The promise of low code platforms, such as Outsystems, Appian, or Kissflow, is that you can build a custom application faster and more cost-effectively than using traditional software development.
But, in many cases, these promises are too good to be true. To understand the real costs of using a low-code platform, we’ll guide you through a simulated cost comparison.
Here’s an overview:
| .Net Development | Low-Code | |
| Development | $78,000 | $8,700 |
| Licensing | None | $75,000 |
| Maintenance | $540,000 | $603,000 |
| Total | $618,000 | $686,700 |
Prices based on the cost of one app over 5 years for 150 users.
We’ll show you how we arrived at these numbers. We’ll also show you some of the other risks and considerations involved that go beyond the price tag.
Development Costs
The popularity of low-code platforms was driven by IT departments that struggle to maintain the human resources they need to keep up with the demand for new software.
For many reasons, it can be difficult for an organization of any size to find and retain quality programmers. And these same IT departments may be wary of custom development firms or see low-code development as a cheaper alternative.
But is low-code development actually cheaper?
Hidden costs: staff training or hiring platform specialists.
Folks who have never worked with these systems might be under the assumption that reducing the amount of traditional code you have to write makes the systems less complicated, so anyone can create the app using the software.
But that’s not the case.
In order to be so highly customizable and capable of enterprise-level functionality, most low-code platforms are incredibly complex and require the help of individuals that are certified on the platform.
In other words, you’re replacing a traditional software developer with a low-code platform developer.
So let’s start our comparison using national averages for one of the most popular low-code platforms, Appian.
1. Start with the national average developer rates
Average .Net developer rate: $52/hr.
Average Appian developer rate: $58/hr
(Wonder why the average Appian developer is higher? It’s more specialized. There’s an estimated 11 million .NET developers in the world. The number of Appian developers are probably in the thousands and therefore much harder to find.)
2. Assume a 25% markup for a freelancing project
.Net developer hourly rate: $65
Appian developer rate: $72.50
3. Factor in time
According to a Forrester report, low-code development can be 10x faster than traditional development. Keep in mind this is at the enterprise level, so organizations who already have large developer resources at their disposal.
But let’s assume that a project would take a .Net developer 600 hours and an Appian developer 60 hours and take two people on the team to complete.
.Net project: 600 hours x $63 x 2 = $78,000
Appian project: 60 X $126 x 2 = $8,700
If we were just looking at the development costs of a project, then low-code might be the clear winner. But we’re not, because we still have to factor in licensing and maintenance. So we’ll continue on.
Licensing Costs
Here’s where the real costs come in. If you use a low-code platform to develop your software, you’re paying monthly or annual licensing fees to continue using the program — even if you paid to develop it.
Appian’s standard licensing fee for one app costs $60 per user per month with a minimum of 100 users (2023 rates).
Let’s assume you’re going to use the software for 5 years and have 150 users.
$60 x 150 x 5 = $45,000
In addition, Appian charges $5,000 per month for unlimited software robots:
$5,000 x 60 months = $30,000
That brings the total licensing costs to $75,000 for five years if you’re not scaling and if you’re only using the platform for one application.
On the other hand, if you’re developing custom software in-house or using an external development shop, one of the big benefits is ending up with a piece of software that you own! In this case there are no licensing costs. You own it outright.
Maintenance & Improvement Costs
Most companies that use a low-code system to build a complex application that’s crucial to their operations will need to keep at least one person on staff or in a long-term contract role that’s a certified Appian developer or specialist. These are folks that will help maintain or improve the software.
If you’re keeping one person on staff for this project, here’s what a salary would cost you based on the average annual salaries of a .Net developer versus an Appian developer:
.Net: $108,000 x 5 years = $540,000
Appian: $120,600 x 5 years = $603,000
Once again, Appian developers are more specialized so there are fewer on the market. This is one of the risks of using a low-code platform that companies don’t always consider. Even if the project is cheaper to develop, it can cost considerably more to find knowledgeable people to maintain it.
In this comparison, .Net project ends up costing $618,000 over 5 years while an Appian project costs $686,700.
Risks Beyond the Price Tag
There are other risks to consider when developing on a low-code platform.
Limits to the Customization Available.
No matter how advanced the platform, it’s inevitable that you will get stuck at some point. When working on an existing platform, there’s always going to be a limit to the ways you can customize or which applications you can connect with, etc.
A common workaround is to develop say 75% of an application in a low-code system to save money, then use a traditional developer for the rest of it. But you can run into many pitfalls this way. The part of the code you need to customize might not be available to you, for instance.
When you’re developing on a platform, you’re limited to what that platform can do.
Licensing Fee Increases
Perhaps $60 per user per app is affordable right now. But what happens when the platform raises their rates or you scale your business and need another 100 licenses per month? These numbers add up month after month.
You Don’t Own Your Code
When you develop on one of these platforms, your essential business processes are tied to one vendor. What happens to smaller companies that run into cash flow issues and can’t make a payment on the license? Their entire operations can be forced to shut down.
Another issue is that these companies can come and go. For instance, Ironspeed was a prominent low-code platform that was forced to shut down due to patent issues. Or an even bigger example is Microsoft’s Silverlight. There is often no way to export the application you’ve developed to migrate it to another platform.
Not Having IT Governance
We’ve spoken to a division inside a global insurance company that decided to use a low-code platform to develop an application to manage their flood claims. They didn’t have an internal development team and saw the low-code platform as being a cheaper alternative than working with a traditional development firm. So they built their application which they used to manage around four million flood claims.
And then they ran into a bug. And when they tried to fix the issue, they accidentally deleted the entire database of claims.
The other problem? They didn’t have a backup. They ended up losing all four million claims.
The issue here wasn’t the system they chose, it was the fact that the people that were maintaining the system weren’t IT professionals. They didn’t know basic safety precautions like to create and maintain data backups.
The benefits of having an IT development team (either an internal team or working with long term partners like us) aren’t just about developing an application. You also need a team that is knowledgeable about security and common tech pitfalls with good practices in place to keep your data safe and secure.
If you have a project you’re considering, talk to us about our delivery guarantee on all custom software projects.
