How to Reduce Software Development Costs by Implementing Test Automation

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.

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.

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.

As was mentioned, it is rather difficult to provide some average cost of software development because every project is unique and plenty of factors impact the overall price. We would like to dive a bit deeper and review the key factors that you should definitely consider.

Project size

The more features and modules your software has, the more time and resources are needed to implement them. This directly impacts the cost of development.

Software Complexity

The more complex architecture and complicated business logic your software have, the more you should be ready to pay.

UI/UX Design Customization

Custom elements and animations significantly increase design costs. In this case, the design is considered to be custom artwork, and related costs may reach up to 25% of the whole software development budget.

Platform Choice

Software development costs vary depending on the chosen deployment platform. For instance, it is more expensive to develop apps running on Android, compared to those running on the iOS or Windows platforms.

Integrations

Modern APIs enable developers to write a few lines of code to have everything up and running. However, legacy software is usually far from being friendly in these terms. If your custom software needs to be integrated with your existing exotic solution, the costs go up accordingly.

Data migration

It takes quite a lot of time to migrate data from one database to another one. If your software development requires data mitigation from an old database to the new one, this will result in extra cost.

Team Line-up and Size

This factor goes without saying. The more IT specialists you need to have in a team, the more you would pay. In essence, team size heavily depends on the project size and complexity. A large-scale sophisticated project entails having a large team consisting of developers, DevOps engineers, manual and automated QA engineers, PMs, BAs, and designers.

Hiring model

When the decision to develop custom software has been made, a company faces a necessity to assemble a team. It has two main options - setting up an in-house team and outsourcing.

Team location

If you opt for outsourcing, such factor as the location of your remote team is of utter importance in terms of costs. The hourly rates of IT specialists across the globe vary a lot. As a rule, the highest rates are in the countries of North America, Australia, and Western Europe.

Hourly Rate of Senior Software Engineers Worldwide

Hourly Rate of QA Engineers Across Countries

Now and then we can hear about chaos, collapses, and even tragedies caused by software glitches. They can cost people time, money, or sometimes even life. Companies, in turn, lose millions of dollars, loyal clients, reputation, and the trust of investors. It’s known that even well-established and reputable brands can fall victim to a hidden bug.

Still, let’s come back to figures. According to the annual report of the Consortium for Information & Software Quality, the cost of poor software quality in the U.S. only reached $2.41 trillion in 2022. Impressive, isn’t it?

The key problem areas that the report has identified are cybercrimes, software supply chain problems, and technical debt.

Any software is developed with the aim to attract as many users as possible and generate high revenue. However, all efforts and money go down the drain, if the quality of a released product is poor. It will not take off. These days users are rather picky and do not spend their time and certainly money on glitchy apps. Therefore, software testing is an essential phase of the software development life cycle, and it is just as important as the rest of the SDLC phases.

Finally, we would like to draw your attention to the fact that engagement of QA experts at the project outset gives an opportunity to cut down costs related to bug-fixing. It is a well-known fact that the earlier a bug is identified and reported, the less it costs to eliminate it. The thing is that for a development team, it is always easier to fix a bug while the trait is still hot than at the later stages of software development when the bug may turn into a disastrous issue requiring a ton of time and effort to be fixed.

Cost of Bux Fixing

We would like to specify at once that automation testing cannot completely replace manual testing, but its numerous advantages give an opportunity to significantly optimize a QA process. Consequently, our main message is that automation testing should complement manual testing and vice versa. The key point is to find a happy balance between the number of manual and automated tests that varies from project to project.

Nevertheless, to understand the benefit of automation testing we should compare it with manual testing. So let's do this while focussing on the main criterion.

Time-Effiency

Speed of testing is undoubtedly the key advantage of automated testing. Thus, the execution of regression tests may take a few weeks when a manual approach is used, while their automation may reduce testing time to a few days. Therefore, when it comes to large-scale projects, test automation is the only way to meet deadlines.

Time-effiency. Manual vs Automated Testing

Accuracy

Without saying, even the most experienced manual testers may make mistakes especially when they deal with monotonous work. Such facets as time pressure, high workloads, stress, and tiredness may affect attentiveness. So there is a high risk of missing critical bugs or neglecting some test cases. Automated tests, in turn, always perform exactly what they should in accordance with the implemented logic. Therefore, with automated testing, you can always be confident in the accuracy of test results.

Feedback Loop

By implementing automation testing, a QA team can quickly provide a development team with feedback on the quality of a new build. Quick bug identification and reporting immensely simplify the work of developers as they can eliminate them while the trail is still hot and before they turn into critical issues. Manual testing, unfortunately, cannot provide feedback at the same pace.

Test Coverage

Automated testing gives an opportunity to considerably increase test coverage. First of all, many more features can be checked as there is no time deficit. Secondly, automated testing also enables parallel test running across multiple browsers or operating systems. Thirdly, some tests especially those related to performance testing cannot even be executed manually. In all fairness to manual testing, it is worth noting that not all test scenarios can be automated as well.

Time Flexibility

Compared to manual testing, automation testing is completely flexible in terms of the time of test execution. Thus, a team of manual testers works 8 hours per day and 5 days per week. As a result, manual test execution is restricted by the working hours of the team. The execution of automated tests is a whole different ball game. Automated tests can be executed at any time of the day or night. Thus, automated QA engineers can launch a test run on Friday evening so that they can have test results ready early on Monday morning.

Testing Costs

It is worth saying that pure manual testing is suitable only for small and simple projects that do not suggest vast loads of work for a QA team. In this case, test automation is completely useless. Its implementation will take more time and money than needed for manual test execution. However, large-scale projects with numerous sprints and releases are a whole other story. In such instances, the more tests are covered with automation, the more you can save money at the end of the day.

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.

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.