Roshana Ghemoshu
software engineer
Roshana Ghemoshu has a keen interest in the evolving world of technology and its impact on everyday business. She enjoys exploring new trends, innovative ideas, and the ways digital advancements are shaping how businesses operate and connect with people.
The cheapest option in year one is rarely the cheapest over five years. A licence looks small until it multiplies by users and renewals. A custom build looks large until you compare it with a decade of fees. Finance leaders should compare options on total cost of ownership (TCO), not the first invoice.
The three options
| Build in-house | Buy (licence or SaaS) | Outsource the build | |
|---|---|---|---|
| Upfront cost | Hiring, tools, management time | Setup and implementation | Project fee |
| Ongoing cost | Salaries and turnover | Per-user or usage fees that grow | Maintenance retainer |
| Fit with your process | High | Medium: you adapt to the product | High, if scope is clear |
| Speed to start | Slow (hiring) | Fast | Medium |
| Control | High | Low | High if you own the code |
| Main risk | Key-person dependence | Price rises, lock-in | Vendor quality, handover |
A simple rule: buy what is a commodity (accounting, email, payroll). Build what differentiates you (a unique workflow, pricing logic or customer experience).
What to include in a 5-year TCO
- Build or setup: development, design, configuration, testing
- Licences or subscriptions: including per-user growth and renewal increases
- Hosting and services: cloud, backups, monitoring, payments, email, security tools
- Maintenance and support: bug fixes, security updates, upgrades. As a planning rule of thumb, custom software often costs roughly 15 to 25 percent of its build cost per year to maintain. Treat that as a starting point and ask for real quotes.
- Integration: connecting to existing systems, which is usually under-budgeted
- Change and improvement: new features as the business evolves
- Internal time: your staff in requirements, testing and training
- Exit costs: data export, migration and contract termination
An illustrative five-year example
Take a business with 50 users. If it buys, the licence fee is charged per user, every month, and usually rises at renewal, so it becomes the largest cost over five years. Setup and integration are small by comparison. If it outsources a custom build, the upfront cost is much higher, and it also pays for hosting, maintenance, support and changes. But there is no per-user fee.
At 50 users, custom can come out cheaper over five years. At 10 users, buying is likely to be far cheaper. The answer depends on your numbers, so test them.
Hidden costs to watch for
- Customizing a bought product, then redoing the work at every upgrade
- Price increases at renewal
- Poorly specified work that leads to rework
- Downtime and failed launches
- Staff time lost to a system that fits badly
- Paying twice: an unused licence plus a replacement build
- Currency risk if you budget in NPR but pay in USD
The finance view
- Cash flow: a build front-loads cost, while SaaS spreads it out. Compare by year, not just in total.
- Accounting treatment: some development spend may be capitalized while subscriptions are usually expensed. Confirm with your auditor.
- Payback: total investment divided by net annual benefit (benefits minus running costs). Count only benefits you can measure, such as staff hours saved or errors avoided, and be cautious with revenue claims.
- Sensitivity: build a low and high case for each option, and note which assumptions change the winner.
Protect yourself in the contract
- You own the source code and the data, or have a clear licence to it.
- Documentation and handover are part of the deliverable.
- Renewal price caps for any bought product.
- A defined data export process and exit terms.
- Security and compliance responsibilities written down.
How Quark Infotech can help
We give you a plain comparison of custom against ready-made products, including where buying is the better choice.
Need a clear cost comparison for your project? Book a free 30-minute call and we will walk through the numbers with you.
FAQs
Is custom software always more expensive?
No. Over several years it can cost less than per-user licences, especially with many users. For small teams with standard needs, buying is often cheaper.
How much should we budget for maintenance?
Plan roughly 15 to 25 percent of build cost per year as a starting point, then replace it with vendor quotes.
Should we build, buy or do both?
Buy commodity functions, build what differentiates you, and connect them. Score each need on value, risk and cost.
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