One of the biggest and most pressing questions about software development Panama (and in any other country, really), is “How much does it cost?” or “How much is this going to cost me?”
The thing is that, unlike many other things that you can put a price on right away, you can’t do that with software development. You can’t put a price on a briefly explained project right away, because it isn’t realistic. Actually, if an offshore or nearshore company gives you the price right away, you should consider it as a red flag.
Now, we have talked about how much does a software development process really costs before in a previous blog. However, we want to dig a little deeper and help you get the answer you deserve.
Top factors to consider in the cost of software Panama
The reason why calculating the real cost of a software solution is so hard, it’s because you need to know the whole scope of the project and have every single detail well explained.
You see, the costs to create a simple web solution are completely different to the price of developing a whole custom made software specifically made for an enterprise.
However, you can still reduce the factors that influence the final cost of a software development process down to three main points:
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The scope of the project
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The hourly rate cost of the developers
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The type of contract
Keep in mind these are just the top 3 factors that can potentially influence the cost of software development in Panama (and in most countries), however, the type of company, the capacity of their team and their experience can also influence the final cost, although we won’t be touching on those subjects today.
1: The scope of the project
If you read our previous blog, you might already have an idea of what we are talking about, but if you didn’t, let us explain anyways. You see, in custom software development, not all projects are priced the same.
Depending on the type of software solution you’re looking for, the requirements you have and the features it will show, the price can either be very low or very high. Let’s give you an example.
A tiny one environment apartment is easier to build than a big house with five bedrooms, a pool, individual bathrooms, a double kitchen, a basement and an a garage… You see our point?
That’s why your software Panama project, whatever that might be, will usually fall into two main categories depending on how difficult or complex it is: Lower and medium price range or average price range.
Lower and medium price range
Really simple software applications or websites will cost you anywhere from $10.000 up to $100.000, of course if you go for a software that’s extremely simple and has just one feature, you can expect to be paying anywhere from $10.000 to $25.000.
Now, if you want a software with a couple more features, something more custom made and that looks actually good, you should expect to be paying anywhere from $25.000 to $100.00.
Avarage price range
This is where most software development process fall at. Keep in mind, if you want your process to cost anything from $100.000 an $250.000 you have to go for a very common, normal type of software. Don’t expect anything too technological or new to fall into this category since those projects usually cost way, way more since they involve way more time and resources.
Please, keep in mind these are just relatively accurate examples based on previous projects from different provider, this is not a guideline you should be taken too seriously since the final cost of a software development process can and will vary depending on your specifications, the team you are working with and the type of software you want.
2: The hourly costs rates of the developers
Now, since it is more likely you will be working with a software development company in Panama and not with individual software engineers, you might not get to see how much do they charge for hours, since this is something that only matters to the company itself.
However, it is something that will impact YOUR project and its final cost. That being said, the price range of software developers in latin america changes depending on the country you’re outsourcing to, which can result in cheaper or more expensive software solutions.
Now, we can’t put a price tag on every software developer in Panama, but there is a study made by Accelerance, in which they compared the price range of full time employed software engineers in Latin America, which are:
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Junior software developer $35-44
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Senior software developer $45-55
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Tech lead $50-61
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Architect $60-72
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QA $30-50
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Project Manager $55-66
This is a good price point, specially when you compare it to the high costs of hiring an American developer (which can charge the double per hour). Like we said, you might not get to see this information when working with a company from Panama, but it is something that affects the final prices of the company and therefore the cost of your project.
3: The type of contract
Last, but not least, the type of contract you and the software development company in Panama decide to sign can either result in a much more expensive or cheaper project.
We have a full on blog talking about the different types of contracts and which one you should use which you can read here. However, in that blog we mention the 3 main types of contracts, which are:
Fixed price contract:
This one is also extremely common and can be used for short period collaborations. You see, in this contract the provider supplies the costumer with a very detailed scope of the project explaining all the money and resources that will go into it and charges a total amount for the overall project.
To put it simply, a steady price is established from the very first moment and the client agrees to pay for such price once the provider has explained why they’re charging that amount.
Target cost contract:
Although this type of contract can be used, we don’t recommended unless you have previously worked with this nearshore development provider, since this type of legal agreement centers around the idea of the costumer (you) paying once the project is completely done and all expenses can be accurately calculated.
This means you won’t know how much the project really costs until it is completely finished and you’ll be at risk of paying a really high price for a software development process.
Long term contract:
Last but not least, long term contracts usually last at least a year, and are pretty similar to those used to hire in-house team. In this type of contract the customer usually offers the provider a much more steady relationship, monthly salary and better benefits.
Long term contracts are a great idea if you’re looking to establish a much more serious relationship with your nearshore software development provider or if the project itself is really huge, other than that, you should be good using any of the other three types of contract.
If you’re looking for a software provider in Panama, contact us! We will help you get the solution you need and do a budget that adapts to what you really need.
