How to Cut Down Software Development Cost By Implementing Test Automation
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How to Cut Down Software Development Cost By Implementing Test Automation

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As a brilliant idea strikes someone, the next thought that usually comes is what it can cost to realize it. If you search on Google how much custom software development costs, you will find the most diverse sums - from several thousands of dollars to several hundreds of thousands of dollars. Still, this is actually not a limit. Thus, Microsoft spent about $1.5 billion on Windows 10.

Average Cost of Custom Software Development

In essence, no research has been conducted yet to give a definite answer to the question of how much custom software costs on average. The thing is that every domain has its own peculiarity. Moreover, even every company within the same niche has different needs. As a result, every custom solution is unique. Along with this, plenty of factors affect the cost of software development, which makes it impossible to calculate the average cost. Nevertheless, there are stats on the average development costs based on software size.

Software Development Cost breakdown

On the Internet one can also come across the average cost of custom software development based on the software type. However, taking into account how data varies across diverse resources, hardly you can trust it.

At this point, we would like to switch your attention to software development budget allocation. With knowledge of the items on a budget, it is easier to estimate costs.

As you may know, software development consists of a few phases - requirement analysis, planning, design, implementation, testing, deployment, and maintenance. As a result, there is a need to engage diverse IT specialists that perform activities contributing to the overall project's success. Apart from developers and DevOps engineers, your team will include project managers, business analysts, QA engineers, and designers.

As the graph above shows, most part of the budget, that is 43%, is allocated to development. This not surprising at all. Then, 19% and 18% are allocated to project management and design correspondingly. 9% go to business analytics. And, what is interesting, only 11% of the budget accrues to software testing. In essence, such budget allocation is not universal and again depends on the peculiarities of a particular project. What deserves attention is that there is a widely held belief that software testing makes up almost half of the software development cost. This is nonsense! If this is applicable to your project for some reason you should urgently change your approach to QA. Test automation may be a way to go in this case.

How to Reduce Software Development Costs with Test Automation

We have already found out that test automation is an efficient approach that helps to improve product quality and considerably reduce test execution time. Beyond this, the implementation of automation testing also gives an opportunity to significantly cut down overall development costs. How? Well, this is possible due to two factors - fast feedback and a notable reduction of labor effort.

As long as test automation enables a QA team to execute software testing faster and more frequently, a development team receives feedback on a new build in no time.

Besides, automation testing directly affects the cost of software testing, which, as we know, is a consistent part of the SDLC.

Still, test automation is not equally beneficial for small and large projects. The thing is that test automation is repaid in the long run. For short-term and simple projects automation testing is a waste of money. To understand whether it makes sense to introduce test automation, you should calculate test automation ROI in advance.

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Test Automation ROI

So, to make sure, that automation testing can bring desired financial benefits for your project, you need to calculate its ROI or return on investment. To put it simply, ROI is a useful metric that helps to estimate the efficiency of investment in test automation for a particular project. Moreover, it can help you compare different test automation services and make the right decision.

So, how can one calculate ROI? The equation is pretty simple:

Still, the question is arising of how to calculate Cost and Value. Well, let’s say you have a certain project and a suite of 400 regression tests that are executed before every release. Based on the tracked data and experience, you and your QA team can make the following assumptions:

With these assumptions in place, we can proceed with the calculation. First of all, let's define the cost related to completely manual test execution:

Cost of completely manual test creation = 400*0.5 hours per test * $25 = $ 5000

Cost of completely manual test execution = 400 * 1 hour per test * $25 per hour = $10.000

Total cost of completely manual testing = $10.000 + $5000 = $ 15.000

Now let’s do the same for automated tests. In this case, the calculation is more complicated as we need to calculate costs related to automated tests and costs related to manual tests that cannot be automated and therefore have to be executed manually.

The number of automated tests = 400 – 15% = 340 tests

Cost of automated test creation = 340 * 2 hours per test * $25 = $17.000

Cost for automated test execution = 340 * 0.1 hours per test * $25 = $850

Cost of manual test creation (those that cannot be automated) = 60 * 0.5 hours per test * $25 = $ 750

Cost of manual test execution (those that cannot be automated) = 60 * 1 hour per test * $25 = $1500

Now we can calculate the total cost of automated testing by summing the costs of automated test creation and execution and the cost of non-automated tests that will be executed manually.

Total Cost of Test Automation = $17.000 + $850 + $750 + $1500 = $ 20.100

As you see the investment in automation testing exceeds the investment in manual testing. Still, let’s see how the situation changes after 7 releases

Cost of completely manual testing across 7 releases

Cost of manual tests that cannot be automated across 7 releases

Cost of automated testing across 7 releases

Now, let’s calculate the ROI of automation testing:

ROI = (105380 - 61482,5) / 61482,5 *100 = 71%

So in our imaginary situation, the ROI of automated testing after 7 releases is 71%, and it actually will grow with every successive release.

By the way, in this example, we have considered test execution on one browser. However, in real-world conditions, you most likely have to run tests on several browsers. In this case, the ROI of automation testing is even higher because once written automated tests can be used for diverse browsers and platforms.


Software development can be not only rather complicated but also rather pricy. So it makes sense to plan everything in advance so that you can minimize costs. In our article, we have listed the most important factors that you should consider while planning out your software development budget.

Your approach to software testing, which is a part of the SDLC, also affects the overall cost of software development a lot. Thus, the implementation of automation testing not only can help you to speed up QA and development processes but to save a lot of money. Still, as long as all projects are different, the benefit varies. To be sure that automation testing is relevant to your project and will bring desired economic advantages, you should calculate with your team the ROI of automation testing. Now, with our help, you know how to do this.

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