Low-code development is becoming a cheaper option for many companies to build their own apps. However, is a low-code development cost truly lower than traditional coding?
To evaluate whether investing in low code or pro code is more economical for your business, it’s crucial to factor in different factors contributing to the total cost. This is also the main theme of today’s blog post!
Further, this post digs into the hidden costs of low-code development you should be aware of, what your business can truly save with low-code, and how to estimate a low-code development budget reasonably. Let’s get started!
Analysis of Low-Code Development Cost Factors
Beyond what you expect, low-code development costs are not limited to a platform’s quoted pricing plan.
Many platform vendors often clarify what features or benefits are included in their pricing models. But are these functionalities sufficient for your business to work on low-code projects? Beyond those advertised fees, do you need to pay anything extra?
Let’s analyze cost factors related to low-code development to answer these questions:
Licensing fees (subscription, per user, per app)
Licensing fees are what you pay to use a low-code development platform. They can be calculated based on usage tiers, per user, or per application.
A per-user pricing model is usually low, but its cost can increase if your team grows. For instance, Microsoft Power Apps charges $20/user/month, but you can get a bulk discount of $12/user/month if your business purchases at least 2,000 licenses.
Per-app licensing may be cheap if your business wants to build a few apps. But the cost scales if the number of apps built increases. For example, Mendix charges you €900/month for one app, but up to €2,200/month for unlimited apps.
Meanwhile, enterprise subscriptions can require higher fixed fees, but allow for unlimited users or apps.
Considering your specific use cases, the likelihood of scalability, and budget constraints to choose the right plan.
Infrastructure & hosting costs
Where you host infrastructure (or deploy apps) also affects your overall low-code development cost.
Many low-code vendors allow you to manage infrastructure on their proprietary cloud-based platform (e.g., Mendix Cloud). This frees you from manual setup or server maintenance.
Meanwhile, if you host apps on managed cloud platforms (e.g., AWS or Microsoft Azure), you may bear additional costs regarding higher data storage, traffic levels, or API calls.
Besides, if you choose on-premise deployments, your company has to face higher costs for servers, storage, security, and updates.
Developer or citizen developer cost
Using low-code platforms can reduce over-reliance on professional developers, but not completely remove associated costs.
Professional developers still hold a crucial role in guiding business technologists, building complex logic and integrations, and ensuring superior security and compliance.
Meanwhile, citizen developers (e.g., HR representatives or marketing executives) need to go through targeted training, upgrade their IT skills, and require supervision.
All these factors may increase developer costs. However, if your citizen developers can leverage low-code platforms effectively to build internal apps and streamline business functions, the ROI (Return on Investment) may exceed the cost.
Integration and API expenses
Low-code apps don’t work alone. But they need to play nicely with your existing software and other third-party services for seamless data transfer and business workflows.
Many platforms offer prebuilt connectors and even enable your team to use custom APIs to integrate with external systems. But building custom integrations may add costs, let alone increased charges for heavier API usage.
Besides, incorporating low-code apps with legacy or third-party systems may be complex and thus require additional developer and testing time. This undoubtedly increases the overall development cost.
Maintenance and support fees
Low-code platforms simplify maintenance, but do not reduce corresponding costs.
If a platform doesn’t support updating your apps to align with evolving business needs, maintaining the apps may demand higher charges, time, and effort.
Besides, many platform vendors include different support levels in their pricing models. Premium support and faster response times may come with higher fees.
The Hidden Costs of Low-Code Development
Low-code development is considered a cheaper alternative to traditional coding. But in reality, various companies have to confront hidden costs related to these platforms. Below is what might arise and impact your total development cost over time:
Platform Lock-In
One of the biggest challenges of using low-code platforms is vendor lock-in. If you want to move your app and data to another platform or a fully custom-coded solution, it may cost a fortune and time to conduct this migration.
Why? A low-code platform uses prebuilt frameworks and tools to let you create an app visually without caring much about code. This turns to a disadvantage when you want to migrate your app out of the platform, as its source code is proprietary and hard to modify or migrate.
When you find the platform no longer useful and want to move your app, it sometimes means rebuilding it from scratch. Accordingly, you have to redesign interfaces, rewrite every line of code, reconnect with external services, and re-engineer workflows.
This increases your development cost considerably.
Scaling and Licensing Growth
Low-code platforms are considered a cost-saving solution if you only build a few simple apps and your team includes only a few members. But the total cost may rise significantly when demands evolve.
