Article

Custom Software vs SaaS: When Building Your Own Costs $79/Month vs $1,500/Month

Building with AI

Key Takeaways
  • The default answer to "should we build or buy?" has been "buy" for over a decade.
  • The external benchmarks frame the SaaS cost baseline.
  • The cost inversion -- where custom-built software becomes cheaper than SaaS -- depends on three conditions that AI-assisted development has made achievable for small operations.
  • The build-vs-buy decision has not been universally flipped.

The Setup

The default answer to "should we build or buy?" has been "buy" for over a decade. SaaS products are faster to deploy, require no development team, and shift infrastructure maintenance to the vendor. For most businesses, this trade-off makes sense -- until it does not. The inflection point arrives when you are paying $1,000 to $5,000 per month across multiple SaaS vendors, your data lives in six different systems that do not talk to each other, and the features you actually need either do not exist or sit behind an enterprise tier you cannot justify.

Gartner reports that organizations spend an average of $3,112 per employee per year on SaaS applications, with the average mid-market company running 80 to 120 SaaS subscriptions. Flexera's State of ITAM report consistently finds that 30% or more of SaaS licenses go unused or underutilized -- money spent on features and seats that generate zero value. The Zylo SaaS Management Benchmark Report quantifies the waste further: the average organization wastes $17 million annually on unused SaaS, and even companies actively managing their SaaS portfolios carry 15-25% waste. For small and mid-market operators, the dollar figures are smaller but the percentage waste is often higher because there is no dedicated IT team optimizing license utilization.

The conventional wisdom is that building custom software is the expensive option and SaaS is the affordable one. The data from PRJ-02 inverts that assumption for a specific class of use case: when the SaaS vendor stack fragments your data, when you are paying for capabilities you do not use, and when the AI-assisted development cost to build a replacement has fallen below the annual SaaS bill.

What the Data Shows

The external benchmarks frame the SaaS cost baseline. Gartner's per-employee SaaS spend of $3,112 means a 10-person operation is spending approximately $31,000 per year on software subscriptions before accounting for premium tiers, overage charges, or the hidden costs of data fragmentation across vendors. Flexera's 30%+ unused license rate means roughly $9,300 of that annual spend generates no value. Zylo reports that SaaS costs grow 15-20% year-over-year even when headcount stays flat, driven by vendor price increases and feature-tier escalation.

The internal data provides a direct comparison. Before PRJ-01 was built, PRJ-02's operation ran on six separate SaaS vendors for core business functions: Konnektive for CRM and order management at $583 per month, an affiliate tracking platform at $499 per month, a social media management tool at $143 per month, SendGrid and Twilio for email and SMS messaging at $180 per month, Klaviyo for email marketing automation at $60 per month, and a communications platform at $100 per month. Total monthly SaaS spend: $1,565. Over the actual 28-month usage period (February 2024 to January 2026), that totaled $19,909 in verified vendor transactions (QuickBooks-verified against source of truth financials).

The combined capability of those six vendors: fragmented. No unified lead profile. No identity resolution. No single view of revenue attribution from first touch to lifetime value. Six separate databases meant six separate views of the same customer.

PRJ-01 replaced all six. One platform. 194,954 lines of custom code. 135 database tables. 20 external integrations (12 inbound, 8 outbound). Three-tier identity resolution (UUID, email, phone) with payload merge and contact point consolidation. Production-tested on 616,543 leads and 75,125 transactions. Monthly SaaS cost after displacement: $0. The annual savings: $18,780 per year in eliminated vendor costs.

The build cost: $16,800 in contractor sweep costs plus $3,184 in AI tooling, totaling approximately $20,000. That means the custom-built platform paid for its own construction in approximately 13 months of SaaS savings alone -- and the platform is a permanent asset that the operation owns outright.

Now compare the market pricing for what PRJ-01 competes against. LeadsPedia, the closest functional comparable in the lead management and affiliate tracking space, starts at $1,500 per month for 25,000 leads, with implementation fees of $2,000 to $10,000. TUNE starts at $499 per month. Phonexa starts at $250 per month plus a $500 setup fee. Everflow does not publish pricing and requires a 6-month minimum commitment. PRJ-01's own pricing -- built for its own operation but architecturally ready for external customers -- starts at $79 per month with $0 setup and a 7-day free trial. That is 19x cheaper than LeadsPedia at entry.

