The Build vs. Buy Software Calculator models the total cost of ownership (TCO) over a multi-year horizon, comparing internal engineering development and maintenance against commercial SaaS subscription fees.
Mathematical Formula
- Build TCO:
(Internal Dev Hours * Blended Hourly Rate) + (Annual Maintenance & Hosting * Years) - Buy TCO:
One-Time Setup Fees + (Annual SaaS Subscription * Years)
Hidden Costs of Building In-House
Engineering teams frequently underestimate in-house builds by ignoring ongoing bug fixes, security patch updates, compliance audits, and the massive opportunity cost of pulling senior engineers away from your core product roadmap.
Frequently Asked Questions (FAQ)
When should a technical founder choose to Build?
When the software feature represents your core competitive differentiator (your secret sauce) or when custom architectural constraints cannot be satisfied by any vendor.
When should a startup Buy SaaS?
For undifferentiated infrastructure—authentication (Auth0), payments (Stripe), email delivery (Sendgrid), and CRM. Buying accelerates time-to-market dramatically.