Budget planning is perhaps the most vital stage of software development (along with the development itself). It requires a large number of inputs to calculate the project cost. Sometimes, founders ask for a ballpark estimate, but it is not always a good idea. Let's learn the ballpark figure meaning and why you cannot ballpark the price of a software development project.
What is a Ballpark Figure?
A ballpark figure is a rough estimate of something that is otherwise unknown. Business analysts use a simple approximation instead of the traditional calculation approach to know the price.
Ballpark figures can provide a price estimation when more complex means of calculating are inaccessible. That is why they were a common thing in the pre-computer finance industry. Then and now, they act as a placeholder for reasoning on the possible amount of something before parties move to the next stage of the project.
The ballpark estimation is widely used in business and daily life, despite the widespread use of computers. The reason is simple: ballpark figures are simple to estimate, making the calculation simpler. Further, it helps to avoid the chance of a human error.
5 Reasons Why You Cannot Use a Ballpark Figure in Custom Software Development
Despite some of the ballpark figure advantages, it is still a rough and rather broad estimate. Moreover, it is impossible to calculate the project budget immediately after the first meeting with the dedicated team. Do you want to know why? Here are five reasons why the ballpark figure does not work in software development.
Custom software development involves careful work on each project. The tech stack, key features, and user experience are different in every web or mobile app. Therefore, you cannot ballpark a software development cost estimation.
Time and Material Projects
When customers change project requirements (e.g., after receiving feedback from a focus group), it affects the overall cost of software development. Thus, it is a widespread approach that client pays for the time and material rather than the project itself.
So, what does it mean for you? Even if you get the ballpark cost estimate, you are unlikely to pay that sum. The final amount depends on the number of hours the dedicated team had to spend developing your digital solution, not the expected time. Therefore, it would be an excellent idea to ask for the cost of the work of each specialist (or group of them). And if you search for a software development company, this information is crucial for making a final decision.
When experienced founders ask for a custom-made digital product, rarely opt for the fixed-price model. Learn more about why it may not be the best option here.
Differences in Estimating Approach
It is challenging to structure the project estimate for every company. In this case, the budget calculation may not include various nuances. For example, one business analyst considers the salary of a scrum master in the final assessment, while the other only counts the development team rates.
Further, many estimates do not take into account essential expenditure items (e.g., technical support and product updates). Thus, it is another reason why you might look for other approaches to estimate the budget instead of a ballpark figure.
Software development projects do not cover only business and tech things. Since real people are involved here, the human factor also plays a role. And if you ask a dedicated team for a rough cost estimate, the business analyst will probably underestimate the total sum.
Let's say you have chosen a team that understated software development budgets. At the same time, remember that your decision affects all further actions regarding the work on the project. Here is a basic example: If the developers cannot do their job effectively and you have to hire a new team, it will add up to even more expenses and lead to inflated budgets. Then, you will be left without money and a finished product.
Moreover, a ballpark figure cannot show the foresight and sincerity of the development team.
Time and Labor Consumption
A trustworthy estimate calculation takes 1-2 days. The reason is simple: business analysts need to understand customers' requirements and create the cost sheet to meet them. A ballpark figure cannot provide a clear picture of expenses. And if you got the estimate after the first meeting with the team, it is likely unrealistic.
What Is Better to Use Instead of a Ballpark Figure
As you already understood, ballpark figures do not work in software development. But how can you find out the project budget? The best solution is to calculate a detailed estimate. Most often, it should be done already in the project implementation process because only then do all the software development details become clear.
And the details are the main problem while planning a budget. During the Discovery Phase, business analysts only scratch the surface of the project structure. But when it comes to the development itself, many small details come up that were either obvious to customers or came to their minds moving to the development stage:
- design elements;
- tech features;
- operating systems support;
- compliance with specific industry standards, etc.
It is what makes the detailed estimate completely different from the Ballpark Figure.
In addition, the development process will require performing complex technical tasks. It is impossible to evaluate them without proper research while implementing the project, which is beyond the Ballpark Figure scope.
A ballpark estimate is a good instrument, but not for software development. Experienced teams prefer to start the project with a detailed estimate and roadmap to prepare them for any obstacles on the path to creating a quality digital product. At Rocketech, we know how to develop top-notch software. We provide a detailed and unique estimate for every project, so you will pay for what you exactly need. Our dedicated team will create a digital solution that turns your investments into a profit. And if you want to try our services, contact us for a free consultation.