The Build vs. Buy Decision Matrix for Business Owners

"Should we build or buy?" This question paralyzes business owners who lack technical expertise. You don't know what's realistic to build, how long it takes, or what it costs. You're torn between SaaS convenience and custom control. Your CTO says build. Your CFO says buy. Nobody has a framework for making the decision objectively.

Here's that framework. No technical expertise required. Just honest answers to clear questions, weighted factors, and a decision process that produces confident choices.

The 15-Question Framework

Answer these honestly. Each reveals whether build or buy makes more sense for your situation.

Economic Questions

1. What's the annual SaaS cost?

• Under $5,000: +3 points Buy
• $5,000-15,000: +1 point Buy
• $15,000-40,000: Neutral
• $40,000-100,000: +1 point Build
• Over $100,000: +3 points Build

2. How many users will need access?

• Under 10: +2 points Buy
• 10-25: +1 point Buy
• 25-75: Neutral
• 75-150: +1 point Build
• Over 150: +2 points Build

3. How fast is your user base growing?

• Stable/shrinking: +2 points Buy
• 0-20% annually: +1 point Buy
• 20-50% annually: Neutral
• 50-100% annually: +1 point Build
• Over 100% annually: +2 points Build

4. What's your time horizon?

• 1-2 years: +3 points Buy
• 2-3 years: +1 point Buy
• 3-5 years: Neutral
• 5-7 years: +1 point Build
• 7+ years: +2 points Build

5. Can you afford $50,000-150,000 upfront?

• No, limited cash: +3 points Buy
• Uncomfortable stretch: +1 point Buy
• Yes, but prefer not: Neutral
• Yes, no problem: +1 point Build
• Yes, seeking capex investments: +2 points Build

Fit Questions

6. How well does available SaaS fit your workflow?

• Perfect fit (95%+): +3 points Buy
• Good fit (80-95%): +2 points Buy
• Acceptable fit (60-80%): +1 point Buy
• Mediocre fit (40-60%): Neutral
• Poor fit (under 40%): +2 points Build

7. How much SaaS customization would you need?

• None, works out-of-box: +3 points Buy
• Minor ($5,000-15,000): +1 point Buy
• Moderate ($15,000-40,000): Neutral
• Significant ($40,000-80,000): +1 point Build
• Extensive ($80,000+): +3 points Build

8. How unique is your workflow vs. industry standard?

• Completely standard: +3 points Buy
• Mostly standard: +1 point Buy
• Somewhat unique: Neutral
• Significantly unique: +1 point Build
• Completely unique: +2 points Build

9. How important is exact workflow fit?

• Can adapt to SaaS: +2 points Buy
• Minor compromises okay: +1 point Buy
• Some compromises acceptable: Neutral
• Prefer exact fit: +1 point Build
• Need exact fit: +2 points Build

Technical Questions

10. How many other systems need integration?

• 0-1: +2 points Buy
• 2-3: +1 point Buy
• 4-5: Neutral
• 6-8: +1 point Build
• 9+: +2 points Build

11. How deep must integrations be?

• Light (notifications, basic sync): +2 points Buy
• Moderate (data sync): +1 point Buy
• Standard (API integration): Neutral
• Deep (bidirectional, real-time): +1 point Build
• Core business logic shared: +2 points Build

12. What are your compliance requirements?

• None/minimal: +1 point Buy
• Standard (GDPR, basic security): Neutral
• Industry-specific (HIPAA, SOC 2): +1 point Buy (expensive tier)
• Highly specific requirements: +2 points Build

Strategic Questions

13. How critical is this system to business operations?

• Nice to have: +2 points Buy
• Useful but not critical: +1 point Buy
• Important for operations: Neutral
• Critical to operations: +1 point Build
• Core competitive advantage: +2 points Build

14. How stable are your requirements?

• Constantly changing: +2 points Buy
• Evolving frequently: +1 point Buy
• Somewhat stable: Neutral
• Stable with minor changes: +1 point Build
• Very stable: +2 points Build

15. Do you have internal development resources?

• No, would need to hire/contract: +2 points Buy
• Limited, outsource most development: +1 point Buy
• Some capacity: Neutral
• Good development team: +1 point Build
• Strong development capability: +2 points Build

Scoring Your Decision

Total your points:

