When to Build Custom Software vs When to Keep Paying for SaaS

The Setup

"Build vs. buy" is the oldest question in business technology. The conventional answer for the past 15 years has been: buy. SaaS is cheaper, faster to deploy, and somebody else handles the maintenance. For most businesses, that advice was correct. Building custom software required hiring developers, managing a project for 12 to 18 months, and spending $200,000 to $1,500,000 — with no guarantee the result would work.

The calculus has changed. AI-assisted development tools have compressed build times from months to weeks. One operator can now do what previously required a 4-to-6 person engineering team. The cost of building dropped by an order of magnitude. The cost of SaaS did not.

According to OpenView Partners' 2024 SaaS Benchmarks, the median SaaS price increased 12% year over year in 2024, continuing a multi-year trend of above-inflation pricing. Meanwhile, the cost of custom development has dropped dramatically: GitHub's 2024 developer survey found that AI-assisted tools reduce development time by 30 to 55 percent depending on the task.

The "buy" side of the equation keeps getting more expensive. The "build" side keeps getting cheaper. At some point, the lines cross.

What the Data Shows

The Stealth Labz operation provides a direct comparison. For 28 months (February 2024 through January 2026), the business paid for six SaaS vendors. Then it built a custom replacement. The data shows both sides of the equation in exact dollar terms.

The "Buy" scenario — what SaaS actually cost:

Cost Component	Monthly	Annual	28-Month Total
SaaS subscriptions (6 vendors)	$1,565	$18,780	$19,909
Contractors (integration + maintenance)	$5,228 avg	$62,731	$62,731
Total	$6,312 avg	~$75,744	$82,640

Source: CS10, 28_month_financial. Monthly average based on April through September 2025 period.

The "Build" scenario — what replacement actually cost:

Cost Component	One-Time	Monthly Ongoing
PRJ-01 build cost	$16,800	—
Operating expenses (Oct 2025 through Jan 2026)	$3,855	—
Ongoing hosting + AI tools	—	~$825
Total first-year cost	$20,655 + $9,900	= ~$30,555

Source: 28_month_financial, portal_stealth_locked_values. Build cost from Infrastructure Build sheet. Operating expenses from STLP project sheet.

The crossover math:

At the pre-build burn rate of $6,312 per month, the SaaS stack would cost $75,744 per year. The custom build cost $20,655 plus $9,900 per year in hosting. Break-even arrives in under 5 months. Every month after that saves $5,487 ($6,312 minus $825).

After year one, the annual cost comparison is $75,744 (SaaS) versus $9,900 (owned). That is an 87% reduction that compounds permanently.

When the "Build" answer is right:

Based on this operation's data, custom build makes financial sense when three conditions are met:

1. Your monthly SaaS spend exceeds $1,500. Below this threshold, the build cost may not justify the savings quickly enough.
2. You are paying contractor or staff costs to maintain integrations between SaaS platforms. This is the hidden multiplier. The subscriptions were $1,565/month. The integration maintenance was $5,228/month average. The hidden cost was 3.3 times the visible cost.
3. Your business requires unified data. If you need to trace a customer from first touch through lifetime value, or if you are reconciling reports from multiple platforms weekly, fragmented SaaS is costing you in decision quality — not just dollars.

When the "Buy" answer is still right:

• Your SaaS spend is under $500 per month
• You use 1 to 2 platforms with no integration needs
• The SaaS vendor's feature set genuinely exceeds what a custom build would deliver
• You do not have access to someone who can build and maintain custom software

According to Forrester's 2024 Total Economic Impact framework, the decision should be based on 3-year total cost of ownership, not monthly subscription price. Over 3 years, the Stealth Labz SaaS stack would have cost approximately $227,232 at the average monthly burn. The custom build will cost approximately $50,355 ($20,655 build + $29,700 hosting over 36 months). That is a $176,877 difference over three years.

How It Works

The build-versus-buy decision is not about technology preference. It is about three financial variables:

Variable 1: Total cost of SaaS (visible + hidden). Add your subscription fees. Add your contractor or staff costs for maintaining integrations. Add the hours your team spends reconciling data across platforms. That is your true SaaS cost.

Variable 2: Build cost. The Stealth Labz operation built PRJ-01 (194,954 lines of code, 135 database tables, 20 external integrations) for $16,800 in 74 active development days. This specific build cost reflects one operator using AI-assisted development. Market rates for equivalent scope range from $780,000 to $1,560,000 at mid-market US rates.

Variable 3: Ongoing operating cost. Owned infrastructure costs hosting and maintenance. For the Stealth Labz portfolio of 10 production systems, that is $825 per month.

The formula: if (Build Cost + 12 months of Operating Cost) is less than (12 months of Total SaaS Cost), building is the better financial decision. For this operation: $20,655 + $9,900 = $30,555 versus $75,744. Building wins decisively.

Source: CS10, 28_month_financial.

What This Means for Business Operators

The "always buy" era of SaaS is ending for operators who have access to modern development tools. The threshold has shifted. Building custom software is no longer a million-dollar, 18-month commitment. It can be a $20,000, 90-day project that pays for itself in the first year and saves $50,000 or more annually thereafter.

The question is no longer "can we afford to build?" The question is: "how much longer can we afford to rent?"

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Related: [C5_S101 — How We Replaced 6 SaaS Vendors with 1 Custom Platform] | [C5_S103 — How to Run 10 Production Software Systems for $825/Month] | [C5_S110 — How We Eliminated $19,909 in Annual SaaS Costs]

References

1. OpenView Partners (2024). "SaaS Benchmarks." Median SaaS price increase trends (12% year-over-year).
2. GitHub (2024). "Developer Survey." AI-assisted development time reduction benchmarks (30-55% depending on task).
3. Forrester (2024). "Total Economic Impact Framework." Three-year total cost of ownership methodology for build-vs-buy analysis.
4. Keating, M.G. (2026). "Case Study: The Platform Displacement." Stealth Labz. Read case study