Building Custom Software: Start with Value
When you’re building custom software, you’re working with a lot of unknowns. That’s the reality of doing something that hasn’t been done before, especially an ambitious new software project. This ambiguity can make forecasting, planning, and investment decisions challenging.
In the early stages, when deliverables are unclear, people often reach for certainty in the form of a nice round number that the business feels comfortable with. But accurate estimates depend on many factors you don’t yet understand. If you’re not careful, you can end up scoping a project around a comfortable number instead of the real potential value your solution could deliver.
We’ve been designing and building software for businesses for 17 years, so we’ve learned how to uncover and protect that value. This guide outlines the common oversights people often make when investing for custom software, and how to avoid them.
Investing Around Value
Good investment isn’t about locking in perfect numbers. It’s about clarity: knowing the meaningful value you want to create, working with uncertainty, and being realistic about what it will take to reach your desired outcome.
Too often, teams rush into design work, sketching wireframes or mock-ups, before they’ve defined the terms of success. That excitement is natural, but it’s too soon to design, and it’s definitely too soon to budget.
Start with value. Ask yourself:
- What problem are we really trying to solve?
- Are we aiming to grow revenue, save time, reduce complexity, or improve the experience for customers or staff?
- What happens to the business if we get this right?
If those answers aren’t clear, pause. You need a shared understanding before you can build a strong business case. That means defining:
- How much value this solution could deliver.
- What you’re willing to spend to prove you’re right.
- What you’re willing to spend to discover you’re wrong.
Once you understand the potential value, you can shape an investment or budget that’s aligned to outcomes, not just features.
Start Small, Intentionally
It might feel counterintuitive to invest in testing something that could fail. But often, that’s the cheapest way to avoid wasting far more time and money down the line.
Some of the most successful projects we've seen began small. At first, the idea wasn’t proven. Nobody really knew if the value was there or if the problem was as significant as it seemed. Instead of committing to a full build, the team tested their riskiest assumptions.
Sometimes that meant a a prototype. Other times, a rough proof of concept or a limited pilot. Whatever the format, the goal was the same: learn early and invest with confidence.
Think of it as spending strategically. If you spend $20k to learn an idea doesn’t stack up, before you sink $400k into it, that’s a win. And if it does hold up? You’ve got evidence, momentum, and confidence to back bigger investment.
Starting small isn’t about being cautious. It’s about being intelligent, putting bold ideas through the right tests early enough that the results shape what happens next.
Plan for Probabilities, Not Certainties
Think of a project estimate like a weather forecast. The Met Service might say it’ll be 15°C at lunchtime tomorrow, but would you bet money on it? Even with supercomputers, forecasts aren’t exact.
Software projects are no different. Expecting a budget estimate to be 100% accurate is unrealistic. Even with solid planning, surprises are inevitable: hidden complexity, technical limits, or integration challenges. That doesn’t mean poor execution, it’s the nature of custom software.
If your project is scoped at $200K–$300K, plan for the higher number. Projects almost always land closer to the top of a range. Build in breathing room so the team has space to respond when things change.
That buffer can make the difference between getting stuck and moving forward. Sometimes it helps overcome unforeseen challenges. Other times, it gives you flexibility to seize unforeseen opportunities mid-project, like adding a feature that suddenly unlocks value no-one had forseen. And if you don’t need it? Even better, you deliver under budget and gain trust.
Consider How you Define Success if you Fail
The risk of failure is inherent in any creative project. You might not achieve your goals, so what do you want to learn when you fail?
When you're testing a hypothesis, a negative outcome is still valuable learning. The win is in how you apply that learning going forward.
If you learn something isn't technically feasible, regroup and review your approach. We’ve rescued projects that have doubled down and thrown more money at an unsuccessful solution without asking themselves if they were heading down the right track. If you find yourself stuck, don’t double your budget, adjust your strategy, reassess the value, and revisit your intent.
These inflection points are natural in software development, and it's important to have transparent conversations about whether to proceed, or not. The likelihood of successful delivery can change as we learn more and it’s important to be realistic about that and talk openly in a constructive way.
Be Transparent About Your Business Goals
At Smudge, we see our role as more than just software developers, we’re advisors. In our experience, projects succeed when there is clarity about what matters most to your business and your people.
When your goals are transparent, we can give you better advice. If you request a new feature halfway through a project, we will assess whether it aligns with your objectives, supports your users, and delivers real value. If it does, we will recommend it. If it doesn't, you can expect that we will question whether it is the best use of your budget.
More importantly, if you come to us seeking a custom solution and we believe the market already offers a low-risk alternative you can trial, we will recommend that first.
That is what integrity means to us. Building features that will not get used, or don't connect back to your goals, and your original intent Our commitment is to keep your investment focused on outcomes that matter to you most.
Get Advice from Smudge
I’m Tim, Strategic Advisory Lead at Smudge. If you need help identifying and communicating value, or you are exploring a software project but are unsure whether to invest, I can help. My role is to validate your needs, stress-test your idea, and point you in the right direction. Don't hesitate to reach out.