Custom vs Off-the-Shelf: When to Build, When to Buy
Salesforce costs $75/user/month and works out of the box. A custom CRM costs $150K-$500K to build and takes 6-12 months. But five years later, the company that built custom owns an asset perfectly fitted to their workflow. The one using Salesforce is paying $500K+ in cumulative licensing and still fighting workarounds. The right answer depends on the math.
Custom vs Off-the-Shelf: What Each Really Costs
Off-the-shelf software (SaaS, COTS) gives you 80% of what you need on day one. Custom software gives you exactly 100% of what you need but takes months to build. The trap most companies fall into: they buy off-the-shelf, spend $100K+ on customizations and integrations to cover the last 20%, then realize they have built a fragile Frankenstein system that costs more to maintain than a purpose-built solution would have. The decision is not about upfront cost. It is about total cost of ownership over 3-5 years.
- Off-the-shelf deploys in days to weeks but typically requires 3-6 months of configuration, data migration, and team training to be fully productive
- Custom software costs 3-10x more upfront but can cost less over a 5-year horizon once you eliminate per-seat licensing, integration fees, and workaround maintenance
- Vendor lock-in with off-the-shelf solutions means price increases of 10-20% annually with limited negotiation power once your data is embedded in their platform
- Custom software gives you a competitive moat when the software IS your differentiation, but it is pure overhead when it handles generic business processes
6 Dimensions to Evaluate Build vs Buy
The right choice is never obvious. Compare the trade-offs across the dimensions that matter most for your situation.
Total Cost of Ownership (5 Years)
Off-the-shelf: $50-150/user/month = $60K-$180K/year for a 100-person company, plus $30K-$100K in integrations and customizations. 5-year TCO: $330K-$1M+. Custom: $150K-$500K to build, $30K-$80K/year maintenance. 5-year TCO: $270K-$820K. Custom often wins on TCO for companies with 50+ users and growing, while off-the-shelf wins for smaller teams.
Time to Deployment
Off-the-shelf: basic setup in 1-2 weeks, full deployment with integrations in 1-3 months. Custom: MVP in 3-4 months, full platform in 6-12 months. If you need a solution working by next month, off-the-shelf is your only realistic option. If you have a 6-12 month runway and the problem is core to your business, custom gives you a better long-term result.
Customization and Flexibility
Off-the-shelf: you get the features the vendor built for their average customer. Configuration covers 70-80% of needs. The remaining 20-30% requires expensive plugins, API workarounds, or just goes unsolved. Custom: every feature is built for your specific workflow. No compromises, no workarounds. This matters most when your process IS your competitive advantage.
Data Ownership and Vendor Lock-In
With off-the-shelf SaaS, your data lives on someone else's servers. Switching vendors means painful migration. The vendor can change pricing, deprecate features, or sunset the product entirely. With custom software, you own every line of code and every byte of data. There is no vendor who can raise your prices by 20% next year.
Maintenance and Updates
Off-the-shelf: the vendor handles updates, security patches, and infrastructure. You get new features automatically but also get breaking changes you did not ask for. Custom: you own maintenance. Budget $30K-$80K/year for a development team to handle updates, security, and feature additions. The maintenance burden is real but so is the control.
Competitive Advantage
If your competitors use the same Salesforce setup, you are competing on sales execution, not software. If you build custom software that handles your unique process 3x faster, that is a moat. Build custom when software is your edge. Buy off-the-shelf for commodity functions like email, HR, and accounting where differentiation adds no value.
Four Scenarios with Clear Winners
Real situations where one approach clearly beats the other, based on outcomes we have seen across hundreds of projects.
Unique Business Process That Defines Your Edge
A logistics company routes shipments using a proprietary algorithm that considers 40+ variables no standard TMS handles. Their custom routing software cuts delivery times by 22% versus competitors using off-the-shelf. This software IS their competitive advantage. No SaaS product will replicate their secret sauce, and they should not want one to. When software is your moat, build it.
Standard Business Function with Proven Solutions
You need a CRM, an HR system, or an accounting platform. Salesforce, BambooHR, and QuickBooks have spent hundreds of millions perfecting these tools. Building a custom CRM from scratch to do what Salesforce already does is like building your own email server. Unless you have an extremely unusual requirement, buy the proven solution and focus your engineering resources on what makes your company different.
Growing Company Outgrowing Their SaaS Stack
A marketplace with 500+ active sellers hit the limits of their Shopify-based system. Custom commission structures, multi-vendor order routing, and real-time inventory sync across 12 warehouses could not be shoehorned into any existing platform without brittle API chains. They invested $350K in custom software and eliminated $120K/year in SaaS fees while getting exactly the features they needed. The break-even was under 3 years.
