Software development: what it is, how it works and what it costs (2026)

What is software development?

Software development is the process of turning a business need into working software: understanding the problem, defining requirements, designing the system, writing and testing the code, releasing it to users and maintaining it over time. It covers websites, mobile apps, internal business tools, platforms and AI systems.

The code is the visible part, but most of the success or failure is decided before the first line is written, when you choose what to build, and after launch, when the software has to keep working as the business changes.

Software development vs software engineering vs programming

In practice the terms overlap, and job titles use them interchangeably. For a buyer, the difference that matters is whether a team only writes code or takes responsibility for the whole product.

Types of software development

• Web development: websites, web apps and customer portals. At Cantacuzino Castle, a web platform runs digital ticket sales and day-to-day operations
• Mobile app development: native and cross-platform iOS and Android apps. MAM Bricolaj's loyalty app reached 7,500 active users in four months
• Custom business software: internal tools, ERP-style workflows, dashboards and enterprise platforms, such as the logistics platform we built for Snap-on
• AI and automation: voice agents, computer vision and intelligent workflows, like the AI vision pipelines in NEI Security's surveillance workflows
• SaaS and MVPs: subscription products, usually started as a minimum viable product to test demand
• Integrations: connecting CRMs, ERPs, payments and internal APIs so systems share the same data

The software development process, step by step

Most teams describe six or seven stages. The names vary; the logic does not. The column most guides leave out is the last one: what you, the client, need to do at each step.

The client steps are where projects are usually won or lost. A team can only build what it understands, and slow feedback is one of the most common reasons projects slip.

Agile, Waterfall or DevOps: which approach fits?

• Agile (Scrum, Kanban): work is delivered in short cycles, usually one to two weeks, with regular demos. Best when requirements will change as you learn, which is true of most business software
• Waterfall: each phase is completed before the next begins. Suits fixed, well-documented requirements and regulated environments
• DevOps: practices that connect development and operations through automation, so releases are frequent, tested and safe. It complements Agile rather than replacing it

Most modern teams combine them: an agreed scope and budget up front, Agile delivery inside it and DevOps practices for releases.

How AI is changing software development in 2026

AI coding assistants now write, review and test code alongside developers, and some tools turn a description into a clickable prototype in minutes. For buyers, this changes one thing a lot and another very little.

What changes: prototypes, internal tools and first versions are faster and cheaper to produce. What does not: production software still needs architecture, security, data protection, testing and someone accountable when it breaks. A demo that works on a laptop is not a system that handles real users and real data. AI lowers the cost of writing code; it does not remove the cost of getting the product right.

How much does software development cost?

There is no honest single price, because cost follows scope. What you can do is understand what drives it, so you can compare quotes and decide where to spend.

Location has a large effect. GoodFirms' October 2026 directory lists a median rate of about $37 per hour for software development companies in Romania, well below typical in-house costs in Western Europe or the US. That is one reason Romania is a common nearshore destination. Compare like with like, though: a lower rate only saves money if the team delivers working software without rework.

What our projects cost: small apps and MVPs can start from around €3,000–5,000, while the larger mobile apps and business platforms we delivered recently cost between €15,000 and €21,000. The price depends on what you need and on your budget, so we scope every project individually. AI-assisted development has also made smaller, focused projects more affordable than a few years ago. Romanian companies can sometimes cover part of the cost through EU funding programmes for digitalisation.

Instead of paying everything up front, clients can choose our monthly model: from around €1,000 per month over 12 to 24 months, with maintenance, updates and support included. It spreads the investment and keeps the team that built the product responsible for running it.

How long does software development take?

Timelines follow scope in the same way. As a rough guide, a focused prototype or MVP takes weeks to a few months, a business platform with integrations takes longer, and large enterprise systems are delivered in phases. The fastest way to shorten a project is to cut the first version down to what users need on day one, then grow it.

Build, buy or outsource?

Before choosing a team, decide whether you need custom software at all. If an off-the-shelf product covers most of your process, buying is usually cheaper. Build when the process is what makes you different, or when standard tools force your team into workarounds.

For companies in Romania, a local partner means the same language, face-to-face meetings when needed and simple contracts. For companies in the US and Western Europe, a Bucharest team works inside the EU under GDPR, in English, one to two hours ahead of London, Berlin or Zurich, with a few hours of overlap with the US East Coast every working day.

How to choose a software development company

• They ask about your business before they talk about technology
• You get a written scope and estimate, not just a day rate
• They show live products and references you can contact
• You see working software every one or two weeks
• Ownership of the code, repositories and accounts is agreed in writing
• There is a plan for maintenance after launch
• Red flags: a fixed price without discovery, no access to the code during the project, and promises that sound like a demo rather than a product

Real example: from offline ticket booths to €250,000 in six months

Cantacuzino Castle, one of Romania's best-known tourist landmarks, sold tickets at offline booths. We built one connected system: online ticket sales, QR access scanned on mobile, cashier and staff tools, an operations platform with an admin dashboard and, on top, AI voice agents covering five internal departments. The castle moved to a fully digital flow and generated over €250,000 in revenue in the first six months.

The lesson applies to most projects: the software worked because it was designed around how the castle actually operates, and AI was added only once that foundation was running.

After launch: maintenance and total cost of ownership

Launch is the start of a product's life, not the end of the project. PTC cites estimates that maintenance accounts for 40–70% of the total cost of software over its lifetime. Maintenance covers security updates, dependency and operating system upgrades, hosting and monitoring, bug fixes and new features.

A practical rule of thumb is to budget around 15–20% of the initial build cost per year for maintenance and small improvements, and to agree before launch who is responsible when something breaks. On a monthly plan, maintenance is already included.

Conclusion

Software development is a business process as much as a technical one. Define the problem clearly, choose a team that takes responsibility for the whole product, stay involved at every stage and plan for life after launch. Do that, and the choice between in-house, agency and nearshore becomes a question of fit, not of risk.