Estimating the cost of a software project

How much will your system cost? Clearly this is a difficult question to answer without knowing its complexity, but here are two example projects showing the sort of amounts that you might expect to pay.

Example 1 - a simple contact management system

Suppose that your company currently holds its sales and enquiry information in a simple Access database. You want to be able to produce an Intranet, so that any employees can view company and contact details, and can automatically generate letters and emails.

If this system is limited to just this functionality, then a typical cost would be about £5,000, although a one-man band without particularly good software knowledge might charge as low as £2,000 and a large software house or consultancy might charge as much as £20,000.

Example 2 - a full-blown CRM system

Suppose for the previous example you also want to be able to see the entire history of all the dealings that you have had with a particular customer - orders, enquiries, quotations, emails, letters, phone calls and visits. In addition you want a system to keep track of meetings and appointments and to generate automatic sales reminders. The new system must run on your corporate intranet.

For a medium-sized company of about 50 staff, a typical cost for this project would be about £50,000, although large software houses and consultancies could charge up to ten times this amount.

One good approach is to get a short-list of 3 or 4 companies, create as detailed a specification of what you want as you possibly can, and circulate this as an invitation to tender to your potential bidders.