Serge Belov"Should we build this or buy an off-the-shelf solution?" is one of the most consequential decisions a growing company makes. Get it wrong and you're either locked into software that doesn't fit, or paying to maintain complexity you didn't need.
The default should be buy
Off-the-shelf software exists because most business problems aren't unique. CRM, project management, accounting, HR, email — these problems have been solved, and the solutions are cheap relative to development cost.
If a SaaS product solves 80% of your problem at $500/month, the bar for custom development is high. You need a compelling reason to take on the ongoing cost and risk of custom software.
When custom makes sense
Your process is the product. If your competitive advantage comes from how you do something — your workflow, your methodology, your data model — then fitting your process into someone else's software means giving up what makes you different.
The integration cost of SaaS exceeds the build cost. Assembling five SaaS products with expensive middleware to do what one custom application could do cleanly is a common trap. When the glue costs more than the build, build.
The data is too sensitive for third-party hosting. Regulated industries, sensitive client data, and IP-critical systems often can't live in a vendor's cloud. Custom software on your own infrastructure is sometimes the only compliant option.
SaaS costs scale painfully with your growth. Per-seat pricing that seems reasonable at 10 people becomes a significant line item at 200. If you can model the crossover point and it's within your planning horizon, building may be cheaper long-term.
The hidden costs of custom software
Custom software has a recurring cost that SaaS doesn't: maintenance. Every dependency gets outdated. Every third-party API changes. Security patches need to be applied. Features need to be added as the business evolves.
Estimate ongoing maintenance at 15–20% of initial development cost per year. A $50,000 application costs $7,500–$10,000/year to keep running well. Factor this into the build vs buy calculation.
A practical framework
- List the requirements — functional and non-functional
- Evaluate 3–5 SaaS options — score them against requirements
- Calculate the 3-year total cost of SaaS — licensing, integration, customization limits
- Get a development estimate — including year-1 maintenance
- Compare total costs and strategic value
The answer is often SaaS for operational functions and custom for anything that directly differentiates your business.
The hybrid path
Most mature companies end up with both. SaaS for commoditized functions (accounting, HR, communication) and custom software for the core operational systems that define how they work. Starting with SaaS and migrating to custom as you understand your needs deeply is usually the right sequence — not the reverse.