Startup Validating an Idea Before Committing
You have a hypothesis about a new business model and need to test it with real users. Spending 6 months and $200K building custom software before you know if anyone wants the product is a mistake we see repeatedly. Use off-the-shelf tools, no-code platforms, or Airtable to validate the idea. Build custom once you have paying customers and know exactly what the product needs to be.
5 Steps to Decide Build vs Buy
A structured approach that replaces gut feelings with data-driven analysis.
Map Your Requirements to Available Solutions
List every feature you need. Score each as must-have or nice-to-have. Then evaluate 3-4 off-the-shelf options against your must-haves. If any product covers 90%+ of your must-haves and the missing 10% can be handled through integrations, off-the-shelf is likely your answer. If the best option only covers 60-70%, you are entering dangerous customization territory where custom may save you pain.
Calculate 5-Year TCO for Both Options
For off-the-shelf: (per-seat cost x users x 60 months) + implementation + annual integrations and customizations + data migration cost. For custom: development cost + annual maintenance (15-20% of build cost) + hosting. Factor in 10-15% annual price increases for SaaS vendors. This calculation often surprises people, as custom frequently wins on TCO for larger teams over 5 years.
Assess the Competitive Impact
Ask: does this software directly affect how customers experience our product or service? If yes, building custom creates a moat competitors cannot easily copy. If the software supports internal operations that customers never see (payroll, internal chat), buy off-the-shelf. Every dollar spent building commodity software is a dollar not spent on your actual differentiation.
Evaluate Your Technical Capacity
Custom software requires ongoing maintenance. Do you have or can you build an engineering team to maintain it for the next 5-10 years? If you are a non-tech company with no engineering culture, the maintenance burden of custom software can become a liability. Off-the-shelf shifts that burden to the vendor. Be honest about your long-term capacity, or partner with a firm that provides ongoing support.
Start with Off-the-Shelf and Graduate to Custom
The smartest companies start with off-the-shelf to validate their workflow, identify what they truly need, and generate revenue. Then they build custom replacements for the specific tools that became bottlenecks. This way, you are building custom based on real usage data, not assumptions. A SaaS company we worked with used Intercom for 2 years, learned exactly what their support workflow needed, then built a custom support tool in 4 months that did half the features but did them 3x better.
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Real Cost Scenarios: Build vs Buy
Three common scenarios showing total cost of ownership over 5 years for each approach.
Small Company (20 Users, Basic Needs)
A team of 20 needing project management, CRM, or a workflow tool. Fairly standard requirements.
Custom pricing based on your requirements
- Off-the-shelf: $20-60/user/month = $5K-$14K/year + $10K setup
- Custom: $80K-$150K to build + $15K-$25K/year maintenance
- 5-year TCO off-the-shelf: $35K-$80K
- 5-year TCO custom: $140K-$250K
- Off-the-shelf wins by $100K+ at this scale
- Verdict: Buy off-the-shelf unless your workflow is truly unusual
Mid-Size Company (100 Users, Specific Needs)
A growing company where off-the-shelf requires significant customization to fit unique processes.
Custom pricing based on your requirements
- Off-the-shelf: $50-150/user/month = $60K-$180K/year + $50K+ integrations
- Custom: $200K-$400K to build + $40K-$70K/year maintenance
- 5-year TCO off-the-shelf: $350K-$950K (with annual price increases)
- 5-year TCO custom: $360K-$680K
- Break-even point: typically year 2-3
- Verdict: Custom starts winning at this scale, especially with 15%+ annual SaaS increases
Enterprise (500+ Users, Complex Requirements)
Large organization with unique workflows, multiple integrations, and compliance requirements.
Custom pricing based on your requirements
- Off-the-shelf: $100-300/user/month = $600K-$1.8M/year + $200K+ customization
- Custom: $500K-$1.5M to build + $100K-$200K/year maintenance
- 5-year TCO off-the-shelf: $3.2M-$9.5M+
- 5-year TCO custom: $900K-$2.5M
- Custom saves $2M-$7M over 5 years at enterprise scale
- Verdict: Custom almost always wins for enterprises with 500+ users and unique processes
Custom vs Off-the-Shelf Software Questions Answered
Quick answers to the questions we hear most often.
It depends on what is in the missing 20%. If the gaps are cosmetic (dashboard layout, report formatting), live with off-the-shelf. If the gaps are in your core workflow (custom approval chains, industry-specific calculations, unique data models), that 20% will cause daily friction that compounds into real productivity loss. Survey your team: if they are building spreadsheet workarounds for the same tasks weekly, the gap is too large.
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