Build vs Buy: When Custom Software Makes Sense

There's a SaaS tool for everything now. Project management, CRM, invoicing, scheduling, inventory - you name it, someone's selling a subscription for it.

Most of the time, buying makes sense. But sometimes it doesn't. Here's how to tell the difference.

The Default: Start With Buying

Unless you have a clear reason to build, buy. Off-the-shelf software has major advantages:

• Immediate availability: Sign up today, use it tomorrow
• Lower upfront cost: $50/month vs $20,000 to build
• Maintained by someone else: They handle updates, security, bugs
• Proven and tested: Thousands of other businesses use it
• Support included: Someone to call when things break

For standard business functions, buying is almost always right. You don't need custom email software. You don't need a custom accounting system. These problems are solved.

When to Build Instead

Custom software makes sense in specific situations:

1. Your Process Is Your Competitive Advantage

If your unique process is what makes you better than competitors, standardizing it on generic software means giving up your edge.

Example: A logistics company has a proprietary routing algorithm that saves 20% on delivery costs. Generic logistics software can't do this - it's what makes them special. Custom software preserves the advantage.

2. You're Fighting the Tool More Than Using It

The warning signs:

• You're using spreadsheets to work around the software
• Your team has complicated workarounds for basic tasks
• You're paying for features you don't use and missing features you need
• You've customized the tool so much it's barely recognizable

When the workarounds cost more than building the right thing, it's time to build.

3. Integration Nightmares

You need Tool A to talk to Tool B and Tool C. None of them integrate well. You're copying data manually between systems. You've hired someone just to maintain Zapier automations.

Sometimes a single custom system that does exactly what you need costs less than duct-taping five tools together.

4. The Math Works Out

Here's the calculation:

• Add up your SaaS subscriptions for the tools you'd replace
• Add the cost of workarounds (staff time, errors, inefficiency)
• Multiply by 3 years

If that number is bigger than the cost to build custom software, building starts to make sense.

Example: Five SaaS tools at $200/month each = $1,000/month = $36,000 over 3 years. Plus one person spending 10 hours a week managing integrations at $30/hour = $46,800 over 3 years. Total: $82,800.

A custom system that replaces all of it for $50,000 could pay for itself in under 2 years.

5. Data Ownership Matters

With SaaS, your data lives on someone else's servers. If they get hacked, raise prices, shut down, or change their terms - you're affected.

For sensitive data or data that's core to your business, owning the infrastructure can be worth the extra cost.

6. Scale Economics Change

SaaS pricing usually scales with users or usage. At small scale, that's a good deal. At large scale, it can get expensive fast.

Example: A CRM at $50/user/month is fine for 10 users ($500/month). At 100 users, that's $5,000/month or $60,000/year. A custom CRM might cost $50,000 to build but pennies to run.

The Hybrid Approach

It doesn't have to be all-or-nothing. Often the best approach is:

• Buy commoditized functions: Email, basic accounting, standard CRM
• Build your differentiators: The unique processes that set you apart
• Connect them with custom integrations: APIs and automation to make them work together

This gives you the best of both worlds: proven tools for standard things, custom solutions for unique needs.

The Real Cost of Custom Software

Building custom software isn't just the development cost. Factor in:

• Maintenance: Someone needs to keep it running, fix bugs, make updates. Budget 15-20% of development cost annually.
• Hosting: Cloud infrastructure costs, though usually modest ($100-1,000/month for most business apps).
• Opportunity cost: The time spent on a custom project that could go elsewhere.
• Risk: Custom projects can fail. SaaS tools are proven to work.

Questions to Ask Before Building

1. Have we tried adapting our process to existing tools? Sometimes the problem is the process, not the software.
2. Are we building for today or imaginary future needs? Build for current requirements, not hypothetical ones.
3. Do we have the budget for ongoing maintenance? Building is just the beginning.
4. What happens if this fails? Have a fallback plan.
5. Is our competitive advantage really in the software, or elsewhere? Be honest about what makes you special.

Warning Signs You're Building for the Wrong Reasons

Don't build custom software because:

• "We're different": Everyone thinks they're unique. Usually they're not.
• "I don't like the existing options": Preference isn't the same as need.
• "We want to own it": Ownership has costs. Make sure the benefits outweigh them.
• "It'll be cheaper long-term": Run the actual numbers. Wishful thinking isn't a business case.
• "The CEO wants it": Executive enthusiasm isn't a substitute for analysis.

When Building Makes Sense: Real Examples

Restaurant Chain

Problem: Using separate systems for ordering, inventory, scheduling, and reporting. Staff spent hours reconciling data.

Solution: Custom POS and back-office system that unified everything.

Result: Saved 15 hours per week per location. Paid for itself in 8 months.

E-commerce Analytics

Problem: Off-the-shelf analytics couldn't provide the specific insights needed to identify winning products.

Solution: Custom AI-powered analytics platform with proprietary scoring.

Result: Became a competitive advantage and eventually a product in its own right.

Field Service Company

Problem: Generic field service software didn't match their unique scheduling requirements.

Solution: Custom scheduling and dispatch system.

Result: Improved technician utilization by 25%.

The Bottom Line

The default answer is buy. Off-the-shelf tools are good enough for most needs, and the benefits of immediate availability, lower risk, and included support are real.

Build when:

• Your process is genuinely unique and creates competitive advantage
• The total cost of buying (subscriptions + workarounds + integration headaches) exceeds the cost to build
• Data ownership or control is critical
• Scale makes buying uneconomical

The best decisions come from honest analysis, not ego or assumptions. Run the numbers. Be realistic about what's truly unique. And remember: the goal isn't to have custom software. The goal is to run your business better.