Strategies for Cost Optimization in Digital Product DevelopmentCreating a digital product can be transformative for startups and SMEs, but budget constraints can be a major obstacle. To cut costs while maintaining quality, explore strategies to reduce software development expenses. Here, we'll discuss ways to maximize investment returns.
Strategies for Cost Optimization in Digital Product Development
Jul 26 2023 | by Polina Morozova, Anna Shkabarina

Developing a digital product can be an exciting and transformative process for startups and SMEs. A budget constraint, however, is often a major obstacle. To overcome this challenge, it is essential to explore strategies that can help cut costs whilst maintaining quality and functionality. In this article, we'll discuss ways how to reduce software development costs and maximize investment returns. Come along!

Top 8 tips to reduce software development costs

1. Define Clear Objective

Before kicking off any digital product development project, it's vital to set clear goals. This includes defining the target audience, identifying key features and functionalities, and setting realistic project timelines.

By having a detailed roadmap, you can fend off unwanted scope creep, minimize rework, and ultimately reduce development costs. However, whatever well-thought-out your development roadmap may be, it is essential to ensure that your idea is market-driven. The main reason for startup failure, according to CB Insights, is a lack of market demand. It was found that 42% of failed startups created products or services that didn't meet the needs of their markets.

2. Prioritize Features using the MVP approach

As the product development process evolves, it is common to come up with numerous ideas and features that could enhance the product. It's tempting to include all these features to create an exceptional product at the output. However, including all whistles and bells can result in an increase in development costs and a prolonged project schedule. Prioritizing features based on their value and impact on the user experience will help you save money.

In future revisions, consider adding features that provide the most value to your target audience. One effective approach to managing costs is to adopt the Minimum Viable Product (MVP) strategy. MVP allows you to launch a functional product with key features quickly, gather user feedback, and iterate based on real-world usage.

Many well-known companies have succeeded in using the Minimum Viable Product (MVP) approach. When Mark Zuckerberg launched Facebook, he started with a simple MVP – an online community for Harvard University students. This served as the foundation for the social platform that later became a global phenomenon today. Here are other companies that started up as MVPs: Uber, Canva, Amazon, Dropbox and Airbnb.

Appeal to the Dashboquet team for MVP development at an affordable cost. We go in for MVP development that includes prototyping, user testing, UI/UX design, support and other related services. In general, MVP development takes up to 3 months.

Keep in mind, an MVP is not a stripped-down version of your final product, but a well-considered and strategically designed product that serves as a springboard for iterative development.

Considering building an MVP or need to test your idea before pitching it to investors? Try our free MVP development cost calculator for startup owners that can estimate the cost and effort involved in building your Minimum Viable Product. In just a few clicks, you'll receive a detailed feature list, technical solutions, team requirements, and an estimated launch time.

3. Agile Product Development Methodology

Cost optimization can be greatly benefited by using an agile development methodology, such as Scrum. A key element of agile methods is iterative development and frequent feedback loops, so you can make course corrections early on. In this way, unnecessary features are reduced and development efforts are aligned with customer needs. Based on Harvard Business Review figures, 60% of companies that use an Agile approach experience increased revenue and profits. The failure rate of Agile is only 8%.

Additionally, thanks to Agile best practices, our MVP app development company can leverage the advantages of European developers' cost-effectiveness while ensuring faster time-to-market for your product.

4. Outsourcing and Offshoring

Consider outsourcing or offshoring certain aspects of your cost-effective product development. Outsourcing allows you to leverage the expertise of specialized development agencies or freelancers without the need for hiring and training additional in-house staff. Offshore development, in particular, can provide cost advantages due to lower labor costs in certain regions.

As Time Doctor said, many American companies appreciate specialists from Eastern countries, such as Romania, Ukraine, Poland, and Estonia. The common reasons are a high concentration of skilled professionals and a low cost of talent. To better understand the difference between offshoring and outsourcing, read the Huddle article.

5. Open Source Solutions

Leveraging open source technologies and frameworks can significantly reduce development costs. In addition to being free, open source software offers a wide range of functionality and flexibility. Utilizing open source solutions allows you to save on licensing costs and development time. It is, however, crucial to assess the suitability and security of open source components as well as ensure proper documentation and long-term maintenance support.

According to Mordor Intelligence, organizations are increasingly embracing open source solutions due to their ability to utilize software and products from various companies, which ultimately reduces the total cost of ownership (TCO).

As reported by Statista, beyond cost reduction, open source technologies foster collaboration among a community of developers, enabling the collective development, testing, evaluation, and improvement of software.

6. Cloud Infrastructure

Infrastructure setups can be expensive and time-consuming to manage. Adopting cloud infrastructure, such as Amazon Web Services (AWS) or Microsoft Azure, offers several cost-saving advantages. Cloud providers offer pay-as-you-go pricing models, allowing you to scale your infrastructure based on demand. In this way, large upfront investments in hardware and software can be avoided. In addition, cloud infrastructure is highly available, scalable, and secure, lowering your development team's workload.

Cloud computing is a good software development cost optimization approach since there is no need for ongoing maintenance and upgrades. Additionally, it removes the requirement for an IT staff responsible for setup and maintenance.

According to Gartner, through 2024, nearly all legacy applications migrated to public cloud will require optimization to become more affordable. Cloud computing allows businesses to save costs on several fronts, most notably on hardware, maintenance, and energy costs.

7. Continuous Testing and Quality Assurance

Bugs and errors in software can lead to costly rework and damage the user experience. Implementing a robust continuous testing and quality assurance process can help identify and address issues early on, saving time and resources. Automated testing tools and frameworks, such as Selenium or Jest, can be utilized to streamline the testing process. Additionally, involving end-users in the testing phase through beta testing or user acceptance testing can provide valuable feedback and improve product quality.

