Agile vs. Waterfall: What's Best for Custom Software Solutions?

Agile and Waterfall are two of the most widely used software development methodologies that are employed by startups and tech giants alike, including companies like Google that utilize Agile variants in their workflows.

Agile is known for its iterative nature and adaptability to shifting requirements, which makes it a preferred choice for projects with dynamic scopes. Meanwhile, the Waterfall model maintains its relevance for projects with fixed parameters, progressing through clearly defined sequential stages.

Organizations select these models based on their unique requirements. The decision often depends on factors such as project complexity, level of stakeholder involvement and regulatory demands. For these reasons, engaging a custom software development company can help young and old businesses determine which methodology aligns best with their goals.

This guide compares Agile and Waterfall models in detail. We’ll explore their respective strengths and drawbacks, clarify when one is more appropriate than the other, and assess how each impacts the success of custom software solutions.

Understanding Agile and Waterfall methodologies

The Waterfall methodology follows a strict, linear process, starting from requirements gathering, moving through design and implementation, and concluding with verification and maintenance. Each phase must be completed before moving to the next. It’s often used when outcomes are predictable and both timeline and budget are tightly controlled.

In contrast, Agile is an adaptive, iterative approach that encourages continuous improvement. Projects are broken down into small, manageable units called sprints. Agile teams evaluate progress regularly and make adjustments based on stakeholder feedback and changing market conditions.

Consider a startup building a mobile app with frequent feature updates and constant user input. In this scenario, Agile is ideal as it allows for early testing, faster iterations and timely course corrections. The flexibility of Agile promotes experimentation and fast adaptation, which are essential for digital products with evolving user demands.

Now, consider a government agency building a tax processing system. The project must comply with strict regulations, has a fixed budget and requires exhaustive documentation. Waterfall is the better choice here because it provides a predictable roadmap, clearly defined approval stages and reduced compliance risk.

Agile’s responsive nature suits fast-moving industries like tech and product development, while Waterfall supports structured environments such as healthcare, aerospace or public administration.

Despite their differences, both models remain widely used across custom software development. The right approach depends on the project’s objectives, environment, stakeholder expectations, and any compliance requirements.

As you weigh these options, you may ask: Is Agile or Waterfall better for software development? The short answer: it depends on your use case. Let’s quickly compare the two.

Pros and cons of the Waterfall model

Source: actiTime

1. Advantages of the Waterfall model

• Predictable timelines and budgets → With a clearly defined structure, it's easier to estimate time and costs from the start.

• Clearly defined scope → Detailed requirements are gathered at the beginning, reducing ambiguity during development.

• Structured process → Ideal for projects where documentation and approval at every stage are mandatory, especially in highly regulated sectors.

2. Drawbacks of the Waterfall model

• Inflexibility → Once the development begins, changes are difficult and costly to implement.

• Delayed discovery of issues → Problems often remain hidden until the testing phase, requiring major revisions late in the process.

• Poor fit for evolving requirements → The model does not adapt well to changing user needs or market shifts.

✨ Real-world applications of the Waterfall model

​Waterfall is suited to projects like infrastructure builds or large-scale enterprise systems such as projects with clearly defined goals and little room for change. For example, the troubled launch of Healthcare.gov revealed the risks of applying Waterfall to projects that needed more flexibility.

So, what software development project does the Waterfall model recommend?

• Projects with a stable scope, fixed requirements and low tolerance for change are ideal candidates for Waterfall.

Pros and cons of the Agile model

1. Advantages of the Agile model

• Flexibility to evolve → Agile embraces changes at any point during development, which is particularly valuable for user-centric products.

• Frequent feedback loops → Continuous communication between teams and stakeholders drives incremental improvement.

• Early and ongoing delivery → Working software is released frequently, giving businesses faster access to value and user feedback.

2. Challenges of the Agile model

• Client involvement is crucial → Agile depends on consistent collaboration with stakeholders, which may not be feasible in all cases.

• Scope management risks → Without proper boundaries, frequent changes can cause projects to grow beyond their original intent or budget.

✨ Real world applications of the Agile model

Agile works best in environments where change is expected. Startups or digital product teams, for instance, benefit from Agile’s responsiveness. When developing a mobile app with constantly evolving features, Agile enables rapid testing, feedback and iteration.

So, in which circumstances would an Agile approach be better suited to an organization than Waterfall? 

• Agile is better when stakeholder input is ongoing, requirements are fluid and speed-to-market is a priority.

Agile vs. Waterfall: what works best for custom software solutions?

When developing custom software solutions, choosing the right methodology depends on multiple project-specific factors.

Waterfall may be the best fit when you have clear deliverables, fixed budgets, and stringent compliance needs. Its structured development path is helpful in industries where every decision must be approved before moving to the next stage, like in defense or healthcare sectors.

On the other hand, if you're building a solution that requires flexibility and speed, like a new digital product, Agile offers a better framework. It supports iterative releases, user testing and faster time-to-market, which is ideal for startups and fast-paced environments.

Let’s look at two practical examples:

1. Dr. Amina, the IT Director of a large hospital, is leading the development of a patient record management system. Due to strict regulations and the need for thorough documentation, she opts for the Waterfall model. In a board meeting, she emphasizes the importance of phase-by-phase approvals. Waterfall's predictability and documentation requirements align well with the hospital's operational structure.

2. Meanwhile, Zayd, a young entrepreneur launching a wellness app for Gen Z audiences, isn’t sure which features users will value most. In weekly sprint meetings, he and his small team adjust development priorities based on early user feedback. “People are asking for meditation reminders,” he notes. Agile allows his team to adapt rapidly, test features, and push updates that reflect current demand.

Both Dr. Amina and Zayd are building custom software solutions, but their needs are very different. While Zayd’s success hinges on adaptability, Amina’s depends on predictability and control. Each methodology fits their respective goals.

So then, is Agile or Waterfall better for software development? 

• There’s no universal answer. The ideal choice depends on the project’s size, risk tolerance, need for flexibility and also the regulatory context.

Choosing the right custom software development partner 🤝

The success of any methodology also depends on the capabilities of your custom software development company. A seasoned development partner will understand when to use Waterfall, Agile or even a hybrid model tailored to your needs.

Some companies blend the two by using Waterfall for initial planning and documentation, then switching to Agile for the build phase. This hybrid approach can deliver the reliability of fixed-scope projects while maintaining the ability to adjust mid-development.

So, when selecting a custom software development company, look for one that:

1. Offers transparency in planning and delivery

2. Encourages active client involvement when needed

3. Has experience delivering projects using both methodologies

4. Provides flexibility to scale or pivot when your business needs change

A good development partner listens, collaborates and proactively updates the process as your goals evolve, all of which is essential for delivering software that can grow with your organization.

Conclusion

When comparing Agile and Waterfall, the better choice isn’t determined by trends, but by the needs of your business and the nature of your project.

Both methodologies offer clear benefits and present unique challenges. The key lies in evaluating your team’s working style, risk appetite, regulatory requirements and delivery expectations.

By partnering with an experienced development team and selecting the right methodology, you’ll increase your chances of delivering impactful, future-ready custom software solutions.

FAQs

1. Which Agile methodology is best for software development?

The best Agile methodology depends on your project needs. Scrum is ideal for projects with evolving requirements and frequent releases, using time-boxed sprints. Kanban is better for continuous delivery and managing a steady flow of work without fixed iterations. Some teams also use Scrumban, a hybrid of both, for added flexibility. The choice depends on your project’s scale, timeline, and how often requirements change.