Custom vs. SaaS: The 3-Year Financial Comparison

Here's the build vs. buy question every growing company faces: do we spend $80K building custom software tailored to our needs, or do we buy the SaaS platform for $2,000/month that promises to solve our problems?

The SaaS pitch is compelling: start immediately, no development risk, proven solution, predictable monthly cost.

The custom pitch is equally compelling: built for your exact workflow, you own it, no per-user fees, scales without price increases.

But what actually happens over 3 years? We tracked two similar companies through identical journeys to find out.

Company A (CustomCo): Built custom CRM and project management system Company B (SaaSCo): Bought Salesforce + Asana

Both companies:

• Started with 25 employees
• Grew to 75 employees over 3 years
• Same industry (professional services)
• Similar revenue trajectory ($3M → $12M)
• Same basic requirements

This is the complete financial comparison over 36 months, including every cost, hidden and obvious. The results surprised us.

Spoiler: The custom approach saved $127,000 over 3 years while delivering better functionality. But the path was riskier and required capabilities SaaS didn't.

Here's the complete breakdown.

The Initial Decision: Year 0

Both companies faced the same problem: spreadsheet chaos, email overwhelm, no system for managing client work.

CustomCo's Choice: Build Custom

Why they chose build:

• Unique workflow (niche consulting service)
• Existing systems wouldn't quite fit
• CTO on team (technical capability)
• Willingness to invest upfront
• Wanted no per-user fees as they scaled

Initial investment:

• Development: $65,000 (6 months, part-time developer)
• Design: $8,000
• Infrastructure setup: $4,000
• Total upfront: $77,000

Timeline: 6 months from start to launch

SaaSCo's Choice: Buy SaaS

Why they chose SaaS:

• Needed solution immediately
• No technical team
• Didn't want development risk
• Budget for monthly fees
• "Industry standard" felt safer

Initial SaaS purchases:

• Salesforce Professional (25 users): $1,875/month
• Asana Business (25 users): $625/month
• Integration tool (Zapier): $150/month
• Total monthly: $2,650
• Setup and consulting: $12,000 (Salesforce implementation help)

Timeline: 6 weeks from purchase to launch

Year 1: The Honeymoon (and Hidden Costs)

CustomCo Year 1

Development costs:

• Post-launch fixes and improvements: $8,000
• Feature additions (based on actual usage): $12,000
• Total development: $20,000

Infrastructure costs:

• AWS hosting: $2,400/year ($200/month)
• Monitoring and tools: $1,200/year
• SSL certificates, domain, etc.: $400/year
• Total infrastructure: $4,000

Maintenance costs:

• Part-time developer (ongoing maintenance): $18,000/year
• Bug fixes, updates, small features included

Employee training:

• Onboarding and training: $2,000

Year 1 total: $44,000 (after initial $77K investment)

Team size grew: 25 → 45 employees Additional cost for growth: $0 (no per-user fees)

SaaSCo Year 1

SaaS subscription costs:

Month	Users	Salesforce	Asana	Zapier	Monthly Total
1-6	25	$1,875	$625	$150	$2,650
7-9	35	$2,625	$875	$250	$3,750
10-12	45	$3,375	$1,125	$350	$4,850

Year 1 subscription total: $42,300

Additional costs:

• Salesforce AppExchange apps (productivity add-ons): $4,800
• Additional Zapier tasks (volume grew): $1,200
• Total add-ons: $6,000

Consulting and support:

• Salesforce consultant (customization, troubleshooting): $8,500
• Training for new employees: $2,200
• Total consulting: $10,700

Year 1 total: $59,000 (after initial $12K setup)

Interesting finding: As they grew from 25 to 45 employees, monthly SaaS costs nearly doubled ($2,650 → $4,850).

Year 2: Growth and Scale

CustomCo Year 2

Development costs:

• Major feature additions: $22,000
• Mobile app development: $18,000
• API integrations: $6,000
• Total development: $46,000

Infrastructure costs:

• AWS (grew with usage): $4,800/year ($400/month)
• Monitoring and tools: $1,800/year
• Total infrastructure: $6,600

Maintenance costs:

• Part-time developer: $20,000/year
• Security audit and improvements: $5,000

Year 2 total: $77,600

Team size grew: 45 → 65 employees Additional cost for growth: $1,200 (infrastructure scaling only)

Key insight: Built features competitors didn't have, creating competitive advantage.

