Custom Software vs SaaS: When to Use Each & Build vs Buy Framework

The build vs buy question is decades old. But the answer has changed.

The Classic Comparison

SaaS Pros:

• Quick to implement (days to weeks)
• Lower upfront cost
• Automatic updates
• Support included

SaaS Cons:

• Limited customization
• Forced to adapt to their system
• Feature bloat (paying for stuff you don't use)
• Vendor lock-in

Custom Software Pros:

• Built exactly for your needs
• Competitive advantage
• Scales with you
• Full control

Custom Software Cons:

• Longer timeline (8-12 weeks)
• Higher upfront cost ($30K-$100K+)
• You maintain it
• Risk if your provider disappears

The New Reality (2026)

Custom software is now CHEAPER than you think:

• Development costs dropped 50% (better tools, cloud, AI)
• Timeline reduced (AI-assisted coding)
• Support is more predictable

The cost advantage of SaaS is disappearing.

The Decision Matrix

Use SaaS If:

• Your needs are generic (CRM, email, project management)
• You want it live in days
• Budget is <$5K annually
• Vendor lock-in doesn't scare you

Build Custom Software If:

• Your process is unique
• You'll save >$50K annually
• You need specific integrations
• Competitive advantage matters
• You're large enough to sustain it

Real Example: ERP System

Generic ERP SaaS: $500/month × 50 users = $300K annually Can't customize to your specific workflow Waste admin time adapting to the software

Custom ERP: $60K build + $50K annually Pays for itself in 3 months Built exactly for your business

The Hybrid Approach

Mostly SaaS with custom integrations and automation layers.

• 80% off-the-shelf
• 20% custom
• Best of both worlds

Bottom Line

If you're asking the question, you probably need custom software. The ROI is often obvious once you do the math.