Why does custom software cost what it costs, and why do two quotes for the same brief differ so much? A business commissioning a build usually writes its requirement down so that the development teams can assess it properly. The quotes still come back spread across a wide range, which leaves the client unable to choose on the first pass.
The purpose of that spread is not random. It comes from two things, and neither is about the software.
The quality of the assessment
Different teams analyse the same requirement to different depths. A strong team works through it using its own experience of similar projects: what the business is really asking for, where the difficulty sits, and how much of it there is.
The difference shows up in the questions. A team that has built something similar will identify the awkward part of the requirement before quoting, because it has been bitten by it before. A team without that experience will price the function points as they read on the page, which is why a quote can look precise and still be wrong.
If the requirement was never assessed properly, the price is a guess with a number attached. That is the first reason two quotes diverge.
The cost of the people
In software development the largest cost is labour, because the product is a service. The largest variable inside labour is the seniority of the engineers.
A company new to the market, trying to win work by undercutting, will staff projects with cheaper people. It can quote very low, and it will get the order. The quality of what comes out is not difficult to predict.
There is a second layer to this. The same skill level costs different amounts in different places, and first-tier cities pay considerably more than second- and third-tier ones. But the engineers with the strongest skills tend to be concentrated in the first-tier cities, which means the first-tier rate is closer to the true market rate for the capability.
That is why a very cheap quote is not a bargain. It is a statement about who will be doing the work.
What to do with the spread
When quotes come back far apart, do not average them and do not take the lowest. Ask each supplier to walk through how they reached their figure: which parts of the requirement they found difficult, how many people they have allowed for, in what roles, over how long.
The answers separate the two groups immediately. A team that has genuinely assessed your project will have specific things to say about it. A team that has not will talk about the price instead.
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