Build vs Buy: When to Build Custom Software and When to Use SaaS

The Build vs Buy Dilemma

Every growing business eventually faces the build vs buy software decision. You need a tool that does something specific — manage inventory, handle billing, automate workflows, serve customers — and you have two options: build custom software tailored to your exact needs, or buy an existing SaaS product that gets you 80% of the way there.

Get this decision wrong and you'll either spend $100,000 building something that Salesforce already does, or you'll jam your business into a SaaS product that forces you to change how you operate. Both are expensive mistakes.

This guide gives you a practical framework to make the right call, every time.

The Decision Framework

Before diving into pros and cons, answer these five questions:

Question 1: Is This Your Core Differentiator?

Does this software directly create competitive advantage? If the way you handle [X] is what makes your business special, build it. If it's a commodity function that every business needs, buy it.

Examples:

• A logistics company's route optimization algorithm? Build. That's your competitive edge.
• That same company's accounting system? Buy. Accounting isn't what makes you special.

Question 2: Does an Off-the-Shelf Solution Exist?

Search the market thoroughly. SaaS products exist for almost everything. If a product does 90% of what you need, the remaining 10% may not justify a custom build.

Question 3: What's Your Timeline?

Custom software takes months. SaaS can be deployed in hours or days. If you need a solution next week, you're buying.

Question 4: What's Your Growth Trajectory?

If you're planning to 10x your user base in the next two years, will the SaaS product scale with you? Or will you hit pricing tiers and feature limits that become untenable?

Question 5: Can You Maintain It?

Custom software requires ongoing maintenance — bug fixes, security updates, infrastructure management. Do you have (or will you hire) the team to support this long-term?

When to Build Custom Software

Your Process IS Your Product

If the software you need is directly tied to how you deliver value to customers, building custom is almost always the right call. Your process is your moat — don't hand that to a SaaS vendor who also serves your competitors.

Existing Tools Require Painful Workarounds

When you find yourself building elaborate workarounds — duct-taping multiple tools together, exporting and importing CSV files, manually copying data between systems — that's a signal that off-the-shelf doesn't fit. The time and frustration of workarounds often exceeds the cost of a custom solution.

You Need Deep Integrations

If your new tool needs to integrate tightly with proprietary systems, internal databases, or custom APIs, a SaaS product's standard integrations may fall short. Custom software lets you connect to anything.

Data Control Is Critical

For industries with strict compliance requirements — healthcare, finance, government — controlling where data lives and how it's processed isn't optional. Custom software gives you complete control over data storage, encryption, and access.

The SaaS Price Scales Uncomfortably

Many SaaS products price per user, per seat, or per transaction. At small scale, that's affordable. At large scale, the math gets ugly fast. We've seen businesses paying $15,000/month for a SaaS tool that could be replaced by custom software costing $3,000/month to maintain after the initial build.

When to Buy SaaS

It's a Solved Problem

Email marketing, CRM, project management, accounting, HR — these are mature categories with excellent products. Building your own version would take years and millions of dollars to match what Mailchimp, HubSpot, or QuickBooks already do.

Speed Matters More Than Fit

If you need a solution running this month, SaaS is the answer. A custom build would still be in the design phase when you need the tool in production.

Your Team Can't Maintain Custom Software

Custom software doesn't maintain itself. If you don't have developers on staff and aren't planning to engage a dedicated development team, a SaaS product with vendor-managed updates and support is the practical choice.

The Market Is Still Unclear

If you're experimenting with a new business model or entering a new market, start with SaaS. Once you understand what you actually need (which is often different from what you initially thought), you can make a more informed build decision.

The SaaS Product Is Genuinely Good

Some SaaS tools are so well-built for their category that custom development can't compete. Stripe for payments, Twilio for communications, Shopify for e-commerce — these products represent thousands of engineer-years of work. Replicating that value custom is rarely justified.

Total Cost of Ownership: The Full Picture

The sticker price of building vs buying is misleading. Here's the full cost comparison.

Building Custom Software

Year 1 total: $40,000–$200,000+ Year 2+ total: $10,000–$47,000/year

Buying SaaS

Year 1 total: $5,000–$110,000 Year 2+ total: $2,700–$67,000/year

The Crossover Point

For most tools, SaaS is cheaper for the first 1–2 years. Custom becomes cheaper at year 3–5, assuming the SaaS costs scale with your growth while custom maintenance costs remain relatively stable.

Use our cost calculator to model the numbers for your specific situation.

Vendor Lock-In: The Hidden Cost of SaaS

One cost that doesn't show up on invoices is vendor lock-in. Once your business runs on a SaaS platform, switching becomes increasingly expensive:

• Data migration — Moving years of data to a new system is time-consuming and error-prone
• Process dependency — Your workflows are built around the tool's capabilities and limitations
• Training — Your team knows this tool. Switching means retraining everyone.
• Integration rebuild — Every integration you've built needs to be rebuilt with the new tool
• Downtime risk — Migration involves a transition period where things can go wrong

How to Reduce Lock-In Risk

• Export your data regularly — If the vendor goes bankrupt tomorrow, do you have your data?
• Avoid vendor-specific features — The more you use proprietary capabilities, the harder it is to leave
• Document your processes — Know what you're doing and why, independent of the tool
• Negotiate exit terms — Before signing, understand what happens if you leave

The Hybrid Strategy

Smart businesses rarely go 100% build or 100% buy. They build where differentiation matters and buy everywhere else.

A Typical Hybrid Stack

• Custom-built: Core product, customer-facing features, proprietary algorithms
• SaaS: CRM (HubSpot/Salesforce), email (Mailchimp), payments (Stripe), analytics (Mixpanel), project management (Linear/Jira)

Integration Is Key

The hybrid approach only works if your custom and SaaS tools talk to each other. This is where APIs matter. When evaluating SaaS products, always check:

• Does it have a well-documented API?
• Can you push and pull data programmatically?
• Are there webhooks for real-time events?
• What are the API rate limits and costs?

If a SaaS tool doesn't offer a solid API, it's a walled garden — and walled gardens become expensive prisons as you grow.

Real-World Decision Examples

Example 1: Appointment Scheduling

A healthcare clinic needs online booking.

Buy: Calendly or Acuity Scheduling. Standard scheduling is a solved problem with excellent SaaS options. Cost: $20–$50/month.

Build exception: If the scheduling involves complex insurance verification, multi-provider coordination, and compliance requirements, custom might be justified.

Example 2: Customer Dashboard

A B2B SaaS company wants to give customers a branded dashboard showing their usage data.

Build: This is customer-facing and directly impacts the product experience. A generic dashboard tool won't match your brand or data model. Custom development makes sense. Cost: $15,000–$40,000 initial build.

Example 3: Internal Reporting

A retail company needs sales reports and inventory analytics for their management team.

Buy: Metabase, Looker, or Tableau. Internal reporting tools are mature and powerful. Don't reinvent the wheel. Cost: $500–$3,000/month.

Making Your Decision

Map every tool your business needs. For each one, ask: "Does this create competitive advantage?" If yes, lean toward building. If no, lean toward buying. Then validate with the total cost comparison.

The best businesses build what makes them unique and buy everything else. They're not trying to be a software company — they're using software to be a better version of whatever kind of company they are.

Need help deciding what to build vs buy? Schedule a consultation — we'll help you map your technology needs and identify where custom development delivers the most value for your business. No sales pitch, just honest analysis.