How to Estimate Your Healthcare Software Development Cost in 5 Simple Steps

In the competitive world of healthcare software development, every resource counts. Are your in-house teams performing at their peak? Are there any alternatives to help you save costs without sacrificing quality? Properly budgeting the engineering costs can give you the answers to all those questions and bring you a step closer to success.

However, estimating software development costs can be overwhelming, especially considering that 45% of software engineering projects exceed budget while delivering 56% less value. So how can you avoid falling into the same trap?

Here’s a simple 5-step guide to accurately estimate your healthcare software development costs using the KMS Healthcare Cost of Engineering Estimator

5 Steps to Estimate Your Healthcare Engineering Project Cost

healthcare software development cost

Step 1: Define the Project Scope 

Your core software functions, business cases, scope, and feasibility determine most of your healthcare engineering costs. 

Generally, healthcare software development scopes fall into the following categories:

1. Small-scale software refers to applications with limited functionality and a compact codebase. These types of software are known for their simplicity and typically offer only a few key features.

2. Medium-scale software is an application that has a moderate level of complexity and functionality. They are more comprehensive than small-scale software and often comprise multiple interconnected modules or components. Designed to meet the needs of various healthcare domains, medium-scale software provides a wide range of features and capabilities.

3. Large-scale software encompasses extensive applications with multiple interconnected modules, databases, and intricate business logic. Usually found in enterprise systems and complex software solutions, this type of software handles substantial volumes of data and supports operations across various sectors.

A well-defined project not only provides you with a comprehensive scale for cost estimation but also helps you establish your healthtech product roadmap for better resource allocation.

Step 2: Determine the Project Complexity

Project complexity includes technology and features. Technical complexity refers to the intricacy of the technology, including the integration of different systems, scalability, and security. The number and complexity of features also heavily influence development costs. 

You also must consider the incorporation of health APIs in healthcare applications. These APIs help with interoperability, health record management, payment processing, and payment gateway integration. The more complex the integration, the higher the development costs. 

Regulatory requirements factor into healthcare software development costs. Healthcare software must adhere to changing regulatory and reporting requirements such as HIPAA and HL7, requiring guidance from healthcare regulatory experts. It’s well worth the investment, as even a minor violation of those regulations can cost you up to $50,000 per incident.

Step 3: Estimate Your Team Size

A traditional healthcare software engineering team comprises specialists across several areas of expertise, although team size may expand based on project scale and timelines: 

  • Software developer
  • Quality assurance engineer (QA)
  • Project manager (PM)
  • Business analyst (BA)
  • UI/UX designer
  • DevOps engineer

The cost of each team member may vary based on location, level of expertise, and experience. 

Also, your team model will affect the total cost of healthcare software development:


A model in which the company builds its internal development team and takes full responsibility for managing employees. When you assign a development project to your in-house IT staff, you can streamline progress monitoring.

However, healthcare ISVs must carefully estimate the additional costs of using only in-house teams, such as:

  • Cost per hire
  • Software licenses
  • IT system
  • Technology training
  • Paid benefits (sick leave, annual bonus, overtime pay, training tax, health insurance)
  • Infrastructure and office
  • General expenses (25% of salary)

Having your own team under one roof often seems more efficient and manageable, but added costs and limited expertise can make your healthcare software development investment fall short of expectations.


Outsourcing engages a third-party software provider that ramps up and manages the development team to meet your requirements. 

Outsourcing saves on expenses like salaries, benefits, training, equipment, and office space for IT staff. You can also access global talents in different regions or countries with much lower rates, particularly with offshore software outsourcing. Plus, you only need to pay for the services and resources you need, while flexibly scaling the team based on your demands.

Pro tips: Healthcare software development companies often have questions about how offshore software outsourcing works and choosing the right technology engineering partner. Learn more in our Guide on Choosing a Healthcare Outsourced Software Company.

Step 4: Breakdown Your Healthcare Software Development Cost

Software development involves many interrelated and interdependent tasks, technologies, and processes. It’s normal to feel overwhelmed, especially when you’re just starting.

