How Much Does It Cost to Develop Custom Software for a Business in Quebec?

How much does custom software cost? It’s a question we hear often! The answer, of course, depends on many factors: the complexity of the project, the technologies used, the scope of features, and the target audience, just to name a few.

Unlike off-the-shelf software that’s funded and used by many clients, the total development and evolution costs of a custom software solution must be entirely covered by the client who commissions it. This represents a significant investment, but one that can be decisive for any organization looking to compete, improve productivity, and reduce human errors. Especially when no existing solution on the market fully meets its needs.

Budget Breakdown by Phase

Typically, a custom software project is divided into five main phases, with each receiving a percentage of the total budget.

1) Analysis

To fully understand the client’s tech ecosystem and turn their goals into a working product, the technical team conducts a comprehensive needs analysis to identify the features that will deliver the desired value. This step usually accounts for 10 to 15% of the overall budget.

2) Design and Architecture

This phase, which includes wireframes, visual mockups, and software architecture planning, generally represents another 10 to 15% of the budget.

3) Development

No surprise here—development is the most expensive stage, typically absorbing 40 to 50% of the total budget. It’s often broken into multiple smaller cycles so clients and stakeholders can test and validate the product as it evolves.

4) Quality Assurance and Automated Testing

Quality assurance is critical, representing about 15% of the budget. The goal is to ensure the final product matches the specifications defined at the start of the project.

5) Project Management

Managing the project from start to finish generally requires 15 to 20% of the budget. This includes team coordination, communication, task prioritization, and answering client and developer questions throughout the process.

Budget Breakdown by Phase

To learn more about the steps involved in creating custom software, check out our article “What are the steps to develop custom software?”

Approximate Costs for Custom Software

It’s difficult to give a precise price for custom software because so many variables can affect the final cost. That said, based on our experience, here are typical cost ranges based on project size:

• Small-scale project = $75,000 to $150,000

• Medium-scale project = $150,000 to $500,000

• Large-scale project = $500,000 to $1.5M

• Enterprise-scale project = $1.5M+

Hourly Rates in Quebec’s Custom Software Development Industry

Hourly rates for software development firms in Quebec typically range between $100 and $200. These rates vary based on several factors:

1) Level of Expertise

As in many fields, higher expertise usually comes at a higher cost. A senior software architect, for example, will command a higher rate than a mid-level developer. The complexity of the project directly influences the level of expertise needed—managing multiple vendors, working with complex architectures, or handling secure systems all require specialized skills that can increase the hourly rate.

2) Reputation and Size of the Firm

Larger firms may charge more because they offer additional services, such as 24/7 technical support. Smaller firms, on the other hand, can provide more competitive pricing and a personalized experience thanks to their leaner structures and greater agility. Independent freelancers are also an option. They may offer lower rates, but their capabilities are usually more limited than those of a full team.

3) Project Duration

The duration of a project also impacts hourly rates. Long-term projects may qualify for discounted rates, as they offer suppliers a more stable, predictable revenue stream over several months or even years.

4) Project Risk

The nature and scale of risks involved in a project can also impact rates. Risks might stem from the type of operations the software must handle (e.g., banking transactions or sensitive data exchange). Industry regulations also play a role—healthcare and pharma projects, for example, tend to be more heavily regulated than entertainment applications.

The maturity of the software idea is another risk factor. A highly exploratory project or prototype brings different risks than the modernization of a proven, well-established software system.

Adding a Contingency for Risk Management

Since every project carries some degree of uncertainty, it’s wise to add a contingency to your initial budget estimate. This is a standard practice, as not everything can be predicted during early planning. Contingency typically ranges from 5% to 25% of the total budget, depending on risk level. Well-defined, low-risk projects will have lower contingencies. Be cautious of extremes—if a project includes no contingency or a very high one (e.g., 50%), it may signal hidden risks or an incomplete planning phase, such as unclear business requirements.