Building & Budgeting for Software with Purpose

Why we set budgets

It’s so easy to get sidetracked in software projects, pouring energy into flashy features and designs, when most of that stuff doesn’t matter. The truth is, software is a tool—a means to an end.

Think of it like a road. A road is only useful because of where it takes us. Sure, it needs to be smooth and well-maintained to avoid accidents, but even the smoothest road is pointless if it doesn’t lead to the right destination.

The same principle applies to software. Whether you’re estimating costs, designing features, or building your final product, the key is to focus on your end goal.

Why This Matters—From a Budget Perspective When setting a budget for a project, the first question isn’t “How much money do I have?” but rather, “What is the end result worth to me?” This shift in thinking changes everything.

Side note this is why I hate open government grants that pretend to fuel innovation. What the do instead is waste tax payer money on projects with arbitrary budgets. Budgets set not by what the project is worth but by how much money was granted. But I digress.

The very firs step should be to start determining the value your software will create. This is your foundation for setting a budget. What’s the concrete outcome you’re aiming for? Once you know that, you can boil your idea down to its minimum viable product (MVP)—the simplest version that delivers meaningful results to your target audience.

From there, it’s just basic math:

1. Estimate the value your app or service creates for your audience. Let’s say it’s $100.

2. If you price it at $50, your audience gets a great deal—it costs half the value it provides them.

3. For this to make sense financially, it should cost you no more than $25 to build, leaving a 100% return on your investment. (Obviously leaving some room for play depending on how much margin you can stomach)

This logic lets you measure the leverage your project creates. A well-designed MVP turns a $25 investment into $100 of value, with room for you to comfortably harvest some of that value as profit.

On the flip side, if your costs balloon past $100, you’ve already lost the leverage—and likely the project’s viability.

Stay Focused on Value “But wait,” you might say, “How can I know these numbers before I launch?” Fair question. It’s true that some of this involves educated guesses, but I’d argue most people dodge this step because it takes effort.

Even with limited data, you should have a rough idea of the value your project can generate. This is enough to guide an initial investment and build the simplest version of your app. That MVP then becomes a next stage in testing to confirm your assumptions and refine the offering.

This is why I think starting with huge sums of money is often a mistake. Big budgets can tempt you to build more than necessary, focusing on bells and whistles instead of nailing the core value.

Keep Your Eyes on the Destination Getting caught up in flashy features or overspending without considering the return on investment can easily derail a project. The goal isn’t to build the thing for its own sake—it’s to create something that delivers value and gets you where you need to go.

By staying focused on the destination, you’ll be better equipped to make smart decisions about budgets, features, and timelines. Software should work like a well-planned road: leading you somewhere meaningful, without unnecessary detours.