Platform vendors charge you based on the number of users and apps. So, if you want to build multiple simple apps company-wide or purchase more licenses, low-code development can cost more than traditional coding.
This time, using low-code platforms may lose its advantage of finding savings.
Beyond drag-and-drop interfaces, many platforms now integrate AI copilots to build apps faster.
AI works based on credits or tokens, which are also included in subscription pricing models. In other words, each action you perform with AI, like assisting app creation or automating RPA workflows, consumes a certain amount of tokens.
When your AI usage increases, the token consumption grows accordingly and adds substantial costs.
Customization Limitations
Low-code platforms come with limited customization options.
What they offer only helps create common UI elements and connect with popular systems or services. Advanced business logic, complex UI components, or unique integrations often go beyond the capabilities of these platforms.
Therefore, you have to hire professional developers to handle high customization demands and expand your app through custom code or APIs. This, however, will increase the total development cost.
Integration & API Fees
Low-code platforms enable prebuilt or custom connectors to integrate with external services. But not all integrations are free or unlimited.
In other words, various platforms offer standard connectors in your main license. For example, Appian or Mendix allows you to connect with standard databases or cloud storage (e.g., MySQL, PostgreSQL, or Dropbox) without paying extra.
However, costs will increase if you demand advanced integrations beyond these basic connectors. Even with included connectors, your existing plan may have API call limits per user per day.
For example, Microsoft Power Apps allows 6,000 requests for various compute operations and analytics (including API calls) per licensed user per 24 hours. If a user or an app exceeds this daily limit, the platform will require additional capacity add-ons, which add extra costs.
Besides, if you connect with systems or services that the platform doesn’t support, custom APIs or middleware (e.g., Zapier or Azure Logic Apps) are necessary. But this may require additional charges.
Also, you may have to pay further for data gateway licenses or VPN setups if you integrate your app from the cloud to on-prem systems.
Training and Vendor Dependence
Low-code platforms help non-technical users to create apps, reducing over-dependence on IT staff.
However, many companies still hesitate to adopt low-code platforms because their non-IT employees have insufficient knowledge.
Not to mention that various platforms are not purely visual builders, but integrate various features, like AI copilots or RPA, to build enterprise-grade apps and automated workflows.
This shift has made low-code platforms harder to use for non-technical users.
That’s why targeted training and educational programs are necessary to help your staff use low-code platforms more effectively. But this, undoubtedly, comes with additional costs.
Further, relying heavily on vendor support in the long term can incur extra fees. Because platform vendors may charge more for platform upgrades, advanced features, troubleshooting, or consulting assistance.
Low-Code vs Traditional Development Cost Comparison
Now, you’ve understood which factors make up the total low-code development cost. But how does this cost compare with traditional development fees? Let’s look at the table below to see how these two approaches cost differently:
| Factors | Low-Code Development | Traditional Development |
| Development Time & Labor | – Shorter development cycles due to visual editors and AI capabilities – Lower costs because of less dependence on pro developers, but hidden costs may arise due to vendor lock-in or growing usage |
Longer time + Higher labor costs |
| Infrastructure & Maintenance | – Simplify infrastructure management and maintenance due to its built-in cloud hosting and automated scaling. – However, costs may rise if you choose to deploy on managed cloud platforms or on-premises. – Maintenance can incur higher fees if the platform doesn’t support the updates you want to meet changing demands. |
Manage the full infrastructure, from the source code and servers to deployment pipelines → require dedicated IT staff and ongoing maintenance, which come with high costs |
| Licensing Fees | Licensing models per user, app, and computing resources. This cost may increase when your demands grow or when you leverage premium features. | Doesn’t have licensing fees |
| Integration | Prebuilt connectors and data tools, but costs may increase if you require advanced integrations that the platform doesn’t support | Custom connectors & auth logic |
| Long-Term ROI | Faster delivery and lower early-stage costs, improving short-term ROI. But for scaling projects, managing platform licenses and integration limits may be challenging. | Upfront fees are high & time-to-market is longer, but more flexibility for complex, custom systems |
How Much Can Businesses Actually Save with Low-Code?
79% of companies save operational costs thanks to low-code. However, some hidden or possibly incurred costs may charge you more. So, how much does your company actually save when using low-code? Let’s find out!
