I’ve had a few conversations recently with people who want to build a software product and were wondering what the true cost would be. Their general feel is that they could build a v1 app with about 6 months of dev work. This is quite plasable with the tools we have today – especially for building a web app. The natural next step, is to think that with 6 months of dev and 6 months of sales, then you have a nice little software company ready to make some killer profits.
This led me to try to think up some simple formula for estimating the cost of building a profitable company from a concept. Obviously there’s no silver bullet, but when people ask a software engineer to estimate the size of a job, they’ll take the answer and double or triple it. Why? Because the developer is likely to give their answer in terms of development effort only and its generally understood that development is just one part of the software development lifecycle and so you obviously need to account for all of the other work that needs to be done.
If your six months of development work becomes about 18 months (x 3) of work (and therefore cost) to actually build and deliver the software, then what would be a fair multiple for estimating the cost of taking that software to market?
Great Article! I actually wrote a similar article but was more about the steps to go from an idea to selling the solution. It may be of interest to the readers.
Here’s the link: http://julian101.com/archives/44
Regards, Julian Stone – http://www.proworkflow.com
Thanks Julian.