20+ points toward Buy: SaaS is clearly the right choice 10-19 points toward Buy: SaaS probably makes sense -9 to +9 points: Close call, dig deeper on key factors 10-19 points toward Build: Custom probably makes sense 20+ points toward Build: Custom is clearly the right choice

Interpreting Close Calls

If you're in the -9 to +9 zone, look at these tiebreakers:

Favor Buy if:

• Cash flow is constrained
• Need solution in under 3 months
• Requirements likely to change significantly
• First time in this problem domain

Favor Build if:

• Long-term investment outlook (5+ years)
• Annual SaaS cost exceeds $40,000
• Unique workflow is core to competitive advantage
• Have development resources available

The Factor Weight Matrix

Not all factors are equally important. Weight by your priorities:

Priority 1: Economics (40% weight)

Questions 1-5 matter most if:

• Cost is primary concern
• Budget-conscious organization
• Seeking ROI justification

When economics favor build:

• Annual SaaS $50,000+
• Growing user base (doubles in 3 years)
• 5+ year horizon
• Can afford upfront investment

When economics favor buy:

• Annual SaaS under $15,000
• Stable/small user count
• Short timeline (under 3 years)
• Cash flow constrained

Priority 2: Fit (30% weight)

Questions 6-9 matter most if:

• Workflow efficiency critical
• User adoption concerns
• Competitive differentiation through process

When fit favors build:

• SaaS fit under 60%
• Customization cost exceeds $40,000
• Unique, stable workflow
• Exact fit important

When fit favors buy:

• SaaS fit over 80%
• Minor customization needed
• Standard workflow
• Can adapt processes

Priority 3: Technical (20% weight)

Questions 10-12 matter most if:

• Heavy integration requirements
• Compliance complexity
• Technical architecture critical

When technical factors favor build:

• 6+ deep integrations needed
• Integration costs $30,000+/year
• Specific compliance requirements
• Need full control

When technical factors favor buy:

• Light integration needs (0-3 systems)
• Standard compliance
• Don't need technical control

Priority 4: Strategic (10% weight)

Questions 13-15 matter most if:

• Long-term strategic planning
• Competitive positioning
• Technology as differentiator

When strategic factors favor build:

• System is competitive advantage
• Stable, core requirements
• Strong development capability

When strategic factors favor buy:

• Non-core operations
• Evolving requirements
• Limited technical resources

Real-World Examples

Example 1: CRM for 40-Person Sales Team

Answers:

1. SaaS cost: $60,000/year (+1 Build)
2. Users: 40 (+1 Build)
3. Growth: 30%/year (+1 Build)
4. Horizon: 5+ years (+1 Build)
5. Can afford $120K upfront: Yes (+1 Build)
6. Workflow fit: 60% (Neutral)
7. Customization: $50,000 (+1 Build)
8. Unique workflow: Significantly (+1 Build)
9. Need exact fit: Prefer (+1 Build)
10. Integrations: 4 (Neutral)
11. Integration depth: Deep (+1 Build)
12. Compliance: Standard (Neutral)
13. Criticality: Critical (+1 Build)
14. Requirements: Stable (+1 Build)
15. Dev resources: Can outsource (Neutral)

Score: +11 Build Recommendation: Build custom CRM

Example 2: Project Management for 25-Person Agency

Answers:

1. SaaS cost: $8,000/year (+1 Buy)
2. Users: 25 (Neutral)
3. Growth: Stable (+1 Buy)
4. Horizon: 3-4 years (Neutral)
5. Can afford $60K upfront: Uncomfortable (+1 Buy)
6. Workflow fit: 85% (+2 Buy)
7. Customization: $10,000 (+1 Buy)
8. Unique workflow: Mostly standard (+1 Buy)
9. Exact fit importance: Minor compromises okay (+1 Buy)
10. Integrations: 2 (+1 Buy)
11. Integration depth: Moderate (+1 Buy)
12. Compliance: None (+1 Buy)
13. Criticality: Important (Neutral)
14. Requirements: Evolving (+1 Buy)
15. Dev resources: Limited (+1 Buy)

Score: +12 Buy Recommendation: Use SaaS (Monday.com, Asana, etc.)

