The SaaS vs custom software debate isn't black and white. Sometimes SaaS is the right choice. Sometimes custom software wins decisively. The key is understanding when each approach makes financial sense for your specific situation.
This article provides an honest comparison—including when SaaS is actually better—so you can make an informed decision about your business software investment.
In This Article
The Quick Answer
Before diving into details, here's the general guideline:
- Spending less than $200/month on software? SaaS is probably fine. The ROI math for custom doesn't work at low spend levels.
- Spending $300-600/month with workflow frustrations? Custom is worth exploring. You're in the sweet spot where ROI becomes compelling.
- Spending $600+/month or growing rapidly? Custom likely wins. The savings compound significantly over time.
Now let's break down the nuances.
When SaaS Makes More Sense
Yes, we help businesses exit SaaS—but honest advice means acknowledging when SaaS is actually the better choice:
Early Stage / Figuring Things Out
If you're still experimenting with your business model, testing different approaches, or rapidly pivoting, SaaS flexibility has real value. Custom software assumes you know what you need. If that's still unclear, you'll waste money building the wrong thing.
Low Software Spend
If your total SaaS costs are under $150-200/month, custom software doesn't make financial sense. The build cost won't be recovered for years, and you don't have enough workflow complexity to justify custom development.
Standard, Uncomplicated Needs
Some tools genuinely work well off-the-shelf. If Calendly handles your scheduling perfectly, there's no reason to build custom. Custom makes sense when generic tools require workarounds or don't fit your workflow.
Specialized Capabilities
Some SaaS platforms offer capabilities that would be expensive to replicate: AI/ML features, massive data processing, global infrastructure. If you genuinely need those capabilities, the subscription may be justified.
SaaS Makes Sense: Example
Business: New marketing consultant, 6 months in
Current setup: $89/month (Calendly $15, Mailchimp $30, Notion $10, Zoom $15, Stripe $19)
Situation: Still figuring out service offerings, client process may change significantly
Verdict: Stick with SaaS. Low spend, business model still evolving. Revisit when process stabilizes and spend increases.
When Custom Software Wins
Custom software delivers superior ROI when certain conditions align:
Established, Repeatable Processes
You know how you handle leads, how jobs flow through production, how you follow up with customers. The process is proven and unlikely to change dramatically. Custom software codifies what already works.
Significant SaaS Spend ($300+/month)
Higher monthly costs mean faster ROI on custom builds. At $500/month in SaaS, a $5,000 custom project pays for itself in 10 months, then saves $6,000/year thereafter.
Workflow Mismatch
You're constantly working around software limitations. Exporting data between systems, maintaining spreadsheets to track what CRMs won't, creating manual processes to fill gaps. These workarounds cost time and money.
Multiple Disconnected Tools
Using 5+ separate tools that don't talk to each other. Data lives in silos. Your team wastes time on duplicate entry and context-switching between platforms. Integration becomes a custom build anyway—might as well own it.
Long-Term Business Commitment
You're building a business for the long haul, not flipping it next year. Custom software ROI improves dramatically over 3-5+ year horizons.
Custom Wins: Example
Business: HVAC contractor, 5 years established, 8 employees
Current setup: $650/month (ServiceTitan $400, Mailchimp $75, Calendly $30, QuickBooks $45, Zapier $100)
Situation: ServiceTitan has features they don't use, missing features they need. Constant workarounds. Process is stable.
Custom build: $7,997 for job tracking, scheduling, customer management, automated follow-up
New monthly cost: $45 (QuickBooks—keep for accounting)
Monthly savings: $605
Break-even: 13 months
5-year savings: $28,303
The ROI Math: Three Scenarios
Let's compare SaaS vs custom software across different spending levels:
Scenario A: Low Spend ($250/month SaaS)
| SaaS (Continue) | Custom ($2,997) | |
|---|---|---|
| Year 1 | $3,000 | $2,997 |
| Years 2-5 | $12,000 | $0 |
| 5-Year Total | $15,000 | $2,997 |
| 5-Year Savings | $12,003 | |
Verdict: Custom wins, but marginally. Break-even is 12 months. If your process might change significantly, SaaS flexibility may be worth the extra cost.
Scenario B: Moderate Spend ($500/month SaaS)
| SaaS (Continue) | Custom ($5,500) | |
|---|---|---|
| Year 1 | $6,000 | $5,500 |
| Years 2-5 | $24,000 | $0 |
| 5-Year Total | $30,000 | $5,500 |
| 5-Year Savings | $24,500 | |
Verdict: Custom wins decisively. Break-even is 11 months, then you save $6,000/year. This is the sweet spot for most small businesses.
Scenario C: Higher Spend ($850/month SaaS)
| SaaS (Continue) | Custom ($7,997) | |
|---|---|---|
| Year 1 | $10,200 | $7,997 |
| Years 2-5 | $40,800 | $0 |
| 5-Year Total | $51,000 | $7,997 |
| 5-Year Savings | $43,003 | |
Verdict: Custom wins overwhelmingly. Break-even is under 10 months. You're essentially leaving $43,000 on the table over 5 years by continuing with SaaS.
Want to see the math for your exact situation? Use our ROI calculator with your actual numbers.
Hidden Costs Most People Miss
SaaS Hidden Costs
- Price increases: Average 5-15% annually. Your $500/month becomes $650/month in 3 years.
- Feature tier creep: Needed features get moved to higher-priced tiers.
- Integration costs: Zapier, custom connectors, middleware to make tools work together.
- Training time: Enterprise tools require significant learning curves.
- Workaround time: Hours spent on manual processes to fill software gaps.
- Switching costs: When you outgrow a tool, migration is painful and expensive.
Custom Software Hidden Costs
- Optional ongoing support: $150-300/month if you want managed maintenance.
- Future modifications: New features cost development time.
- Hosting: $20-100/month for servers (though often less than SaaS costs).
- Learning curve: Even simple custom software has some adoption period.
The Decision Framework
Use this framework to evaluate your situation:
Question 1: How stable is your business process?
- Still experimenting: Lean toward SaaS
- Mostly stable, minor tweaks expected: Custom is viable
- Rock solid, proven workflow: Custom is strongly favored
Question 2: What's your monthly SaaS spend?
- Under $200/month: Likely stay with SaaS
- $200-400/month: Evaluate carefully
- $400+/month: Custom likely wins on ROI
Question 3: How well do your tools fit?
- 90%+ fit, minor workarounds: May not be worth switching
- 70-90% fit, regular frustrations: Custom worth exploring
- Under 70% fit, constant workarounds: Custom strongly indicated
Question 4: What's your time horizon?
- Might sell or close in 1-2 years: SaaS is simpler
- Building for 3-5+ years: Custom ROI becomes compelling
- Building a legacy business: Custom is almost always better long-term
If You Decide to Go Custom
Don't try to replace everything at once. Smart transitions follow this pattern:
- Start with your biggest pain point—the tool that frustrates you most or costs the most
- Build that first, get it working smoothly
- Evaluate results—savings achieved, team adoption, workflow improvement
- Expand to next highest-value replacement
- Keep tools that genuinely work—not everything needs to be custom
Questions about the transition process? Our FAQ section covers common concerns about moving from SaaS to custom software.
Get Your Personalized ROI Analysis
Book a free process audit. We'll calculate exact savings for your situation and tell you honestly whether custom makes sense.
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