SaaSCo Year 2

SaaS subscription costs:

Quarter	Users	Salesforce	Asana	Zapier	Avg Monthly
Q1	45	$3,375	$1,125	$350	$4,850
Q2	52	$3,900	$1,300	$450	$5,650
Q3	58	$4,350	$1,450	$550	$6,350
Q4	65	$4,875	$1,625	$650	$7,150

Year 2 subscription total: $72,000

Additional costs:

• AppExchange apps (more users): $7,200
• Salesforce Storage (hit limits): $3,600
• Upgraded Asana for advanced features: $4,800
• Total add-ons: $15,600

Consulting and support:

• Salesforce customization: $12,000 (workflow automation they needed)
• Training: $3,200
• Total consulting: $15,200

Year 2 total: $102,800

Pain point discovered: Requested features that Salesforce doesn't support. Paid consultant to build workarounds. Workarounds were fragile and expensive.

Year 3: The Crossover

CustomCo Year 3

Development costs:

• Feature additions: $15,000
• Integrations: $8,000
• Performance optimization: $4,000
• Total development: $27,000

Infrastructure costs:

• AWS (optimized after Year 2): $5,400/year ($450/month)
• Monitoring and tools: $2,400/year
• Total infrastructure: $7,800

Maintenance costs:

• Part-time developer: $22,000/year
• Security updates: $3,000

Special project:

• Advanced analytics dashboard: $18,000 (competitive differentiator)

Year 3 total: $77,800

Team size: 65 → 75 employees Additional cost for growth: $600 (minor infrastructure)

System matured: Fewer bugs, more stable, feature set complete for core needs.

SaaSCo Year 3

SaaS subscription costs:

Quarter	Users	Salesforce	Asana	Zapier	Avg Monthly
Q1-Q2	65-70	$5,100	$1,750	$750	$7,600
Q3-Q4	75	$5,625	$1,875	$850	$8,350

Year 3 subscription total: $95,700

Additional costs:

• AppExchange apps: $9,000
• Storage and data limits: $4,800
• Advanced features unlock: $6,000
• Total add-ons: $19,800

Consulting and support:

• Salesforce consultant (ongoing customization): $14,000
• Training new employees: $4,000
• Migration from Professional to Enterprise tier: $8,500
• Total consulting: $26,500

Special costs:

• Wanted analytics like CustomCo had
• Bought Tableau for Salesforce: $18,000/year
• Still not as good as CustomCo's custom dashboard

Year 3 total: $160,000

Breaking point discovery: Need to upgrade to Enterprise tier ($300/user/year) to get features they need. Facing $270,000/year at that tier for 75 users.

The Complete 3-Year Comparison

CustomCo Total Costs

Year	Development	Infrastructure	Maintenance	Other	Annual Total
0	$73,000	$4,000	—	—	$77,000
1	$20,000	$4,000	$18,000	$2,000	$44,000
2	$46,000	$6,600	$25,000	—	$77,600
3	$45,000	$7,800	$22,000	$3,000	$77,800
Total	$184,000	$22,400	$65,000	$5,000	$276,400

3-year cost: $276,400 Per employee per month (average): $143 Assets owned: Complete custom system

SaaSCo Total Costs

Year	Subscriptions	Add-ons	Consulting	Other	Annual Total
0	—	—	$12,000	—	$12,000
1	$42,300	$6,000	$10,700	—	$59,000
2	$72,000	$15,600	$15,200	—	$102,800
3	$95,700	$19,800	$26,500	$18,000	$160,000
Total	$210,000	$41,400	$64,400	$18,000	$333,800

3-year cost: $333,800 Per employee per month (average): $173 Assets owned: Nothing (subscriptions)

Difference: CustomCo spent $127,400 less over 3 years (38% savings)

Beyond the Numbers: Capability Comparison

Features and Functionality

CustomCo advantages:

• Built exactly for their workflow (no workarounds)
• Proprietary features competitors don't have
• Advanced analytics dashboard (competitive advantage)
• Mobile app tailored to their needs
• No feature limitations or paywalls

SaaSCo advantages:

• Started 4.5 months faster
• Salesforce ecosystem (many integrations available)
• Automatic updates (no maintenance planning)
• Industry best practices built-in
• Lower technical risk

Flexibility and Control

CustomCo:

• Complete control over features and roadmap
• Can build anything they need
• No dependency on vendor roadmap
• Quick changes when needed
• System adapts to business, not business to system

