FREE TOOL
Build vs. Buy Software Calculator
Buy the vendor, build in-house, or build with a partner — compared on 5-year total cost of ownership, with the break-even year most comparisons hide.
The decision
Cumulative cost, years 0–5
- Buy — 5-year total● LOWEST
- $430k
- Build in-house — 5-year total
- $813k
- Build with a partner — 5-year total
- $475k
At these inputs, buying stays cheaper across 5 years — build only for control, data ownership, or roadmap reasons. In-house adds ~25% hiring/coordination overhead on the build plus 0.5 FTE to own it.
Deciding on a system that matters? We'll pressure-test the math with you — including the honest case for the vendor.
Talk it throughWhy three options, not two
Build-vs-buy content usually compares a vendor subscription against hiring a team — and hiring loses on year one every time, so the analysis quietly becomes an ad for the vendor. The real decision has a third path: a senior partner builds the system without you hiring for it. You pay the build once and a maintenance retainer after, skipping the ~25% hiring and coordination overhead and the fixed FTE cost that make in-house ownership expensive before the system justifies dedicated headcount.
The chart compares cumulative cost across five years: the vendor line compounds at your cost-growth rate; the build lines pay up front and grow linearly. Where they cross is your break-even year. Need a realistic build estimate for the comparison? Use the software cost calculator first.
Common questions
- How do you calculate build vs. buy for software?
- Compare cumulative 5-year cost, not sticker prices. Buy = integration cost plus the vendor subscription compounding at your seat/usage growth rate. Build in-house = the build cost plus ~25% hiring and coordination overhead, plus the fraction of an engineer's loaded cost to own it every year. Build with a partner = the build cost plus a maintenance retainer, typically 15–20% of the build per year.
- When does building beat buying?
- Building wins when vendor cost compounds fast (seat-priced tools at a growing company), when the system is core to your differentiation, or when data ownership and roadmap control carry real value. Buying wins for commodity capabilities at stable scale. The break-even usually lands in years 2–4 — which is why 1-year comparisons almost always favor the vendor and mislead the decision.
- What does 'build with a partner' mean and why is it often cheaper than in-house?
- It means a senior external team builds (and optionally maintains) the system without you hiring for it. You skip the ~25% hiring/coordination overhead and the fixed cost of dedicated FTEs — maintenance is a retainer sized to the system instead of headcount. In-house wins later, if and when the system needs multiple full-time engineers anyway.
- What costs does this calculator leave out?
- Deliberately excluded: switching costs if you leave the vendor later, the opportunity cost of engineering attention, and vendor lock-in risk — they're real but situation-specific. If the totals are within ~20% of each other, those soft factors should decide, not the spreadsheet.
Related: architecture & strategy · technical due diligence · build vs. buy insights