Build vs Buy Internal Tools: The 2025 Decision Guide

"Notion? Slack? Monday? Salesforce?"

Too many options when choosing internal tools.

But the real question is different.

"Do we buy off-the-shelf or build custom?"

Build vs Buy: The Numbers First

Upfront Costs

Approach	Cost
SaaS Adoption	$10-100/user/month
Custom Development (MVP)	$30,000-60,000
Custom Development (Medium)	$60,000-120,000
Custom Development (Complex)	$120,000-300,000+

3-5 Year Total Cost of Ownership (TCO)

Example: CRM for a 50-person company

Item	SaaS ($50/user/month)	Custom Development
Year 1	$30,000	$60,000 (development)
Year 2	$30,000	$9,000 (15% maintenance)
Year 3	$30,000	$9,000
Year 4	$30,000	$9,000
Year 5	$30,000	$9,000
5-Year Total	$150,000	$96,000

Custom development is 36% cheaper.

But that's not the whole story.

The True Cost of SaaS

Monthly fees look affordable. But consider:

Hidden Additional Costs

Item	Cost
Initial Setup/Onboarding	$1,000-5,000
Premium Feature Upgrades	+20-50%/month
API Integration Add-ons	+10-30%/month
Premium Support	+15-25%/month
Training	$500-2,000 per session

According to Gartner, annual software management costs are 4x the initial purchase price.

Long-Term Cost Increases

Phenomenon	Impact
Annual Price Increases	5-15%/year
User Growth	Proportional increase
Feature Requirements	Forced plan upgrades
Vendor Lock-in	Increased switching costs

SaaS costs are not fixed—they're variable. And they almost always go up.

The True Cost of Custom Development

Custom development also has hidden costs beyond the initial quote.

Hidden Costs

Item	Cost
Annual Maintenance	15-20% of dev cost
Security Updates	$5,000-15,000/year
Infrastructure/Hosting	$100-1,000/month
Feature Additions	$1,000-5,000 each

Failure Risks

According to McKinsey research:

Metric	Statistic
Projects Over Budget	45%
Under-Delivered Value	56%
Large IT Project Failure Rate	66%+

BCG finds that more than 2/3 of enterprise software projects fail on schedule, budget, or scope.

When to Choose SaaS

SaaS Makes Sense When:

Standardized workflows (most companies use similarly)
Fast deployment needed (hours to days)
Limited initial capital
No or minimal IT staff
Small scale (under 10 people)

Common SaaS Use Cases

Tool Type	Examples
Collaboration	Slack, Notion, Monday
CRM	HubSpot, Salesforce
Accounting	QuickBooks, Xero
HR	BambooHR, Workday
Marketing	Mailchimp, HubSpot

Key insight: SaaS is efficient for basic infrastructure, not differentiation.

When to Build Custom

Custom Development Makes Sense When:

Unique business logic (competitive advantage)
Complex integrations with existing systems
50+ users with long-term cost considerations
Data security/compliance requirements
Can't find needed features in SaaS

Effective Custom Development Cases

Tool Type	Reason
Order Management	Business-specific processes
Inventory Management	Integration with existing systems
Internal Dashboards	Company-specific KPIs
Customer Portals	Brand experience differentiation
Booking Systems	Industry-specific rules

2025 Trend: The Hybrid Approach

Many companies choose "SaaS + Custom" combinations.

Area	Approach
Basic Infrastructure (email, collaboration)	SaaS
Differentiation (core business logic)	Custom
Connection Layer (APIs, integrations)	Custom or Low-code

In 2025, 62% of tech leaders are more aggressive with technology investments, with many adopting hybrid strategies.

Decision Framework

5 Key Questions

Question	Build	Buy
Is this tool a competitive advantage?	✓
Standard workflow?		✓
50+ users for 5+ years?	✓
Need deployment within 6 months?		✓
Have internal development capability?	✓

3+ Build checks → Consider custom 3+ Buy checks → Evaluate SaaS first

ROI Calculation

SaaS 5-Year TCO = (Monthly cost × Users × 12 × 5) + Add-on costs
Custom 5-Year TCO = Dev cost + (Dev cost × 0.15 × 4 years) + Infrastructure

Breakeven = Dev cost ÷ (Monthly SaaS cost - Monthly maintenance)

Example:

SaaS: $5,000/month
Custom: $60,000 development + $750/month maintenance
Breakeven: $60,000 ÷ ($5,000 - $750) = 14 months

The Third Option: Subscription Development

A model combining SaaS predictability with custom flexibility.

Problems with Traditional Approaches

Approach	Problem
SaaS	Customization limits, rising long-term costs
Agency Development	High cost, separate maintenance, communication issues
In-House Hiring	Hiring time, fixed cost burden

Subscription Development Advantages

Aspect	Subscription Development
Cost	Monthly flat rate (predictable)
Revisions	Unlimited
Maintenance	Included
Ownership	100% code ownership

DaaSy builds internal tools for $2,000/month flat (beta: $999).

What you can build in one month:

CRM + Dashboard
Booking System
Inventory Management
Customer Portal

Agency quotes of $15,000-30,000 can be started at $2,000/month.

Checklist: Where Does Your Company Stand?

Current Situation Assessment

Using 5+ SaaS tools
Monthly SaaS spend over $5,000
Frequently saying "if only it had this feature"
Wasting time moving data between tools
Received SaaS price increase notices

3+ checks → Time to calculate custom development ROI

Custom Development Readiness

Can define clear requirements
Plan to use for 1+ years
Can budget $1,000+/month
Have a development partner or internal PM

Conclusion: The Answer Depends on Context

Situation	Recommendation
Early Startup (under 10 people)	Start with SaaS
Growth Stage (10-50 people)	Custom for core areas only
Scale-up (50+ people)	Decision based on long-term TCO

In 2025, 88% of SMBs say automation helps them compete with larger companies.

It's not about which tool you use, but how you implement it.

SaaS or custom—make the choice that fits your business.