Why is development so expensive?

Yeah, it's just a scaling thing isn't it?

Once you get past one or two people building an MVP suddenly you need a project manager or a test team, or marketing, or finance team, or investors. All of a sudden things start to go bad.

If you're an enterprise company you decide to outsource to get a small job done and suddenly lots of extra people are added who are essentially overhead. It seemed cheap and now it isn't. Or you decide to buy a product to fix all your problems, but the business doesn't respect the limitations of the product and you end up buying another, or spend all your pennies on integration.

I've worked on project teams from 1-100 and generally the most productive ones have been with around 3-4 people.

In 'the olden days' programming projects were batch processing jobs on mainframes and had simple requirements, simple processes and easily predictable fail conditions.

Nowadays the all-singing, all-dancing one-stop-shop that has become the user's expectation has pages and pages of requirements, complex processes and fail conditions that could not only fill several books but are dependent on a whole host of other systems.

In short, it's user expectations (which ironically is the same reason it's more expensive to make a movie these days)

Complexity begets originality.

As time progresses technology will become more complex and powerful. Where the use of the technology may become simpler or the tools to produce make the work easier, the overall complexity of the software will increase as time continues. The amount of platform increases, the amount of users increases, and the amount of edge cases increases.

When you couple this solemn fact with the idea that inflation has increased what would have been tens of thousands of dollars of development costs in the 50s to the millions that exist now - the cost has increases as everything has, and the complexity of understand and designing the system has increased more alongside it.

If you consider that there are more developers than ever before who are all competing on salary then the price of employment increases as well.

There are many reasons for your question, and really it all comes back to the initial line.

I regularly spend a week or two on a project which immediately begins showing increased revenue on the sites I work for, and that revenue accrues. I don't think that is expensive at all. In fact, I think my company is getting an incredible return on their investment in my labour. The same cannot be said for startups but I feel like the VAST majority of software development is done on projects where small changes are yielding increased revenue, decreased labour costs, better compliance with regulations, etc.

It costs so much mostly because programmers don't know how to write software cost-efficiently. As everybody follows the same path, VCs start to believe the cost is increasing when in fact it's the programmer's knowledge of cost-efficiency software design that is decreasing. Take a look at this: https://www.youtube.com/watch?v=pW-SOdj4Kkk

The costs to develop software are ridiculous and unrealistic. It turns out that if enough people act as ridiculous and unrealistic that becomes the new normal.

Could you add more to your question? I’m not sure it’s true costs are increasing? And “anything at least cost a million now” - can you list any specific examples of the kind of project you’re asking about? Just “software” is a huge space TBH

Cutting edge stuff is always expensive. There was a time when clothing, sugar, and bread were expensive, high tech.

Personal and sales websites are cheap now. Blogs are cheap. Web infrastructure is cheap.

Social media is basically an information superhighway. Compared to actual highways they take more traffic and cost much less. Many other apps are replacing middle men; Uber is quite cheap for something that is replacing the whole taxi industry.

It's getting cheaper PER unit of utility. You can now create a lot of stuff with "no-code" that was previously expensive.

Five people at an average salary of $100k plus about $30k each in benefits/401k/bonuses is $650k. Then you have infrastructure costs, software licensing, and overhead like utilities, management, legal, security, etc.

The technology stack was exponentially smaller and more stable. For me, everything I needed to know were in three 300 page books. One was in JCL. The other two were about the SAS modules that were installed on the mainframe, the base SAS procedures and the book on how to write macros. The mainframe predated the internet and was limited in how many characters you could input per line. And you inputted one line at a time. But with it I could conduct transactions around the world in real-time as long as the transaction was limited to alphanumeric with very few special characters.

Where did you get that from?

The tools, libraries, frameworks etc. we have now make it a lot easier to build something that would have earlier cost a fortune in custom development. If anything, it's getting cheaper to build projects now.

I think the answer is that demand for development/developers is increasing and even now we are far from peak demand/digitalization.

Even with the huge financial incentives supply of developers is constrained by the mental capacity/desire to do the often time consuming and tedious task of learning the development skills.

I can develop a software for free, the costs are decreasing from my pov.

I see founders launching startups having spent much less than that.