Budget is one of the most important pillar of all projects including software projects. Budget is the amount required by the vendor company to deliver the project to the customer. The responsibility of the project manager of the vendor company is to complete the project within the budget that is assigned to the software project. This requires extreme attention of the project manager and other concerned staff. Usually the software projects are not completed in its allocated budget and as such cancelled before completion. There are several reasons due to which we face budget related issues such as under estimation, underbidding for the software project, lack of experienced people determining the budget etc. In this research project I have studied different approaches followed by the software organizations in Pakistan for determining budget for their software projects. I identified the strengths and weaknesses of the budget determination approaches followed by these organizations inPakistan and proposed some recommendations in order to avoid the budget related problems.