Custom Software vs SaaS: When to Build Your Own (2025 Decision Guide)
You're paying $47,000/year across 12 SaaS tools. They don't talk to each other. Your team has memorized 27 workarounds. And you just discovered the "enterprise" tier you need costs 4x more—for features you designed yourself in a spreadsheet.
Sound familiar? You're not alone. The build vs buy decision is one of the most consequential choices a growing business makes. Get it right, and you unlock competitive advantage. Get it wrong, and you waste months and money.
This guide will help you make that decision with clarity—not gut feeling.
The Real Cost of SaaS (It's Not Just the Subscription)
When evaluating SaaS, most businesses look at the monthly fee and stop there. But the true cost of SaaS includes hidden factors that add up fast:
The Hidden Costs of Off-the-Shelf Software
- Price increases: Average SaaS pricing increases 8-15% annually. That "affordable" tool doubles in 5 years.
- Per-seat scaling: Grew from 10 to 50 employees? Your costs just 5x'd—but did the value?
- Workaround labor: 2-4 hours/week per employee adapting to software that doesn't quite fit.
- Integration tax: Zapier, middleware, custom scripts—the glue that holds your stack together.
- Feature ransom: The one thing you need? It's only on the enterprise tier.
- Vendor lock-in: Years of data trapped in formats only that vendor understands.
A real example: One of our clients, a 40-person professional services firm, was paying $4,200/month across Salesforce, Monday.com, HubSpot, Docusign, and various integrations. Their team spent 15+ hours weekly on manual data syncing and workarounds. We built them a unified operations platform for $45K. It paid for itself in 9 months and now saves them $80K+ annually.
7 Signs Off-the-Shelf Software Is Failing You
Not sure if you've outgrown SaaS? Here are the warning signs:
You're Using Less Than 20% of Features
You pay for "enterprise project management" but only use it as a glorified task list. The 80% you don't use isn't free—it's cluttering your interface and slowing your team down.
You've Hit the "Enterprise Wall"
The feature you need—custom fields, API access, SSO, advanced permissions—is locked behind a tier that costs 3-10x more. You're being held hostage.
Your Process Is More Complex Than the Tool Allows
You've bent your workflow to fit the software instead of the other way around. "That's just how [Tool] works" has become an acceptable answer.
Data Lives in Silos
Customer data is in Salesforce. Project data is in Asana. Financial data is in QuickBooks. Nobody has the full picture without manual compilation.
Integrations Break Monthly
Your Zapier workflows stop working. APIs change without warning. You've hired someone whose job is partly "fixing the integrations."
Competitors Have an Advantage You Can't Match
They've built something custom that makes their operations faster, cheaper, or better. You can't replicate it with off-the-shelf tools.
The Vendor's Roadmap Doesn't Match Yours
They're building AI features you don't need. The thing you've requested for 2 years is still "on the roadmap." You've lost faith it'll ever ship.
The pattern: You started with a tool that was 90% right. Over time, as your business evolved, it became 60% right, then 40%. The gap between what the tool does and what you need keeps widening.
When SaaS Still Makes Sense
To be clear: SaaS isn't always wrong. It's the right choice when:
Stick with SaaS When...
- ✓It's a commoditized function (email, basic CRM, file storage)
- ✓The tool does 80%+ of what you need
- ✓Compliance requirements favor certified vendors (payments, security)
- ✓You're a small team (<10) with simple processes
- ✓Your needs change so fast custom would be outdated immediately
- ✓The function isn't core to your competitive advantage
Build Custom When...
- ✓The workflow is core to how you compete
- ✓No SaaS tool does more than 60% of what you need
- ✓You're paying for 3+ tools that should be one
- ✓Manual workarounds cost significant hours weekly
- ✓Data integration between systems is a constant pain
- ✓You've outgrown tier pricing but not enterprise budgets
The ROI Framework: How to Do the Math
Deciding between build vs buy shouldn't be emotional. Here's how to calculate the true cost of each option:
Step 1: Calculate Your True SaaS Cost (5-Year View)
SaaS 5-Year Cost Formula
Current Annual Cost: $______
Expected Annual Increase (10%): × 1.6 (5-year multiplier)
Integration/Middleware Costs: + $______/year × 5
Workaround Labor: + (hours/week × $rate × 52 × 5)
Training/Onboarding Overhead: + $______
TRUE 5-YEAR SAAS COST: $______
Most businesses underestimate this by 40-60%. The workaround labor alone often exceeds the subscription cost.
Step 2: Calculate Custom Build Cost
Custom Build 5-Year Cost Formula
Initial Development: $______
Year 1 Iteration (20% of build): + $______
Ongoing Maintenance ($1-3K/mo × 48): + $______
Infrastructure (hosting/services): + $______ × 5
Training (usually minimal for custom): + $______
TRUE 5-YEAR CUSTOM COST: $______
Custom has higher upfront cost but lower ongoing cost. The crossover point is usually 18-36 months.