Example 3: Internal Operations Platform for 80-Person Company

Answers:

1. SaaS cost: $45,000/year (+1 Build)
2. Users: 80 (+1 Build)
3. Growth: 25%/year (Neutral)
4. Horizon: 7+ years (+2 Build)
5. Can afford $100K upfront: Yes (+1 Build)
6. Workflow fit: 45% (Neutral)
7. Customization: $60,000 (+2 Build)
8. Unique workflow: Significantly unique (+1 Build)
9. Exact fit importance: Prefer exact (+1 Build)
10. Integrations: 6 (+1 Build)
11. Integration depth: Deep (+1 Build)
12. Compliance: Standard (Neutral)
13. Criticality: Critical (+1 Build)
14. Requirements: Stable (+1 Build)
15. Dev resources: Some capacity (Neutral)

Score: +13 Build Recommendation: Build custom platform

When the Matrix Says "Close Call"

Score between -5 and +5: Neither clearly wins. Additional considerations:

Run Break-Even Analysis

Calculate exactly when custom pays for itself:

Break-even = Development Cost / (Annual SaaS Cost - Annual Maintenance)

Example:

• Development: $100,000
• SaaS: $35,000/year
• Maintenance: $15,000/year
• Break-even: $100,000 / ($35,000 - $15,000) = 5 years

If break-even under 3 years: Lean build If break-even over 5 years: Lean buy

Consider Hybrid Approaches

Start with SaaS, plan custom migration:

• Use SaaS Year 1-2 (validate, grow)
• Build custom Year 2-3 (when economics justify)
• Migrate Year 3

Pros: Lower risk, proven need before building Cons: Migration effort, may get locked in

Build core custom, use SaaS for periphery:

• Custom for unique workflow
• SaaS for standard functions
• Best of both

Pros: Optimize each function Cons: More complexity

Test with Prototype

Build proof-of-concept ($10,000-20,000):

• Validate technical feasibility
• Test core workflows
• Get team feedback
• Refine requirements

Then decide: Full build or SaaS alternative

The Thalamus Decision Support Service

What we provide ($1,500-2,500):

1. Guided questionnaire - Walk through framework together
2. Financial modeling - Complete 5-year cost comparison
3. Fit assessment - Evaluate SaaS options against requirements
4. Technical feasibility - Scope and estimate custom development
5. Risk analysis - Identify and quantify risks of each approach
6. Clear recommendation - Build, buy, or hybrid with justification

Deliverable:

• Decision matrix scored for your situation
• Financial models (SaaS vs. custom)
• Recommended approach with rationale
• Implementation roadmap if building
• SaaS evaluation if buying

Value:

• Avoid $50,000-200,000 wrong decision
• Confidence in choice
• Clear path forward

Common Mistakes to Avoid

Mistake 1: Deciding Based on Emotion

"We should own our software!" (without running the numbers) "Building is too risky!" (without assessing actual risk)

Solution: Use framework objectively

Mistake 2: Ignoring Total Cost

SaaS: Only considering license fees (ignoring customization, integrations) Custom: Only considering development (ignoring ongoing maintenance)

Solution: Calculate complete 5-year TCO

Mistake 3: Overweighting Upfront Cost

Custom costs more Year 1, but less Year 2-5

Solution: Look at 3-5 year horizon, not just Year 1

Mistake 4: Underestimating Custom Complexity

"How hard can it be?" (Famous last words)

Solution: Get realistic estimates from experienced developers

Mistake 5: Overestimating SaaS Fit

"It'll work well enough" (then spending 10 hours/week on workarounds)

Solution: Test extensively before committing

The Bottom Line

Build vs. buy isn't random—it's systematic:

Use the 15-question framework Weight factors by your priorities Calculate break-even honestly Consider hybrid approaches

Clear buy when:

• Scoring 10+ points toward buy
• Annual cost under $15,000
• Great workflow fit (80%+)
• Short timeline (under 3 years)

Clear build when:

• Scoring 10+ points toward build
• Annual cost over $40,000
• Poor workflow fit (under 60%)
• Long timeline (5+ years)

Close call when:

• Score between -9 and +9
• Run deeper analysis
• Consider hybrid
• Test with prototype

The framework removes emotion and guesswork. Answer honestly, weight appropriately, make confident decisions.

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About Thalamus: We provide build vs. buy decision support and build custom when it makes sense. Framework application, financial modeling, clear recommendations. Decision support service: Contact us