To ensure the software can handle the expected load and performance requirements, performance testing should be conducted. This involves simulating various scenarios, such as high user traffic or large data sets, to evaluate the software's responsiveness, scalability, and resource usage. Tools like Apache JMeter or Gatling can be used for performance testing.

8. Effective Project Management

Efficient project management practices are crucial for cost optimization. It is estimated that 11,4% of all resources are wasted in businesses due to poor project management processes. To mitigate this, effective communication and regular progress tracking are essential. By maintaining open lines of communication and closely monitoring project progress, potential roadblocks or delays can be identified and addressed promptly, preventing further resource wastage.

Utilize project management tools and methodologies, such as Kanban or Lean, to streamline workflows and improve team collaboration when custom software development. Among tools for project management, Jira leads with a 42,09% market share. In particular, our company uses the YouTrack tool, a close counterpart to Jira. YouTrack enables agile project management, powerful search and filtering options, and a customizable workflow.

Project Management Institute found that 89% of companies have two or more PMOs. This indicates a growing recognition of the importance of project management maturity and a commitment to improving project outcomes.

Top 5 software development cost factors

There are many factors that can affect software development costs. In terms of cost, the following factors can make a significant difference.

1. Complexity and Number of Features

The complexity and number of features in a software application significantly affect its development cost. Simple applications with a limited number of features require less time and effort to develop, resulting in lower costs. The development team can quickly understand the requirements, design a straightforward solution, and implement it within a relatively shorter timeframe. An example is a basic note-taking application that allows users to create, edit, and delete notes.

On the other hand, complex software projects with numerous features and intricate functionalities may take more time and resources, leading to higher costs.  For instance, an e-commerce platform with multiple user roles (customer, seller, admin), various payment options, inventory management, order tracking, and integration with external services. Developing such a platform requires thorough requirement analysis, knowledge of complex business processes, and designing a scalable architecture. Complexity increases development effort and costs.

2. Operating Systems

The choice of operating system significantly influences the cost of software development. Native applications, designed specifically for a specific OS such as iOS or Android, are generally cheaper to develop compared to cross-platform solutions. However, cross-platform development becomes a preferred option when funds are limited and there is a need for an application to run on both iOS and Android platforms.

3. UX/UI Design

The role of UI and UX design in software development is crucial, as studies have shown that well-designed user interfaces can increase customer conversion rates up to 400%. The cost of UI and UX design may vary depending on the complexity of the project and the level of customization required.

Investing in UI and UX design early in the development process can save both time and money in the long run. User-centered design approaches, such as conducting usability testing and gathering user feedback, can help identify and address potential issues early on, minimizing the need for costly design changes or rework during later stages of development.

Design cost reduction techniques:

  • Use ready-made design templates. Instead of starting from scratch, use pre-existing design templates that align with your project requirements. This can significantly reduce the time and effort required for design creation;
  • Opt for simpler animations and interactions. Complex animations and interactions can be time-consuming and costly to develop. Consider using simpler and more straightforward animations that still enhance the user experience without adding unnecessary design complexity;
  • Maximize design reuse. Identify design elements or components that can be reused across different screens or modules of your software. By reusing existing design assets, you can save time and effort in creating new designs.

Remember to maintain a balance between cost reduction and design quality.

4. Quality Assurance (QA)

The Importance of QA is a critical step in software development to ensure the application performs as expected, free of bugs and errors. QA aims to guarantee a consistent user experience across various devices and platforms.

The time invested in QA is influenced by the scope and complexity of the project. Projects with multiple features, supporting various OS, require more extensive testing, thus costing more. Nevertheless, thorough QA can enhance user satisfaction and loyalty by minimizing glitches, which can save money and resources in the long run.

5. Third-party API Integration

By integrating third-party APIs (Application Programming Interfaces), you can add functionality without having to rebuild the software. This can speed up development and reduce costs. However, the complexity of integrating and working with third-party APIs, as well as the availability of comprehensive documentation or software development kits (SDKs), can affect the overall development cost.

An example of leveraging third-party APIs is integrating ChatGPT, an AI language model, into your digital product. Here are some software development cost optimization best practices you can implement by using ChatGPT:

  1. Content creation. With ChatGPT, you can create blog posts, product descriptions, FAQs, and more for your digital product. The content you create with ChatGPT can save you time and money compared to hiring a professional writer;
  2. Customer support. Basic customer support can be provided by ChatGPT for your digital product. If you integrate ChatGPT into your business, you can provide instant responses to customer inquiries and reduce the need for human customer service representatives;
  3. Automated testing. It is possible to automate testing for your digital product using ChatGPT. ChatGPT simulates user interactions and tests product functionality, leaving you with less manual testing and saving time and money;
  4. Translation. Translating digital content into multiple languages can be accomplished using ChatGPT. This tool helps you translate content without hiring professional translators;

As a whole, ChatGPT can help you cut costs to develop your digital product. You can improve efficiency and reduce HR costs with ChatGPT by automating certain tasks and providing instant responses to customers.

6. Additional Project Requirements

Software development costs can also be impacted by specific project requirements. To illustrate, compliance with industry standards and regulations like HIPAA or GDPR will require additional time and resources. In the same way, developing a system that can handle large amounts of data or serve many users can be expensive.


Effective cost optimization in digital product development can drastically improve your return on investment and facilitate a smoother, more efficient development process. By aligning these strategies to your unique business requirements, you can create high-quality digital products cost-effectively and make your product development relatively cheap.

If you want to enter the market with your product and test it as quickly as possible at a competitive price, consider Dashbouquet for outsourcing. One significant benefit of hiring a team from Estonia is that the cost of hiring developers is lower than in the USA.

We welcome any questions you may have, contact us for a free consultation.

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