come with it. 9. No modification: no modification regarding the terms of this agreement would be valid unless in writing and agreed upon by both parties. 10. Applicable law: This agreement and the interpretation of its terms and condition will be governed and constructed under the laws of the state. Click here to download a template To meet your business needs and keep up with the competition in the market under the condition of an evolving economy, you might consider Customised Software Development to upkeep your brand uniqueness. Looking to outsource web development for your business? Logicsofts offers Customised Software Development and website designing for each of your needs and requirements. With ten years of experience in the market, we go to great lengths and measures to assure the creative and effective delivery of content to keep your visitors engaged. Some of our related blogs that might be of your interest: Outsource Software Development Outsource Web Development Offshore Software Development   About Logicsofts: Logicsofts is one of the leading digital marketing agencies that offer professional website developmentwebsite design and SEO service at astoundingly affordable prices. We provide SEO services to all kinds of companies irrespective of their size. We have shown a 100% success rate in all our services be it web development, web design or SEO for electricians, accountants, or various MNCs. Speak to our specialist for more information: +442079935898

About Logicsofts: Logicsofts is one of the leading digital marketing agencies that offer professional website developmentwebsite design and SEO service at astoundingly affordable prices. We provide SEO services to all kinds of companies irrespective of their size. We have shown a 100% success rate in all our services be it web development, web design or SEO for electricians, accountants, or various MNCs. Speak to our specialist for more information: +442079935898

Author Bio

Abhay is a Digital Marketing Guru and an accomplished entrepreneur with an experience of a decade working with various businesses varying from startups to established brands. He co-founded many companies like Logicsofts, PrintYo, CrazyRise and more. He is passionate about SEO and Online Data Analytics, which play a vital role in any business growing and mutating as per the data results.
Follow me on LinkedIn, Facebook and Instagram

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Author : Abhay

Abhay is a Digital Marketing Guru and an accomplished entrepreneur with an experience of a decade working with various businesses varying from startups to established brands. He co-founded many companies like Logicsofts, PrintYo, CrazyRise and more. He is passionate about SEO and Online Data Analytics, which plays a vital role in any business to grow and mutate as per the data results.
Follow me on LinkedIn,Facebook and Instagram