How much does custom software development cost?

The contract price is only part of the cost. Calculate the total cost of ownership over 5 years: development, data migration, licenses, hosting, your people’s time, and operations. As a rule of thumb, plan 10–20% of the purchase price per year for operations and maintenance, with further development budgeted separately. Median rates in government contracts in 2026 are around CZK 9,000–14,000 per person-day excluding VAT. Details in chapter 4.

How long does it take to develop an application?

It depends on the scope, but as a rule of thumb, just approaching the market takes a company 2.5–6 months, and a public contract takes months to a year. Split a large project into stages of up to about 3 months, each with a go/no-go decision: each additional year of duration increases cost overruns on large IT projects by 15%. Details in chapters 8, 10, and 12.

Who owns the source code when I have software developed?

Software you paid for is not automatically yours. When a company delivers it, the prevailing interpretation is that you need an explicit license, ideally an exclusive one, with the right to have it modified by another company, to sublicense, and to assign the license. Ask for the code in your own repository after every sprint, and have an exit plan with a price in the contract. Details in chapter 11.

Fixed price or time and materials?

A fixed price suits small, well-described contracts; with an unclear brief, you pay for it through a markup or additional work. Time and materials without a cap is an open-ended budget. For a new system, a combination works well: a fixed cap, short stages with a go/no-go decision, and within them payment for time worked or per accepted increment. Details in chapter 10.

What is an SLA and what should it include?

An SLA is a service level agreement: it states in numbers how quickly the vendor will help when the system does not work, and what they will pay if they do not make it in time. For each priority, ask for three time limits (response, restoration, resolution), the support hours, a precise definition and measurement of availability, tiered penalties, and a monthly report. Details in chapter 21.

How do you choose a software vendor?

Quality should carry at least 50–70% of the weight in the evaluation, and you should evaluate the team that will actually do the work, not the salespeople. Check references yourself by phone, check the company in public registers, and try a paid trial sprint with the finalists. Choose the type of vendor based on how much management you can handle yourself. Details in chapters 7 and 9.

Is it better to buy off-the-shelf software or have your own developed?

Do not build accounting, payroll, or a standard CRM: off-the-shelf is cheaper, and the vendor keeps track of legislation and security for you. Custom development makes sense where the process is your competitive advantage or where nothing off the shelf exists. Compare the total cost over 5 years, not the license against the contract price. Details in chapter 2.

What should you do when the vendor is falling behind?

React within 2 weeks to a red flag, such as a repeated “90% done” or 4–6 weeks with nothing new to deploy. Escalate step by step: stop expanding the scope, commission an independent audit, re-plan with a smaller scope, and only then turn to contractual penalties, stopping the project, or switching vendors. Details in chapter 19.

Do I need an OHA opinion?

Yes, if a public authority is acquiring a designated information system or making architectural changes to one, regardless of the contract price. A system is designated if it uses the basic registers or provides services to them, is linked to them, or serves at least 5,000 users a year with a verified electronic identity. Submit the request before the contract is announced; the opinion usually comes within 30 days. Details in chapter 12.

How do you avoid dependency on a single vendor (vendor lock-in)?

Dependency arises mainly in the contract, not in the technology. Ask for a license with the right to have the software modified by another company, the code and documentation in your own repository on an ongoing basis, free data export in an open format, and accounts held in your name. Test the exit package once a year; source code escrow is only insurance against the vendor’s insolvency. Details in chapter 24.

How much does software maintenance cost per year?

As a rule of thumb, plan 10–20% of the purchase price per year for operations and maintenance, and that is without new features. Maintenance accounts for 40–80% of all costs over the software’s lifecycle, and most of it is enhancements, not fixes. A support proposal well below 10% that does not describe what it includes is probably leaving something out. Details in chapter 22.

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Appendix

Frequently asked questions

How much does custom software development cost?
The contract price is only part of the cost. Calculate the total cost of ownership over 5 years: development, data migration, licenses, hosting, your people’s time, and operations. As a rule of thumb, plan 10–20% of the purchase price per year for operations and maintenance, with further development budgeted separately. Median rates in government contracts in 2026 are around CZK 9,000–14,000 per person-day excluding VAT. Details in chapter 4.
How long does it take to develop an application?
It depends on the scope, but as a rule of thumb, just approaching the market takes a company 2.5–6 months, and a public contract takes months to a year. Split a large project into stages of up to about 3 months, each with a go/no-go decision: each additional year of duration increases cost overruns on large IT projects by 15%. Details in chapters 8, 10, and 12.
Who owns the source code when I have software developed?
Software you paid for is not automatically yours. When a company delivers it, the prevailing interpretation is that you need an explicit license, ideally an exclusive one, with the right to have it modified by another company, to sublicense, and to assign the license. Ask for the code in your own repository after every sprint, and have an exit plan with a price in the contract. Details in chapter 11.
Fixed price or time and materials?
A fixed price suits small, well-described contracts; with an unclear brief, you pay for it through a markup or additional work. Time and materials without a cap is an open-ended budget. For a new system, a combination works well: a fixed cap, short stages with a go/no-go decision, and within them payment for time worked or per accepted increment. Details in chapter 10.
What is an SLA and what should it include?
An SLA is a service level agreement: it states in numbers how quickly the vendor will help when the system does not work, and what they will pay if they do not make it in time. For each priority, ask for three time limits (response, restoration, resolution), the support hours, a precise definition and measurement of availability, tiered penalties, and a monthly report. Details in chapter 21.
How do you choose a software vendor?
Quality should carry at least 50–70% of the weight in the evaluation, and you should evaluate the team that will actually do the work, not the salespeople. Check references yourself by phone, check the company in public registers, and try a paid trial sprint with the finalists. Choose the type of vendor based on how much management you can handle yourself. Details in chapters 7 and 9.
Is it better to buy off-the-shelf software or have your own developed?
Do not build accounting, payroll, or a standard CRM: off-the-shelf is cheaper, and the vendor keeps track of legislation and security for you. Custom development makes sense where the process is your competitive advantage or where nothing off the shelf exists. Compare the total cost over 5 years, not the license against the contract price. Details in chapter 2.
What should you do when the vendor is falling behind?
React within 2 weeks to a red flag, such as a repeated “90% done” or 4–6 weeks with nothing new to deploy. Escalate step by step: stop expanding the scope, commission an independent audit, re-plan with a smaller scope, and only then turn to contractual penalties, stopping the project, or switching vendors. Details in chapter 19.
Do I need an OHA opinion?
Yes, if a public authority is acquiring a designated information system or making architectural changes to one, regardless of the contract price. A system is designated if it uses the basic registers or provides services to them, is linked to them, or serves at least 5,000 users a year with a verified electronic identity. Submit the request before the contract is announced; the opinion usually comes within 30 days. Details in chapter 12.
How do you avoid dependency on a single vendor (vendor lock-in)?
Dependency arises mainly in the contract, not in the technology. Ask for a license with the right to have the software modified by another company, the code and documentation in your own repository on an ongoing basis, free data export in an open format, and accounts held in your name. Test the exit package once a year; source code escrow is only insurance against the vendor’s insolvency. Details in chapter 24.
How much does software maintenance cost per year?
As a rule of thumb, plan 10–20% of the purchase price per year for operations and maintenance, and that is without new features. Maintenance accounts for 40–80% of all costs over the software’s lifecycle, and most of it is enhancements, not fixes. A support proposal well below 10% that does not describe what it includes is probably leaving something out. Details in chapter 22.

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