How Much Does It Cost to Build a Software Product with AI? (Real Numbers)

The Setup

If you search "how much does it cost to build a software product," every answer points to the same range: $50,000 to $500,000 for custom software, depending on complexity. Clutch.co's annual survey of development firms puts the median custom software project between $75,000 and $250,000 for mid-market builds. Accelerance's global rate survey shows senior developers billing between $50 and $250 per hour depending on geography, and Toptal and Upwork list senior full-stack developers in the $100 to $200/hour range for US-based talent. When you stack up the typical team — four to six developers, a project manager, a QA engineer, and a technical architect — the monthly burn rate for a mid-market build lands between $60,000 and $120,000. A twelve-month project at that rate produces a single product for $720,000 to $1,440,000.

The conventional approach assumes these costs are fixed structural requirements. You need the architect because someone has to design the system. You need QA because someone has to test it. You need the PM because someone has to coordinate the humans. The cost is not primarily in the code — it is in the coordination overhead that scales with team size and project duration.

But what if the coordination layer collapsed? What if the architecture, the quality assurance, and the project management were handled by a single operator working with AI tools that cost roughly $105 per month? The numbers from one audited portfolio suggest the cost model for building production software has fundamentally changed — and the gap between the old model and the new one is not incremental. It is structural.

What the Data Shows

Clutch.co's 2024 survey reports that a mid-market operations platform — the kind with multi-tenant architecture, reporting dashboards, CRM integration, and role-based access control — typically costs between $300,000 and $750,000 from a US-based development firm. An insurance quoting platform runs $60,000 to $120,000 per geography. A seasonal e-commerce build with seven third-party integrations (payment processing, video hosting, email, analytics) falls in the $120,000 to $240,000 range. These are not outlier estimates — they are the center of the distribution for firms listed on Clutch with verified client reviews.

Against that baseline, one technology infrastructure operation built a portfolio of ten production systems — including an operations platform, a four-product insurance cluster, seasonal e-commerce, insurance quoting across two geographies, a reporting platform, and a legal services platform — for a total audited cost of $67,895. That figure includes $65,054 in contractor costs and $2,841 in AI tools and software, verified against QuickBooks records (CS08, Oct 2025 - Feb 2026).

The market replacement value for that same portfolio, estimated at mid-market US rates: $795,000 to $2,900,000. The timeline a conventional team would have required: twelve to twenty-four months with a four-to-six person team plus PM and QA. The actual timeline: four months. The actual team: one operator plus AI.

The cost did not stay flat across the portfolio — it collapsed. Monthly burn rate data shows the trajectory:

• September 2025: $8,367/month
• October 2025: $6,070/month
• November 2025: $6,999/month
• December 2025: $1,035/month
• January 2026: $825/month

That is a 90% reduction in monthly infrastructure and contractor costs across a four-month window. But the per-project cost tells an even sharper story. The first product built cost $7,995 in external support. The fourth product cost $1,680. The sixth cost $330. The seventh cost $90. The ninth product cost $0. The marginal cost of a new production system reached zero (CS08, Jan 2026).

The total spend breakdown: $40,700 to the primary development contractor (CON-02), $21,854 to a secondary contractor (CON-03), $2,500 for an initial website build, $2,634 in AI tool costs (Anthropic, OpenAI), and $207 in other software. No investors. No venture capital. No equity sold. 100% retained ownership across every system in the portfolio.

For context, the traditional cost structure that was displaced: a technical architect at $20,000/month for twelve months ($240,000), a QA engineer at $10,000/month ($120,000), a project manager at $12,000/month ($144,000), DevOps at $8,000/month ($96,000), and SaaS platform subscriptions at $1,565/month ($18,780). That traditional team cost alone — before writing a line of code — runs $960,000 to $1,440,000 annually. The entire CEM portfolio replaced that output for $67,895.

How It Works

The cost collapse is not a negotiation story. The operator did not find cheaper contractors or offshore the work to a lower-rate geography. The cost fell because each project made the next one faster, simpler, and less dependent on external help.

The process works through accumulated infrastructure. When the operator builds authentication for the first project, that authentication pattern becomes available for every subsequent project. Database schemas, API integrations, front-end templates, deployment configurations — each piece of infrastructure built once becomes a reusable asset. By the fourth or fifth project, the operator is assembling proven components rather than writing untested code from scratch. What a conventional team would build in weeks, the operator deploys in minutes from accumulated patterns.

The AI layer accelerates the assembly. Technical questions that required a $150/hour specialist in October 2025 were answered by AI tools costing approximately $105/month by January 2026. The operator's judgment about what to build never changed — the support for how to build shifted from expensive human specialists to inexpensive AI. The return on the $34,473 in direct external support investment: 23.1x to 84.1x, depending on which end of the market rate estimate you use. Simultaneously, $82,640 in ongoing SaaS subscriptions and contractor fees were permanently displaced — costs that no longer exist because the operator's own infrastructure replaced the third-party services.

What This Means for Technical Leaders and Founders

The numbers force a recalibration of build-or-buy decisions. If the historical assumption was "building custom software costs $250,000 minimum and takes twelve months," then outsourcing, licensing SaaS products, and accepting vendor lock-in made economic sense. If the actual cost of building — with AI-assisted execution and accumulated infrastructure — is $67,895 for ten production systems delivered in four months, the calculus reverses.

This does not mean every operator will replicate these exact numbers. The portfolio behind this data was built by a technical operator running a structured execution methodology with disciplined use of AI tools. The point is not that software is now free — it is that the cost floor has dropped by an order of magnitude for operators who invest in building reusable infrastructure rather than paying for the same components to be rebuilt from scratch on every project. The quality held: 12.1% product defect rate against an industry norm of 20-50%. The ninth product shipped with the same production-grade quality as the first — it just cost $0 in external support to build.

For anyone evaluating build costs in 2026, the question is no longer "can we afford to build?" The question is whether you can afford the 12x to 43x markup of the old model.

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Related: Spoke #8 (Reducing Contractor Dependency) | Spoke #11 (Measuring AI Development Productivity) | Spoke #12 (Build Budget Deep Dive)

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