Custom Software: Costs to Expect After Launch

Launching custom software is a significant milestone in bringing your project to life, but it’s only the beginning. Once development is complete, it’s essential to allocate a budget for ongoing costs that will ensure your application is live, functional, and sustainable.

In this article, we’ll go over the main recurring expenses to anticipate after your software goes live, including hosting, data backups, maintenance, monitoring, technical support, and licensing fees.

Licensing Costs

You should plan for licensing fees related to third-party software, libraries, or tools integrated into your solution. While often billed annually, these licenses are critical for your software’s functionality and must be included in your overall budget.

Keep in mind that these tools can help reduce initial development costs. For example, if your application requires an admin panel, a prebuilt solution like Laravel Nova (about $200 per year) may be more cost-effective than building a custom system from scratch. When selected wisely, these third-party tools offer great value by speeding up development and lowering costs.

Generally, the first year of licensing is included in your initial software development cost. Starting in the second year, a custom application built primarily with open-source technologies typically incurs $0 to $1,000 per year in licensing fees.

Hosting and Data Backup Costs

Hosting is key to ensuring your software remains accessible online. Monthly hosting fees can vary widely depending on storage requirements, traffic, services used, and the complexity of your cloud infrastructure. These costs can also evolve over time as your application grows and infrastructure adjustments are needed.

While your software provider may offer initial hosting estimates during the development quote, these numbers become more accurate during the design phase, when your infrastructure is fully defined. Based on our experience, hosting can range from a few hundred dollars per month (e.g., for an internal tool used by a small team) to several thousand dollars per month (e.g., for a public platform with many users).

As a client, you may choose to directly manage hosting payments. For governance purposes, we often recommend that clients retain ownership of their infrastructure and provide access to their provider for technical management.

Application and Server Maintenance Costs

Once launched, software requires ongoing maintenance to ensure long-term stability, performance, and security.

Maintenance is typically split into two categories: server maintenance and application maintenance. Server maintenance includes tasks like applying security patches and updating system software. Application maintenance involves updating code, frameworks, and libraries, as well as implementing new features to keep your software sustainable.

As a general rule, maintenance and monitoring costs typically range from 6% to 10% of the initial development cost, per year. For example, if a software project costs $350,000 and annual maintenance is estimated at 7%, you can expect maintenance fees of about $24,500 per year.

Maintenance costs can be adjusted based on your needs. Factors such as update frequency, data sensitivity, or cybersecurity requirements can all influence the budget. For instance, an app handling sensitive data may require regular audits and proactive security patches, while a simple internal tool might need less frequent updates.

Ad Hoc Support Costs

Most custom software projects are paired with a pre-approved support hours package. These hours are used for making improvements, answering questions, participating in brainstorming meetings, analyzing new ideas, or handling other client requests.

This support model offers several benefits:

• Faster service: The development team plans its workload monthly based on these contractually agreed-upon support hours, ensuring they’re ready to respond to your needs.

• Reduced management costs: Without a support agreement, even small requests require time for analysis, cost estimation, and client approval, which can be inefficient for minor tasks. For instance, a 4-hour task might require 1 hour just for administrative coordination. Pre-approved support hours eliminate that overhead.

• Defined response time in case of incidents: Response times are typically outlined in your SLA (Service-Level Agreement).

• Locked-in hourly rate for the contract’s duration.

The size of the support agreement depends on your software’s complexity and your desire to evolve it over time. A basic application with few changes might only require 10 hours per month, while a more complex platform with frequent updates could need dozens, or even hundreds, of hours monthly.

To estimate your support budget, multiply the needed hours by your provider’s hourly rate. Long-term agreements (over two years) with high hour commitments may be eligible for discounted rates.

Launching your custom software is a major milestone, but maximizing its value requires planning for ongoing costs. Hosting, maintenance, licensing, and support are essential for ensuring your application’s stability and growth. By investing in these areas, you protect your software’s longevity and performance while avoiding costly downtime or setbacks. The goal is to keep your solution secure and high-performing as your business evolves.