The feature gap runs in the same direction. PRJ-01 has 8 capabilities that none of the four competitors offer at any price: identity resolution and deduplication, lead enrichment with 26 persona segments, audience builder with persona-based segmentation, e-commerce transaction processing across 3 payment providers (Stripe, Shopify, WooCommerce), visual funnel builder, subscription billing with usage metering, platform credit economy, and lead-level lifetime value attribution. The competitors have one capability PRJ-01 lacks: call tracking (available in LeadsPedia and Phonexa).

How It Works

The cost inversion -- where custom-built software becomes cheaper than SaaS -- depends on three conditions that AI-assisted development has made achievable for small operations.

The build cost has to fall below the SaaS cost. PRJ-01's total build cost of approximately $20,000 is equivalent to roughly 13 months of the $1,565 monthly SaaS spend it replaced. After month 13, every month of operation represents pure savings. By comparison, the SaaS costs would have continued indefinitely at $1,565 per month with no equity, no ownership, and no ability to customize the product to exact specifications. Gartner's data on 15-20% annual SaaS price increases means the $1,565 baseline would have grown to roughly $1,800 to $1,880 per month within two years.

The custom platform has to match or exceed the combined SaaS capability. This is where most build-vs-buy analyses stop, because historically, matching the functionality of 6 established SaaS vendors was a $780,000 to $1,560,000 undertaking (mid-market US rates, COCOMO II verified). At those costs, buying is obviously cheaper. AI-assisted development compressed the build cost by 46x to 93x, making the "build" side of the equation viable for the first time at solo-operator scale. PRJ-01 does not just match the combined capability of the six vendors -- it exceeds it with unified data, identity resolution, and lead-level revenue attribution that no combination of the prior vendors could provide.

The operational cost has to stay low. Post-build, PRJ-01 runs on hosting infrastructure and approximately $105 per month in AI tooling. There are no per-seat licensing fees, no overage charges from vendors, and no risk of vendor-initiated price increases. The operation owns the code, the data, and the infrastructure. Flexera's finding that 30%+ of SaaS licenses go unused is structurally impossible when you built the software yourself -- every feature exists because the operator needed it.

What This Means for Business Operators Evaluating SaaS Spend

The build-vs-buy decision has not been universally flipped. SaaS remains the right answer for commodity functions: email (SendGrid), payments (Stripe), hosting. Where the calculation changes is for core business logic -- the system that processes your leads, manages your customer relationships, tracks your revenue attribution, and coordinates your operational workflows. When that system is spread across 4 to 6 SaaS vendors at $1,000 to $5,000 per month total, and when AI-assisted development has compressed build costs by 40x to 90x, the "build" option deserves a fresh evaluation.

The relevant numbers from this operation: $1,565 per month in SaaS costs replaced by a $20,000 one-time build. $18,780 in annual savings. A platform that exceeds the combined capability of 6 vendors and competes at $79 per month against incumbents charging $1,500 per month. 100% ownership of code, data, and customer relationships. Zero vendor lock-in. Zero risk of vendor price increases or forced migrations.

The question is not "should everyone build custom software?" It is: "If your SaaS stack costs $1,500 per month, fragments your data across 6 vendors, and the AI-assisted cost to build a unified replacement is $20,000 -- why are you still renting?"

Related: C1_S12 (Contractor Cost Collapse), C1_S13 (5-Day Production Builds), C1_S14 (Solo AI-Built Enterprise Platform)

References

  1. Gartner (2024). "SaaS Spend Benchmarks." Average of $3,112 per employee per year on SaaS applications.
  2. Flexera (2024). "State of ITAM Report." 30%+ SaaS license underutilization across organizations.
  3. Zylo (2024). "SaaS Management Benchmark Report." $17 million average annual SaaS waste, 15-20% YoY cost growth.
  4. LeadsPedia (2026). Published pricing (leadspedia.com/pricing). Starting at $1,500/month for 25,000 leads.
  5. Phonexa (2026). Pricing via GetApp/Zoftware. Starting at $250/month plus $500 setup fee.
  6. TUNE (2026). Pricing via GetApp, TrustRadius, Vendr. Starting at $499/month.
  7. FullStack (2025), Keyhole Software (2026), Qubit Labs (2026), COCOMO II. Replacement value cost benchmarks.
  8. Keating, M.G. (2026). "Case Study: The CDP Disruptor." Stealth Labz. Read case study