Step 3: Factor in Productivity Gains
Custom software isn't just about cost—it's about what your team can accomplish. Consider:
- Hours saved per employee per week × team size × hourly cost × 52 weeks
- Deals closed faster because data is unified
- Errors eliminated (and their cost in money/reputation)
- New capabilities unlocked that weren't possible before
Real ROI Example
A 25-person insurance agency was spending $3,800/month on Salesforce + DocuSign + a quoting tool + various integrations. Agents spent 8+ hours/week on manual data entry between systems. We built them a unified platform for $55K. Result: $67K/year in SaaS savings + $250K/year in recovered productivity.Payback period: 3 months.
Real Examples: When Companies Made the Right (and Wrong) Choice
✅ Smart Build: Regional Healthcare Network
A network of 12 clinics was using separate EHR, scheduling, and billing systems. Staff spent hours daily reconciling patient data across platforms. HIPAA compliance was a nightmare to audit.
We built a unified patient intake and scheduling layer that sat on top of their existing EHR, eliminating 90% of manual data entry. The $42K build replaced $15K/month in SaaS tools and saved 40+ hours/week across the organization.
✅ Smart Build: Multi-Location Fitness Chain
A growing fitness chain with 8 locations was using MindBody for scheduling. The pricing scaled aggressively with locations, and they couldn't implement their unique membership model (family plans + punch cards + class packages).
We built a custom membership and scheduling system that supported their exact pricing model. They expanded to 15 locations with zero increase in software costs, while competitors struggled with per-location SaaS fees.
❌ Wrong Choice: Premature Build
A 6-person startup wanted to build a custom CRM because "Salesforce is too expensive." They spent $35K building it, then pivoted their business model twice. The custom CRM became technical debt they had to maintain while also learning they should have just used HubSpot Free.
Lesson: Don't build custom for commodity functions, especially if your business model isn't stable yet.
The Decision Framework: Build or Buy?
Use this framework to make the right call:
The Build vs Buy Matrix
1Is this core to your competitive advantage?
If the workflow is what makes you better than competitors, you probably shouldn't trust it to generic software.
→ Yes = Lean toward Build | No = Consider SaaS
2Does existing SaaS do 80%+ of what you need?
If a tool is "close enough", the ROI of custom rarely makes sense. Below 60%? Custom starts winning.
→ Below 60% = Lean toward Build | Above 80% = Stick with SaaS
3How many tools would custom replace?
Replacing 1 tool? Probably not worth it. Replacing 3-5+ tools? The integration value alone makes custom compelling.
→ 3+ tools = Strong case for Build | 1 tool = Optimize your SaaS choice
4Is your business model stable?
If you're pivoting frequently, custom software becomes expensive baggage. Wait until your core processes are proven.
→ Stable = Safe to Build | Still figuring it out = Wait
5Can you afford the upfront investment?
Custom requires capital. If cash is tight, SaaS's monthly payments preserve runway. But if you have the capital, the 5-year math often favors custom.
→ Yes + 3-year runway = Build | Cash-constrained = Optimize SaaS
How We Approach Build vs Buy Decisions
At Pacific Software Ventures, we don't push custom software when SaaS makes sense. Here's our honest approach:
- Discovery first: We help you calculate the true ROI before committing to anything
- Hybrid thinking: Often the best answer is custom for your core workflow + SaaS for commodity functions
- Right-sized solutions: We build what you need—not a Swiss Army knife of features you'll never use
- Fixed pricing: You know the cost upfront, so the ROI calculation is reliable
- Fast delivery: Most custom internal tools ship in 4-8 weeks, not 6-12 months
We've talked founders out of custom builds when SaaS was clearly the right answer. And we've helped businesses save millions by building exactly what they needed instead of paying for what they didn't.
The Bottom Line
The build vs buy decision isn't about "custom is better" or "SaaS is easier." It's about understanding where you are in your business journey and what will create the most value.
Key Takeaways
- SaaS wins for commodity functions, early-stage companies, and unstable processes
- Custom wins for competitive advantage, complex workflows, and multi-tool consolidation
- Calculate the real 5-year cost of both options before deciding
- Include productivity gains in your ROI math—they're often bigger than direct costs
- The best answer is often hybrid—custom for your core, SaaS for the rest
Still not sure? That's what our free strategy calls are for. We'll help you run the numbers and make the right decision—even if that decision is "stick with SaaS."
Not Sure Whether to Build or Buy?
Book a free 30-minute strategy call. We'll help you run the numbers and make the right decision for your business.