Build vs Buy Calculator
Compare the true cost of building custom software vs buying an off-the-shelf solution. Factor in development time, maintenance, and opportunity cost.
Last updated: March 2026
A build vs buy calculator compares the true cost of building in house versus purchasing a SaaS tool. Build when the tool is core to your competitive advantage. Ongoing maintenance typically costs 15 to 25% of initial build cost per year. Use this free tool to decide.
Buy Total Cost
$4,800
Build Total Cost
$44,000
Savings with Cheaper Option
$39,200
Build Break-Even
100 months
How You Compare
Your build vs buy break-even is better than 95% of B2B software decisions.
Industry typical: 12-36 months
Source: McKinsey Build vs Buy Analysis 2025
💡 What This Means
- 💰 The cheaper option saves $39,200 over your time horizon. Buying is the clear winner on cost alone.
- ⚠️ Build doesn't break even until month 100. That's a long payback — make sure you'll still need this solution by then.
- 💡 Don't forget maintenance burden: custom-built solutions require ongoing developer time. Factor in 20-30% of initial build cost annually for maintenance.
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What is Build vs Buy Decision?
The build vs buy decision compares the total cost of developing software in-house against purchasing an existing solution. Building offers full customisation and no recurring licence fees, while buying provides faster deployment and proven reliability. The right choice depends on how core the functionality is to your competitive advantage. Compare SaaS investment returns with the SaaS ROI Calculator and evaluate vendors with the Vendor Comparison Calculator.
The Formula
Build Total = Initial Development Cost + (Annual Maintenance × Years) Buy Total = (Annual License Fee × Years) + Implementation Cost + Training
Worked Example
A company needs a project management tool. Build: $40,000 initial development + $8,000/year maintenance. Buy: $12,000/year licence + $5,000 implementation. 5-year comparison.
- Build total = $40,000 + ($8,000 × 5) = $80,000
- Buy total = ($12,000 × 5) + $5,000 = $65,000
- Year 1: Build $48,000 vs Buy $17,000
- Break-even: Build becomes cheaper at year 8.75
📌 Over 5 years, buying saves $15,000 (19%). Building only becomes cheaper after year 8.75 — and that assumes zero scope changes or major refactoring.
Why This Matters
Opportunity cost
Developers building internal tools aren't building your product. If your engineering team is your biggest expense and competitive advantage, every hour spent on non-core tools is an hour not spent on features that drive revenue.
Maintenance burden
Custom software requires ongoing maintenance: bug fixes, security patches, infrastructure updates, and feature requests. This "maintenance tax" of 15-25% of initial build cost per year is often underestimated and grows as the codebase ages.
Common Mistakes
❌ Underestimating build costs by 2-3x
Software projects consistently overrun estimates. A $40,000 estimate typically becomes $80,000-120,000 once edge cases, testing, documentation, and scope changes are included. Always multiply initial estimates by 2-3x for realistic budgeting.
❌ Building commodity features
If the functionality exists in mature SaaS products (CRM, email, project management, analytics), buying is almost always better. Build only when the tool is core to your competitive advantage and no existing solution meets your needs.
Industry Benchmarks
| Category | Good | Average | Poor |
|---|---|---|---|
| Break-even (build vs buy) | Build cheaper within 2 years | 3-5 years | Build never cheaper |
| Maintenance as % of build cost | Below 15% | 15-25% | Above 30% |
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