Build vs. Buy Calculator

Your details

The monthly subscription or license fee for the off-the-shelf product.
/ month
How many developers (or equivalent contractor FTEs) will build the solution.
people
Realistic calendar months from kickoff to production-ready launch.
months
Monthly gross salary (or contractor day-rate converted to monthly) per developer.
/ month
Employer costs on top of salary: payroll taxes, benefits, insurance, equipment. Typically 25-40%.
%
Research shows software projects overrun estimates by 1.5-2x on average. 1.0 = no buffer.
x
Developer-days per month needed to keep the system running after launch (bug fixes, security patches, upgrades).
days / month
How many years to project cumulative costs. Break-even is shown independently of this.
years
Currency
Break-evenBuy wins
999years

Years before the cumulative savings from building recover the upfront investment

Cost to build$187,200
Annual maintenance$28,364
Annual buy cost$12,000
Annual savings (build)-$16,364
Total cost to build$329,018
Total cost to buy$60,000
Net savings over horizon-$269,018
Build$544,582
Buy$72,000

Net savings from building: -$269,018

  • Upfront cost
  • Annual maintenance
  • Total over horizon

Buying is cheaper - the build never breaks even under these assumptions.

  • Annual maintenance costs exceed the license fee, so the in-house build will never pay for itself.
  • Consider reducing the maintenance estimate, negotiating a better SaaS price, or reducing scope.

Next stepRevisit maintenance assumptions or negotiate a lower SaaS price before committing to build.

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