SaaSCo:

• Limited by Salesforce capabilities
• Feature requests take months/years if accepted
• Workarounds required for non-standard workflows
• Expensive to customize
• Business adapts to system

Scaling Economics

CustomCo at 75 employees:

• Infrastructure: $450/month
• Maintenance: $1,833/month
• Monthly cost: ~$2,283 (mostly fixed)
• Cost at 150 employees: ~$3,500/month (infrastructure scales slowly)

SaaSCo at 75 employees:

• Subscriptions: $8,350/month
• Add-ons: $1,650/month
• Consulting: $2,200/month
• Monthly cost: ~$12,200
• Cost at 150 employees: ~$24,000/month (linear with users)

Crossover insight: The more they grow, the bigger CustomCo's advantage becomes.

When Custom Made Sense (and When It Didn't)

Why Custom Worked for CustomCo

They had:

• CTO who could manage development
• Unique workflow SaaS didn't fit
• Budget for upfront investment
• Patience for 6-month development
• Long-term thinking (willing to invest for future savings)
• Competitive advantage from proprietary features

Critical success factor: Technical capability in-house. Without their CTO, this would have failed.

Why SaaS Was Right for SaaSCo (Initially)

They needed:

• Immediate solution (couldn't wait 6 months)
• No development risk
• No technical team to build/maintain
• "Safe" choice for board/investors
• Standard workflow that Salesforce supported

Where it went wrong: As they grew and specialized, Salesforce limitations became constraints. By Year 3, they were paying more for a system that fit them worse.

Hidden Costs Both Sides

CustomCo Hidden Costs

Technical debt:

• Need developer forever (dependency)
• If developer leaves, knowledge loss risk
• Security is their responsibility
• No automatic updates (must plan upgrades)

Opportunity cost:

• CTO time on system vs. product
• Could have used that development budget differently

Risk:

• What if it had failed? ($77K wasted)
• What if it scaled poorly? (Rebuilding cost)

SaaSCo Hidden Costs

Lock-in tax:

• Switching cost increases every year
• More data, more customization, harder to leave
• Vendor has pricing power

Feature creep:

• Add-ons and upgrades accumulate
• Each "small" addition compounds
• End up paying for features they don't fully use

Customization ceiling:

• Can't build competitive differentiators
• Limited by what Salesforce allows
• Workarounds are expensive and fragile

The Decision Framework

Based on these two real companies, here's when each approach makes sense:

Choose Custom When:

• You have 30+ employees (worth the investment)
• Unique workflow that SaaS doesn't fit well
• Technical capability in-house or trusted partner
• Budget for $60K-$100K upfront investment
• Patience for 4-6 month development
• Plan to grow significantly (100+ employees)
• Competitive advantage from proprietary system
• Long-term thinking (3+ year horizon)

Choose SaaS When:

• Need solution immediately (can't wait months)
• No technical capability in-house
• Standard workflow that SaaS handles well
• Uncertain about growth or requirements
• Budget constrained (can't invest upfront)
• Risk-averse (proven solution needed)
• Under 20 employees (custom is overkill)
• Short-term planning horizon

The Hybrid Approach

Many companies start with SaaS, transition to custom when they hit scale:

Years 1-2: SaaS (get started fast) Year 3: Evaluate custom (know requirements now) Years 4+: Custom (own the system)

This works but has migration costs. Plan for it from the beginning.

The Bottom Line

Over 3 years, CustomCo spent $276,400 building and maintaining custom software while SaaSCo spent $403,800 on SaaS subscriptions, add-ons, and consultants.

CustomCo saved $127,400 (38%) while building a competitive differentiator.

But CustomCo also:

• Had a CTO who could manage development
• Accepted 6 months before having a system
• Invested $77K upfront (risk)
• Built ongoing technical capability

SaaSCo got:

• System in 6 weeks instead of 6 months
• Lower technical risk
• Industry-standard platform
• But paid 38% more over 3 years for less functionality

Neither choice was wrong. They were right for different circumstances.

The mistake is not doing the math. Most companies pick SaaS because it feels safer without calculating the long-term cost.

We're Thalamus. Enterprise capability without enterprise gatekeeping.

If you're facing build vs. buy decisions, we should talk. Not because we always recommend build (we don't), but because we'll help you do the actual math for your situation.

Sometimes the most valuable consulting is running the numbers honestly instead of going with what feels safe.