- Development Time Savings (Time-to-Market)
Traditional development may take months or even years to go from concept to testing and deployment. Each stage requires significant time and seamless collaboration.
However, low-code platforms may speed up time-to-market by offering drag-and-drop components, like UI elements, business logic, and workflows. This allows your business to respond promptly to market shifts and business needs, hence creating value sooner for target audiences.
- Personnel Resource Optimization
A traditional development team often involves various specialists, from frontend and backend developers to QA testers.
Hiring and managing such a team across projects requires high salaries. Not to mention that companies are facing a shortage of IT staff.
Waiting for in-house teams or outsourcing may add more opportunity costs. That’s why using low-code may partially resolve this issue.
With visual interfaces, business users can create apps under low-code guidelines and IT supervision. Meanwhile, professional developers focus on more complex and higher-value tasks.
This HR optimization helps your company reduce hiring needs while creating good-quality solutions for specific use cases.
- Reduced Maintenance and Bug Fixing Costs
Using standardized frameworks and components in low-code platforms, you can avoid various common bugs and compatibility issues.
Besides, many low-code platforms support automated updates to optimize performance, improve security, and ensure compliance.
This simplifies maintenance and debugging, hence reducing corresponding costs.
- Improved Agility and Adaptability
Compared with traditional coding, low-code development is more agile. With prebuilt components and logic templates, you can build apps or automated workflows within weeks instead of months. This faster time-to-market allows your business to adapt instantly to changing needs.
Calculating ROI and Total Cost of Ownership (TCO)
When choosing low-code development platforms, don’t just look at their total costs. You should also calculate their Return on Investment (ROI) to get a financial picture of their real value.
The basic formula for ROI calculation is:
ROI = (Net Benefit / Total Cost of Ownership) x 100
Net Benefit is the total value gained (e.g., faster time-to-market, labor savings, or reduced maintenance) minus the total cost of ownership (TCO).
Meanwhile, the TCO includes not only licensing fees but also ongoing and hidden costs (e.g., infrastructure & hosting, API charges, training, governance, and maintenance).
Suppose using a low-code platform saves your business $100,000 per year in developer hours and infrastructure costs. However, the platform has a TCO of $50,000 in licensing and operations. So, according to the given formula, the ROI will be:
ROI = (($100,000 – $50,000) / $50,000) x 100 = 100%
This figure means that within a year, your company reaches the break-even point (“recovers the low-code investment”).
Use this calculation periodically to reassess your TCO and ROI. This is extremely important if your business demands more users, apps, and other factors, which can increase the total cost.
This not only ensures continuous financial benefits but also lets your company monitor platform usage over time to discover optimization opportunities.
How to Estimate Your Low-Code Development Budget
Before deciding on a low-code platform, your business needs to plan a budget effectively to avoid unexpected costs. Below are some steps you can follow to budget reasonably:
- Identify the project scope and complexity
The first thing to do when budgeting is to clarify your expected apps, along with project scope and complexity.
Particularly, you need to identify which problems your apps need to resolve and which features are crucial to achieve that goal. This helps you evaluate the project complexity and consider whether the chosen platform offers sufficient tools to meet your objectives.
From your shortlisted low-code development platforms, estimate licensing costs. Remember to carefully check which features and benefit packages come with your chosen pricing model.
Even with low-code, your team still needs business technologists to build simple apps and professional developers to handle complex features and supervise the whole development work. Consider who will take over which tasks, along with development effort and labor costs.
- Ponder long-term and hidden costs
Don’t forget to consider long-term and hidden costs that are excluded from your standard pricing plan. These costs include infrastructure and hosting (if you choose managed clouds or on-prem infrastructure), integration and API usage, maintenance & scaling, and more.
Considering these costs, plus labor and licensing fees, will help you estimate your full-year TCO more accurately.
- Consider buffer and contingency
Whether low-code or pro-code development, you should add a reserve to your budget for unknown costs (e.g., new feature requests, third-party integrations, or platform upgrades). 10-20% is enough for well-defined, simple low-code apps. If you aim to conduct more complex, enterprise-grade projects, add 20-30% instead.
Conclusion
Many organizations believe that low-code platforms may help them reduce development and operational costs. This is true if you just build a few simple apps that don’t come with complex requirements and involve a few citizen developers. In reality, low-code development includes ongoing and hidden costs beyond licensing fees. Factor in all the costs that can arise during low-code development, or you will overspend your budget on unexpected stuff.