For more effective planning and estimation, consider breaking down your costs into smaller, more detailed parts. Measure each factor independently and come up with the most realistic costs for your healthcare software development project.

Researching and comparing each factor individually can take weeks or even months. Jump ahead by using a comprehensive cost estimation tool tailored to your specific needs.

Let Our Cost of Engineering Tool Do The Heavy Lifting For You

The KMS Healthcare App Development Cost Calculator puts all the software engineering cost factors at your fingertips, ranging from labor to operations. Break your costs down based on your team size and categorize them into two main parts: variable costs for staff and fixed costs for the development infrastructure. 

The calculator estimates standard costs per U.S. full-time equivalent software engineer. It also adopts a detailed formula to flexibly apply the actual costs of your specific market with reference to reliable human resources organizations such as SHRM.

Moreover, this tool provides an all-inclusive dashboard that compares different pricing models and detailed cost variations by country. With all the information in hand, you can make informed decisions and choose the pricing option that best fits your healthcare software development needs.

Healthcare software development - Cost of engineering tool by KMS Healthcare

Use the KMS Healthcare Cost of Engineering Estimator to confidently plan your healthcare application development project, ensuring cost-effectiveness and efficiency. 

Just insert your team size and get your cost breakdown in your mailbox now. 


HealthTech ROI Calculator for Cost Efficiency

Step 5: Refine your Healthcare Software Development Cost Estimation

Always reassess all cost components while using the KMS Healthcare Cost of Engineering Estimator to ensure that your project is on budget. 

Consider scalability and future enhancements when estimating the cost of a healthcare app development project to ensure that you address evolving user demands and technological advancements.

Other Factors Affecting Healthcare Software Development Cost


Several other factors indirectly affect the total cost of your healthcare software development project: 

1. Merge Project Planning and Budgeting

Budgeting first and planning later inflates development costs. 

Organizations that prioritize budgeting often overlook critical factors and dependencies that can significantly affect the overall cost and success of the healthcare software project.

Thoroughly plan every aspect of the project while setting and finalizing the budget. This should involve engaging all stakeholders and gathering their input on the software goals. Once you have a well-defined plan for your software, it will be much easier to estimate development costs realistically.

2. Create Software Requirement Specifications (SRS) 

The SRS document details the software system’s functional and non-functional requirements, as well as any constraints or dependencies. It serves as a foundation for understanding the scope and complexity of the project, which directly affects cost estimation.

Without a clear and well-written SRS document, miscommunications and discrepancies can lead to unexpected development costs that exceed the initial cost estimates:

  • Unforeseen complexity in system design
  • Inadequate resources for development and implementation
  • Operational cost overruns

3. Keep In Mind the Time-to-Market

Time is money in healthcare software development.

As highlighted by a McKinsey report, a product that arrives six months late to the market can suffer a 33% reduction in profits over five years. However, releasing a product on schedule, even if its development is 50% over budget, only leads to a 3.5% drop in profit. 

Your project’s velocity and progress have a profound impact on the total cost. The faster you get your software to market, the less money you spend developing it. You’ll also beat competitors to market with valuable new features and advancements. 

Strike the right balance to make your software product meet market demands while staying within budget.

4. Get a Consultation With Healthcare Software Development Experts

Technology evolves continuously, making it hard to update every factor needed to accurately estimate costs. To establish more transparent and profitable pricing, seek guidance from outside healthcare software development experts.

Experts with decades of healthcare technology go-to-market experience know how to excel at this game. They will help you generate accurate and reliable cost estimates and minimize your healthcare software engineering costs. 

Making Cost-Effective Decisions with KMS Healthcare

making effective decision on healthcare software development cost

Use the KMS Healthcare Cost of Engineering Estimator to assess and optimize your HealthTech team’s costs, paving the way for accelerated product development and greater profitability.

With more than 14 years of healthcare software development success, KMS Healthcare navigates complex cost estimations and helps you reduce development costs without sacrificing your product quality. Our expertise in healthcare software enables us to provide insightful recommendations for decision-making and efficient budget allocation.

Contact KMS Healthcare

Schedule a free consultation with us for a professional cost estimation for your engineering project, or any additional services to drive your product to success.

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