Contents
The Old Economics
Software development follows a predictable cost model: you pay for time, expertise, and complexity. More features means more money. Here's what the CEM portfolio would cost at market rates:
Market Rate Estimates (Mid-Market US Agency)
What It Would Cost Someone Else
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Operations platform $780K – $1,560K
Insurance cluster (4 products) $320K – $640K
Seasonal e-commerce $120K – $240K
Insurance quoting (2 geos) $120K – $240K
Reporting platform $60K – $120K
Legal services platform $45K – $90K
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TOTAL $795K – $2.9M
Timeline: 12–24 months
Team: 4–6 developers + PM + QAWhat It Actually Cost
Actual Build Cost
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Contractors (full period) $65,054
AI tools + software $2,841
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TOTAL $67,895
Timeline: 4 months
Team: 1 operator + AIThe Inversion Visualized
Cost Comparison
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Market rate (low) ████████████████████████████████████████████ $795,000
Market rate (high) ████████████████████████████████████████████ $2,900,000
████████████████████████████████████████████
████████████████████████████████████████████
Actual cost █ $67,895
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Same output. 12x–43x less.How the Cost Collapsed Over Time
The story isn't just "it was cheap." It's that the cost kept falling as the system compounded.
Monthly Infrastructure + Contractor Costs
Monthly Burn Rate
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Sep 2025 ████████████████████████████████████ $8,367
Oct 2025 ██████████████████████████ $6,070
Nov 2025 ████████████████████████████████ $6,999
Dec 2025 █████ $1,035
Jan 2026 ████ $825
Peak → floor in 4 months. 90% reduction.Per-Project Build Cost
What Each New Product Cost to Build
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Oct $7,995 ████████████████████████████████
Oct $4,080 ████████████████████
Oct $4,005 ████████████████████
Nov $1,680 ████████████████
Dec $330 ███
Jan $90 █
Jan $0 ▏ ← Ninth product. Free.
The marginal cost of a new product → $0Where the Money Went (And Didn't Go)
Actual Spend Breakdown
| Category | Amount | % of Total |
|---|---|---|
| Primary dev contractor | $40,700 | 59.9% |
| Secondary contractor | $21,854 | 32.2% |
| Initial website build | $2,500 | 3.7% |
| AI tools (Anthropic, OpenAI) | $2,634 | 3.9% |
| Other software | $207 | 0.3% |
| Total | $67,895 |
No investors. No venture capital. No equity sold. 100% retained ownership.
What Was NOT Spent
| Traditional Cost | CEM Cost |
|---|---|
| Technical architect ($20K/mo × 12) | $0 |
| QA engineer ($10K/mo × 12) | $0 |
| Project manager ($12K/mo × 12) | $0 |
| DevOps ($8K/mo × 12) | $0 |
| SaaS platforms ($1,565/mo × 12) | $0 after displacement |
| Traditional team cost (12 months) | $960K–$1.44M |
The ROI
On the $34,473 in direct external support investment:
Return on Investment
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Investment $34,473
Return (low) $795,000 → 23.1x
Return (high) $2,900,000 → 84.1xAt the same time, $82,640 in ongoing costs were displaced — SaaS subscriptions and contractor fees that no longer exist.
Why It Matters
The economics of building software have fundamentally changed. The old model — hire a team, pay by the hour, hope they deliver in 12–18 months — is not the only option anymore.
Compounding drives the cost down, not negotiation. The cost didn't fall because the operator found cheaper contractors. It fell because each project made the next one faster, simpler, and less dependent on external help. By the ninth product, the build cost was $0.
The quality held. 12.1% product defect rate against an industry norm of 20–50%. Cheaper didn't mean worse — it meant the operator wasn't paying for the same infrastructure to be rebuilt from scratch every time.
100% ownership. No investors. No dilution. The operator owns every line of code, every database, every customer relationship. That's not just a cost story — it's a control story.
Key Numbers
| Metric | Value |
|---|---|
| Total build cost | $67,895 |
| Market replacement value | $795K–$2.9M |
| ROI on support investment | 23.1x–84.1x |
| Monthly burn (before) | $8,367 |
| Monthly burn (after) | $825 |
| Costs displaced | $82,640 |
| Equity sold | 0% |
| Team size | 1 operator + AI |
References
- McConnell, S. (2004). Code Complete, 2nd ed. Microsoft Press. Industry defect rates of 20–50% for typical software projects.
- Keating, M.G. (2026). "Foundation: The Compounding Knowledge Base." Stealth Labz CEM Papers. Read paper
- Keating, M.G. (2026). "Drift Tax: The Measurable Cost of AI-Assisted Errors." Stealth Labz CEM Papers. Read paper