If you've ever sent out RFPs (Request for Proposals), you know about the wide range of bids that will come in response. Before you make a decision, there are a number of things to take into consideration when reviewing your options. The level of experience should be at the top of your list, followed by things like ethical practices, standards and behavior, organization, and timeliness. Such factors add to the differences in project estimates, but there's another factor that shouldn't be overlooked. The type of company bidding on the project can also make a significant difference on an estimate.
At the high end of the spectrum are the high rollers of custom design. Known for exorbitant spending and high salary rates, this kind of custom shop tends to focus on excessive and unnecessary things that will bring in more money. Moreover, you can easily spend $400-$800 per hour on any work they do. On top of that you should be prepared to wait. It may take some time for the company to produce a full application, given that they like to draw things out using unnecessary additions and pieces as an excuse.
If the high rollers are a bit extreme for you, consider middle level custom shops. Typically you will find that these companies are more reasonable as their price range is based on estimated hours. Expect to pay around $100-$200 per hour. Other than cost, the attribute that sets them apart is the fact that they are usually able produce full projects in a short amount of time. What is more, they are ideal for larger and longer term projects as they have the capacity and will focus on the necessary parts.
Believe it or not, such pricing is still too costly for some, thus the reason behind small level shops. Like middle level shops, smaller shops base their pricing scale on estimated hours with the price range varying from $75-$80 per hour. While the cost-effective pricing is certainly ideal, it's important to keep in mind that small shops are more limited in what they can and cannot do. For instance, small level shops are not adequately equipped to take on a large amount of work, nor do they have the capacity to take on a long term project. As such, this type of shop is best used for smaller and shorter term projects.
For those looking for even cheaper pricing, we'll continue down the list to independent contractors. These “shops” consist of 1 or maybe 2 developers. As such their price range stands around $50-$250 per hour. Like small level shops, independent contractors do not have the ability to take on long term projects. Moreover, it is easy for them to get burnt out from a combination of tasks and it's possible that they may leave a project midway through. In addition the developer(s) can be difficult to contact depending on their level of experience and professionalism.
And finally there's overseas development companies. If you have a custom application, it would probably be wise to avoid such companies. They focus on quick, easy and mass produced projects that require little to no planning. Sure, they're cheap ($35-$90 per hour), but in the end are they really worth it? There's even an increased chance the project will fail it developed by this kind of company.
Just as estimates tell you what you can expect to pay for the work, the price points listed above can give you an idea of the kind of work you can expect to see. And while the aforementioned descriptions are not necessarily typical, they are a good starting point. Keep in mind that while you might be looking for the best deal for your money, it might take a little more time, effort, and money to get a quality product. And it works the other way around as well; spending a lot of money may not get you the best product as well. Make sure you consider your options carefully.