Part of our complete guide to custom software development.
Agency, freelancer, or in-house?
An agency gives you a full team (PM, design, engineering, QA) and speed, best for defined projects and MVPs. A freelancer is cheaper for small, well-scoped tasks but a single point of failure. In-house makes sense once the software is core and ongoing. Most companies start with an agency to ship, then hire in-house to maintain.
Step 1 — Write your requirements first
Clear scope is what produces comparable, accurate quotes; vague briefs produce padded or lowball bids and 20–50% scope-creep overruns. Use our free requirements (PRD) template to define goals, non-goals, user stories and must-haves before you talk to anyone.
Step 2 — Shortlist and send one RFP
Pick 3–5 agencies with relevant portfolios and send them the identical brief with our Software Development RFP Template. Same brief = apples-to-apples proposals.
Step 3 — Score them objectively
Rate each vendor after their pitch and reference calls with the Agency Evaluation Scorecard. Weight relevant experience, technical fit and process highest; keep price at ~10%. Let the weighted total, not the sales pitch, drive the shortlist.
Questions that reveal the most
- Who owns the code and IP? (You should — 100%.)
- How do you handle scope changes and overruns?
- How do you run QA, security and post-launch support?
- Can I speak to two or three past clients?
Red flags
- A fixed price with no discovery — they’re guessing.
- No references you can call.
- Vague ownership of code/IP.
- Only talks features, never outcomes or process.
FAQ
How do I choose a software development company?
Scope requirements, shortlist 3-5, send the same RFP, and score each on weighted criteria – experience, technical fit and process highest, price ~10%. Pick the highest weighted total.
Agency vs freelancer for software?
An agency gives you a full team and speed for defined projects; a freelancer is cheaper for small tasks but a single point of failure. Choose based on scope and risk.
What should I ask a software agency?
Ask who owns the code/IP, how they handle scope changes, how they run QA and support, and for references you can call.
How much does hiring a software agency cost?
US custom software typically runs $25,000-$150,000+. Use a cost calculator and require a budget range in your RFP for comparable bids.