Software development costs detailed in new Boyd report

A new 2022 North American site selection study compares the cost of operating
a software development center in a series of 25 top US and Canadian hubs of
the software industry. Operating costs are scaled to a representative 50,000 sq.
ft. software development office employing 150 workers. The analysis includes all
major geographically-variable cost factors critical to the corporate site selection
process for new high-tech, digital development centers.

Software development costs in 2022

The Boyd Report shows total annual operating costs ranging from a high of $23.8
million in San Rafael, California, to a low of $12.9 million in Longueuil, Quebec,
Canada. Among the US software hubs, annual costs range from a high of $23.8
million in San Rafael to a low of $17.8 million in Minden, Nevada. Operating
cost differentials are based on the latest 2022 BizCosts data. Canadian costs are
expressed in US dollars at an exchange rate of .79.

Comparative Locations

Major geographically-variable operating costs were projected by Boyd for a
series of 25 North American locations housing current and emerging
concentrations of software, gaming, and digital multimedia industry operations.
Locations included in the Boyd analysis demonstrating a diverse range of site
selection strengths, including precedent software development activity, available
Skills in software and digital multimedia design, strong information technology academic linkages, lifestyle amenities attractive to millennial tech workers and
others.

The 25 comparative locations included in the Boyd analysis are detailed below
alphabetically by state and province.

  • Tempe, Arizona
  • Carlsbad, California
  • Irvine, California
  • Redwood City, California
  • San Rafael, California
  • Santa Monica, California
  • Highlands Ranch, Colorado
  • Coral Gables, Florida
  • st. Petersburg, Florida
  • Alpharetta, Georgia
  • Meridian, Idaho
  • Hoffman Estates, Illinois
  • Metairie, Louisiana
  • Worcester, Massachusetts
  • Ann Arbor, Michigan
  • Minden, Nevada
  • Egg Harbor Twp., New Jersey
  • Northport, New York
  • Victor, New York
  • Hillsboro, Oregon
  • Blue Bell, Pennsylvania
  • Richardson, Texas
  • Kirkland, Washington
  • Burnaby, British Columbia
  • Longueuil, Quebec

Total Annual Operating Cost Ranking

Taken from summary Exhibit I is a cost ranking of the 25 surveyed US and
Canadian software center locations.

TOTAL GEOGRAPHICALLY-VARIABLE OPERATING COST RANKING

Software Development Location

Total Annual
Operating Costs
San Rafael, California $23,802,146
Redwood City, California $23,779,750
Santa Monica, California $21,479,793
Irvine, California $20,895,841
Worcester, Massachusetts $20,560,708
Blue Bell, Pennsylvania $20,298,729
Carlsbad, California $20,201,733
Northport, New York $20,188,798
Kirkland, Washington $20,172,539
Ann Arbor, Michigan $20,063,539
Hoffman Estates, Illinois $20,053,239
Highlands Ranch, Colorado $19,504,751
Egg Harbor Twp., New Jersey $18,994,900
Richardson, Texas $18,961,062
Coral Gables, Florida $18,827,342
Tempe, Arizona $18,740,804
Victor, New York $18,524,700
Hillsboro, Oregon $18,383,990
Alpharetta, Georgia $18,369,077
Metairie, Louisiana $18,231,893
st. Petersburg, Florida $18,227,565
Meridian, Idaho $17,923,894
Minden, Nevada $17,863,242
Burnaby, British Columbia $14,004,902
Longueuil, Quebec $12,919,899

Operating Costs Under the Microscope

Operating Costs Under the Microscope

Growing pressures for corporate tax hikes heightened costs associated with
Reshoring jobs back to the US, and historic levels of inflation are all causing a
greater focus on comparative operating cost structures within all sectors of the
tech industry, including software. Many tech companies are concluding that
Improving the bottom line on the cost side of the ledger will be far easier than on
the revenue side coming out of the pandemic in 2022. Site selection planning on
where to locate new software development facilities, likewise, is focusing heavily
on comparative economics.

Cost differentials between an acceptable development site and an optimum
location can be substantial even within a given region. Itemized annual operator
Costs are detailed in the following table for several high and low-cost software
hubs included in the new Boyd Report.

What it Costs to Operate a Software Development Center: The Highs and Lows (1)

Highest Cost US Location Lowest Cost US Location
San Rafael Santa Monica Northport Highlands Ranch st. Petersburg Mind
(San Francisco Metro) (Los Angeles Metro) (New York Metro) (Denver Metro) (Tampa Metro) (Reno/Tahoe Metro)
California California New York Colorado Florida Nevada
Labor
Weighted Average Annual Earnings $98,779 $90,137 $83,676 $82,706 $78,183 $77,618
Annual Base Payroll Costs $14,816,850 $13,520,550 $12,551,400 $12,405,900 $11,727,450 $11,642,700
Fringe Benefits $5,482,235 $5,002,604 $4,644,018 $4,590,183 $4,339,157 $4,307,799
Total Annual Labor Costs $20,299,085 $18,523,154 $17,195,418 $16,996,083 $16,066,607 $15,950,499
Electric Power Costs $134,075 $98,115 $140,275 $74,245 $65,100 $61,380
Amortization Costs $2,414,864 $1,943,932 $1,696,331 $1,570,440 $1,370,522 $1,267,647
Property and Sales Tax Costs $849,641 $825,802 $1,069,414 $788,479 $649,884 $503,376
Travel Costs $104,481 $88,790 $87,360 $75,504 $75,452 $80,340

Total Annual GeographicallyVariable Operating Costs

$23,802,146 $21,479,793 $20,188,798 $19,504,751 $18,227,565 $17,863,242
Notes:

Includes all major geographically-variable operating costs for a 50,000 sq. ft. software development center employing 150 workers.

Source: The Boyd Company, Inc., of Princeton, NJ

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