FAQ

How Much Does It Cost to Build Software with AI vs Hiring Developers?

Building with AI

Key Takeaways
  • AI-assisted development can reduce custom software build costs by 12x to 43x compared to hiring a traditional development team, depending on methodology and project scope.
  • co's annual survey places the median custom software project at $75,000 to $250,000 for mid-market builds, while one audited AI-assisted portfolio delivered 10 production systems for a total of $67,895 -- with a market replacement value of $795,000 to $2,900,000.
  • The traditional cost structure is driven by coordination overhead, not code.

AI-assisted development can reduce custom software build costs by 12x to 43x compared to hiring a traditional development team, depending on methodology and project scope. Clutch.co's annual survey places the median custom software project at $75,000 to $250,000 for mid-market builds, while one audited AI-assisted portfolio delivered 10 production systems for a total of $67,895 -- with a market replacement value of $795,000 to $2,900,000.

The traditional cost structure is driven by coordination overhead, not code. A mid-market US development team -- four to six developers, a project manager, a QA engineer, and a technical architect -- burns $60,000 to $120,000 per month. A twelve-month project at that rate produces a single product for $720,000 to $1,440,000 (Clutch.co, Accelerance Global Rate Survey). Toptal and Upwork list senior full-stack developers at $100-$200/hour for US-based talent. The architect, QA, PM, and DevOps roles alone cost $960,000 to $1,440,000 annually before a line of production code is written.

Against that baseline, one technology infrastructure operation built the following portfolio using CEM (Compounding Execution Method) with AI tools costing approximately $105/month: an operations platform, a four-product insurance cluster, seasonal e-commerce, insurance quoting across two geographies, a reporting platform, and a legal services platform. Total audited cost: $67,895, including $65,054 in contractor spend and $2,841 in AI tools and software, verified against QuickBooks records. Timeline: four months. Team: one operator plus AI (CS08).

The cost did not stay flat -- it collapsed as reusable infrastructure accumulated. Monthly burn rate fell from $8,367 in September 2025 to $825 in January 2026, a 90% reduction. Per-project cost tells the sharper story: the first product cost $7,995 in external support. The fourth cost $1,680. The sixth cost $330. The ninth cost $0. The marginal cost of a new production system reached zero because each project's infrastructure became reusable scaffolding for the next one.

The quality held through the cost collapse. The portfolio maintained a 12.1% product defect rate against an industry norm of 20-50%, at 4.6x output velocity. No investors. No venture capital. No equity sold. 100% retained ownership across every system. The ROI on the $34,473 in direct external support investment: 23.1x to 84.1x, with $82,640 in ongoing SaaS and contractor costs permanently displaced.

The cost advantage is not about finding cheaper labor. It is structural: accumulated patterns eliminate redundant work, AI replaces expensive specialist consultation, and a single operator replaces the coordination overhead of a multi-person team.

Related: Spoke #7 (Cost to Build Software with AI) | Spoke #12 (Contractor Cost Collapse)

References

  1. Clutch.co (2024). "Custom Software Development Cost Survey." Median project costs of $75,000-$250,000 for mid-market builds.
  2. Accelerance (2024). "Global Software Development Rate Survey." Senior developer billing rates by geography ($50-$250/hour).
  3. Toptal & Upwork (2024). Senior full-stack developer rate data ($100-$200/hour US-based).
  4. Keating, M.G. (2026). "Case Study: The Cost Inversion." Stealth Labz. Read case study