“Do we buy a SaaS or build it custom?” is one of the recurring decisions in any company digitalizing its processes. And it is almost always answered badly, because the visible price of the SaaS (the monthly fee) gets compared with the visible price of development (the initial budget), ignoring everything else.
In this article we give you the framework we use with our clients: calculate the 3-5 year TCO of both options, put numbers on the hidden costs, and decide with a table, not with intuition.
The Root Mistake: Comparing a Monthly Fee with a Development Budget
Why do almost all comparisons favor SaaS at first glance? Because 49 EUR/user/month looks ridiculous next to 80,000 EUR of development. But that comparison mixes units: a recurring cost that grows with your team versus a one-off investment with bounded maintenance.
The correct comparison is the total cost of ownership (TCO) of each option over the same time horizon — 3 years minimum, 5 if the process is stable — including all costs, visible and hidden.
The Real TCO of a SaaS
The fee is only the first line of the bill. The full TCO includes:
Per-Seat Licenses: The Growth Trap
The per-seat model means your cost grows linearly with your headcount, forever. Round numbers: a SaaS at 49 EUR/user/month with 50 users is 29,400 EUR/year; with 150 users, 88,200 EUR/year. Over 5 years, a company growing from 50 to 150 users will have paid roughly 280,000 EUR in licenses alone.
Add to this the patterns anyone who manages software knows:
- Annual price increases of 5-15%, which you accept because migrating is expensive
- Zombie seats: registered users who barely use the tool (typically 20-30%)
- Bundled plans: the feature you need is always in the higher tier
- Charging for add-ons: API, SSO/SAML, audit logs or advanced permissions as extras
The Other Hidden Costs of SaaS
- Implementation and data migration: it is rarely “sign up and go”
- Integrations: connecting the SaaS with your ERP/CRM costs development or middleware (iPaaS) with its own fee
- Adapting your process to the tool: when the SaaS doesn’t fit, it is your operation that gets deformed; that efficiency cost is real even if it never shows up on an invoice
- Manual work around it: the bridge spreadsheets filling the gaps the SaaS doesn’t cover
- Platform risk: price changes, removed features, acquisitions or shutdowns — and the exit cost (exporting data, retraining the team)
The Real TCO of Custom Software
Let’s be equally demanding with the other option. Building is not paying once and forgetting:
- Initial development: for a typical internal tool, between 30,000 and 150,000 EUR depending on complexity (indicative ranges; a complex app can exceed them — we publish detailed ranges in how much app development costs in 2026)
- Maintenance and evolution: rule of thumb, 15-25% of the initial cost per year (dependencies, security, improvements)
- Infrastructure: hosting and cloud services, usually 100-500 EUR/month for internal tools
- Opportunity cost: 3-6 months until the first version is in production
- Execution risk: a bad partner or poorly defined scope can double the budget
In exchange: cost independent of the number of users, software that adapts to your process (and not the other way around), integrations exactly as you need them, ownership of the data and the roadmap, and an asset on your balance sheet instead of a perpetual rent.
Numerical Example: 5-Year TCO
An operations management tool for a company growing from 50 to 120 users over 5 years. SaaS at 49 EUR/user/month with an average 7% annual increase; custom with 90,000 EUR of development and 20% per year of evolution:
| Item | SaaS | Custom |
|---|---|---|
| Licenses / initial development | ~255,000 EUR | 90,000 EUR |
| Implementation and integrations | 15,000 EUR | (included) |
| Maintenance and evolution | (included) | 90,000 EUR (5 years) |
| Infrastructure | (included) | 18,000 EUR |
| 5-year TCO | ~270,000 EUR | ~198,000 EUR |
With 20 stable users, the same table would give SaaS a clear win (~65,000 EUR versus ~198,000 EUR). The decisive variable is almost always the number of users and their growth. Build your own table with your numbers: the exercise takes an afternoon and prevents six-figure mistakes.
When Each Option Wins
SaaS wins when:
- The process is standard and doesn’t differentiate you (email, accounting, payroll, digital signatures)
- You have few users or a fluctuating team
- You need the solution now (time-to-value in days)
- The market offers mature products that fit your process without forcing it
Custom software wins when:
- The process is the core of your competitive advantage and you want to control it
- The number of users is high or growing: per-seat licenses scale badly
- You need deep integrations with your ERP, CRM or machinery
- The available SaaS options force you to deform your operations
- The sum of several SaaS tools patched with spreadsheets already costs more than a build
It is the same logic we apply when comparing Salesforce vs custom CRM or SAP vs custom development: the answer depends on the case, but the decision method is always the same.
5-Step Decision Framework
- Is the process differentiating? If it doesn’t set you apart from your competition, go SaaS and don’t think twice.
- Calculate the TCO of both options at 3 and 5 years with the table above: licenses with user growth and price increases vs development + 20% per year + infrastructure.
- Add the hidden costs honestly: integrations, manual work around the SaaS, inefficiency from adapting your process; and for custom, the opportunity cost of waiting months.
- Assess the risk of each path: vendor dependence and exit cost (SaaS) vs project execution risk (custom). Mitigate the latter with a bounded MVP before the full build.
- Consider the hybrid: SaaS for the standard, custom for the core, connected through APIs. It is the winning configuration for most mid-size companies.
A final heuristic that sums it all up: buy what makes you equal, build what makes you different.
Frequently Asked Questions
What is TCO and why does it matter more than the license price?
The total cost of ownership: everything you will pay for the solution over 3-5 years, including licenses with their increases, implementation, integrations, training and manual work around it. It is the only figure comparable between a SaaS and a custom build.
When does custom software pay off?
When the process is differentiating, users are many (or growing), the required integrations are deep, or the SaaS forces you to deform your operations. With few users and standard processes, SaaS wins almost always.
How much does custom software development cost?
Typical internal tools: 30,000-150,000 EUR upfront plus 15-25% per year of maintenance and evolution. Always compare against the accumulated SaaS cost over the same horizon, not against its monthly fee.
Can I combine both options?
Yes, and it is the usual approach: SaaS for standard processes and custom development for the core of the business, integrated through APIs. That way you optimize cost and focus at the same time.
Conclusion
The custom software vs SaaS debate is not won with opinions but with a 3-5 year TCO table. SaaS shines for standard processes and small teams; custom development wins when the process is differentiating and per-seat licenses start scaling against you. And for most companies, the optimal answer is hybrid.
At Soamee we build custom ERPs and custom CRMs, and we also help decide when building is not the right call. If you are facing this decision, book a free consultation and we will run the numbers for your case together.