Total cost over 3 years: SaaS subscription or custom software

Comparing a SaaS subscription with custom software on the first invoice alone is like comparing rent and a purchase over a single month. The right horizon is at least three years. Here are the cost lines to add up on each side, a worked example to adapt, and the situations where the math clearly favors one option.

To run the numbers with your own figures, the SaaS vs custom calculator draws both curves and shows the break-even month.

The cost lines to add up on each side

An honest total cost does not stop at the sticker price. This is the list I use to help a CEO or a CFO compare.

Two lines are often forgotten. The first is add-on tools: a SaaS is rarely used alone, and is usually surrounded by an automation tool and a few Excel files. The second is the exit cost: switching SaaS in three years will mean a data migration and new training.

A worked example over 3 years

An illustrative example, with made-up amounts to replace with your own. A company with 25 users compares a SaaS at €60 per user per month, billed yearly, with custom software at $18,000 (€16,000)excl. VAT.

In this example, first-year maintenance is lower because the first three months of support are included in my work. The result changes a lot with the number of users: with 8 users, the same SaaS would cost €17,280 in subscriptions over 3 years, and the gap would shrink considerably.

To get a realistic range for your own needs, the estimator calculates an order of magnitude based on the features you select.

Hidden costs, on both sides

I would rather say it plainly: custom software has its less visible costs too.

On the SaaS side:

• price increases at renewal, which most terms of service allow;
• essential features reserved for the higher tier;
• time lost on workarounds when the tool does not fit the process;
• dependency: your data and your habits live with the vendor.

On the custom side:

• your team’s time during scoping and testing, which is real and must be planned;
• features requested after delivery, which are not included;
• technical maintenance (updates, security), covered in the cost of app maintenance;
• project risk, which is kept under control with serious scoping and a fixed quote.

What tips the balance

The math leans toward custom software when several of these conditions apply:

1. You have more than 15 to 20 users, or the number will grow as you hire.
2. The SaaS only covers part of the need, and you pay for two or three tools to do the job of one.
3. Your process is specific: pricing rules, approval flows, documents unique to your trade.
4. Your data is strategic and you want to stay in control of it.

On the other hand, SaaS remains the right choice when the team is small and stable, the process is standard and the vendor covers your needs well. The guide custom app vs SaaS goes through these criteria in detail.

When custom software is not the answer

I do not recommend custom software to replace a general-purpose tool that works: email, office suites, accounting, payroll. The vendors of these products keep up with regulations and spread their costs across thousands of customers; redoing their work makes no sense.

I also do not recommend it if your available budget is below $6,800 (€6,000)excl. VAT: below that, you get a prototype, not a production tool. In that case, it is better to configure a SaaS properly or, if your current tool covers the essentials, extend it without replacing it.

Where to start your calculation

1. List your current subscriptions tied to the process in question, with the number of users and the renewal date.
2. Add the side costs: connectors, automation tools, time spent re-entering data.
3. Project your headcount over three years, with a price increase assumption.
4. Ask for a quote for custom software covering the same scope, maintenance included.

I can run this calculation with you during a free 30-minute discovery call. The terms and price list are published on the pricing page.