Build vs Buy Software Calculator

How the Build vs Buy Calculator Works

Build versus buy is usually argued with the sticker price: the subscription is cheaper than the build, so rent. That comparison leaves out two things this calculator puts back in. Subscriptions go up every year, and the tools that do not fit your workflow create labor that never appears on the vendor's invoice.

The cost of renting

The subscription for the tools being replaced, with your annual price increase applied year over year, plus the workaround labor: hours per month times your loaded hourly cost, every month of the horizon. Double entry, manual integration between tools, and reports rebuilt in spreadsheets are real costs of the rent model, and for most firms they are the larger of the two.

The cost of owning

The build investment (build phase months times the monthly build rate) and ongoing management after launch. The transition is not free either, so the calculator keeps charging the subscription and the full workaround labor for every month of the build phase. After launch it assumes the internal system eliminates 80% of the workaround hours (adjustable) and carries the rest as a permanent cost of owning.

The crossover month

The first month where the cumulative cost of owning drops below the cumulative cost of renting. Before it, owning is more expensive, because you are paying for both. After it, the gap widens every month, and it widens faster each year the subscription goes up.

When renting wins

If the crossover is past your horizon, keep renting. Commodity tools (email, payroll, accounting, file storage) are almost always cheaper to rent and should stay that way. The math only turns when the tool sits in the middle of your core operational workflow and the friction around it is what your team spends its week on. That is the distinction our Build vs Buy page is about.

Where the default investment figures come from

The defaults are our standard rates: $4,995 a month during the build and $1,495 a month for ongoing management after launch. The five-month build phase is the middle of what the custom software cost calculator estimates for a typical scope, which comes out at 4 to 6 months. Replacing a bigger stack can take longer, so run your scope through that calculator and put its timeline here.