PurposeIn the current market scenario, software upgrades and updates have proved to be very handy in improving the reliability of the software in its operational phase. Software upgrades help in reinventing working software through major changes, like functionality addition, feature enhancement, structural changes, etc. In software updates, minor changes are undertaken which help in improving software performance by fixing bugs and security issues in the current version of the software. Through the current proposal, the authors wish to highlight the economic benefits of the combined use of upgrade and update service. A cost analysis model has been proposed for the same.Design/methodology/approachThe article discusses a cost analysis model highlighting the distinction between launch time and time to end the testing process. The number of bugs which have to be catered in each release has been determined which also consists of the count of latent bugs of previous version. Convolution theory has been utilized to incorporate the joint role of tester and user in bug detection into the model. The cost incurred in debugging process was determined. An optimization model was designed which considers the reliability and budget constraints while minimizing the total debugging cost. This optimization was used to determine the release time and testing stop time.FindingsThe proposal is backed by real-life software bug dataset consisting of four releases. The model was able to successfully determine the ideal software release time and the testing stop time. An increased profit is generated by releasing the software earlier and continues testing long after its release.Originality/valueThe work contributes positively to the field by providing an effective optimization model, which was able to determine the economic benefit of the combined use of upgrade and update service. The model can be used by management to determine their timelines and cost that will be incurred depending on their product and available resources.