Custom software vs off-the-shelf: what each really costs over five years

Sooner or later two documents land on the same desk: a software renewal notice that is higher than last year’s, and an agency quote to build your own. One is a fee that keeps creeping up; the other is a large number up front that hides its running costs. This build vs buy software guide puts both on the same five-year footing, with prices checked on 4 October 2026, and says plainly when the answer is “don’t build”.

The short answer

For most 5–50 person firms, the custom software vs off-the-shelf question has a plain answer. Buy the tools every business needs: email, accounting, payroll, CRM, helpdesk, project management. Their vendors spread the cost over thousands of customers. Build only the part of your business that is genuinely different, such as your quoting logic or client portal, and prove that process cheaply first in a spreadsheet or no-code tool. The rest of this guide is the arithmetic behind that advice.

What off-the-shelf software really costs over five years

Only one cost driver is on the pricing page: seats times price. The rest are price rises, renewal terms, tier jumps, AI meters and admin.

Today’s per-seat prices

Prices from each vendor’s own pricing page, checked 4 October 2026.

HubSpot’s page also showed its Starter tier at $7 a seat a month on annual billing, beside a $20 figure. That looks like a promotional price, so don’t build a budget on it.

Prices keep rising

• Microsoft 365 Business Basic went from $6 to $7 per user a month, and Business Standard from $12.50 to $14, from 1 July 2026 at renewal (Microsoft licensing news).
• Salesforce raised Enterprise and Unlimited editions by an average of 6% in August 2025 (Salesforce newsroom).
• Atlassian cloud plans rose 5% to 10% in October 2025, according to its partner Adaptavist (Adaptavist).
• Google moved Workspace Business Standard to $14 a user with Gemini included, “only $2 more” in its words (Google Workspace blog).

Vertice, which helps businesses buy SaaS, measured SaaS inflation at 11.4% in early 2025 (Vertice 2025) and a record 16.4% in June 2026 (Vertice tracker), against US consumer inflation of 3.4% (BLS CPI). It uses its own customers’ data and does not publish its method, so read it as a direction, not a forecast.

The costs that are not on the pricing page

• Tier jumps. HubSpot Starter to Professional takes a seat from $20 (monthly billing) to $90–$100, plus a required $1,500 onboarding fee (HubSpot pricing).
• AI meters. Zendesk charges $2.00 per extra automated resolution (Zendesk) and Freshdesk $49 per 100 extra AI sessions (Freshdesk). In Zylo’s 2026 survey, 78% of IT leaders reported surprise usage or AI charges (Zylo).
• Renewal clauses. HubSpot can raise fees at renewal “up to our then-current list price”, with no cap (HubSpot terms). A third of vendors have uncapped rise clauses (Vertice 2025).
• Unused seats. Zylo found 36% of licences unused, mostly at larger firms. Count active users before renewing.

Worked example. A 15-person service firm, on annual billing at today’s prices.

• HubSpot Sales Hub Professional, 5 sales seats: 5 × $90 × 12 = $5,400
• Asana Advanced, 15 users: 15 × $24.99 × 12 = $4,498.20
• Zendesk Suite Team, 4 agents: 4 × $55 × 12 = $2,640
• Zapier Team, 2,000 tasks: $69 × 12 = $828
• Total: $13,366.20 a year, plus a one-time $1,500 HubSpot onboarding fee.

Assumption: prices rise 0%, 5% or 10% a year (table below). At 25 people (8 sales seats, 25 project users, 6 agents) the bill becomes $20,925 a year before any rise.

Includes the onboarding fee once. Prices checked 4 October 2026. Email and office software is left out; you need it on either path. Model your own seat growth and test all three scenarios.

What custom software really costs

A custom build is hours times rate. The hours cover specification, design, testing and project management, not just coding. Then add hosting, outside services such as payments, security testing and, biggest of all, upkeep.

Developer rates by region

Pay and rate data dated May 2025 to October 2026; see each link.

US agencies typically charge more, but we could not verify a range, so get quotes. And the rate matters less than it looks: seniority, time-zone overlap and a clear written scope change the hours more. Compare fixed prices for a written scope, not hourly rates.

Two example builds

The hours are our illustrative assumptions, not sourced figures; get two written estimates for your own scope. The internal tool is a quoting and job-tracking app replacing spreadsheets for about 15 staff: 400 hours. The customer portal has logins, order and invoice history, document upload, card payments and a sync with your CRM or accounting tool: 1,000 hours.

Build cost only; hours are assumptions.

Hosting and upkeep

Hosting is the small part. At AWS Lightsail list prices, a 4 GB server plus a high-availability managed database costs roughly $54 to $144 a month (AWS Lightsail pricing); we use $84 as a middle case.

Upkeep is the big part: patches, updates, fixes and “can it also do this?” requests. Robert Glass’s 2002 book says maintenance “typically consumes 40-80 percent of software costs” over a system’s life, about 60% of it on improvements. The source is old, so take the principle: most of the money is spent after launch.

Agency blogs often quote upkeep as a fixed yearly percentage of the build. We could not trace that rule to any study, so we budget hours: 10 a month for the internal tool, 20 for the portal. Those are assumptions; replace them with a written support quote.

Worked example. The internal tool at the Indian midpoint rate of $36 an hour.

• Build: 400 hours × $36 = $14,400
• Upkeep (assumption: 10 hours a month): 10 × 60 months × $36 = $21,600
• Hosting (assumption: $84 a month): $84 × 60 months = $5,040
• Five-year total: $14,400 + $21,600 + $5,040 = $41,040

Five years of upkeep costs one and a half times the build.

Midpoint rates. Upkeep is monthly hours × 60 × rate.

On every row, upkeep costs more than the build. Any comparison of a one-off build price with five years of subscriptions flatters building.

Build vs buy software, side by side

Building wins on cost only when build, upkeep and hosting over five years cost less than five years of subscriptions, counting price rises, one-off fees and the cost of moving out.

Worked example: where building loses. Fifteen people use Airtable Business at $45 a user a month (Airtable pricing).

• Per year: 15 × $45 × 12 = $8,100
• Five years with no rises: $8,100 × 5 = $40,500
• Five years at 10% a year (assumption): $8,100 × 6.1051 = $49,451
• The matching internal tool: $41,040 to $75,040.

Build here only for a much better fit, not to save money. On Retool’s pricing, 2 builders and 13 users would cost just $1,020 to $3,540 a year, plus build time.

Worked example: where building can win. Forty people use a CRM at $100 a user a month, Salesforce’s Pro Suite list price (Salesforce pricing).

• Per year: 40 × $100 × 12 = $48,000
• Five years at 6% a year (assumption): $48,000 × 5.6371 = about $270,580
• Portal-sized build, Eastern European midpoint, with upkeep and hosting: $154,000 + $5,040 = about $159,000
• Gap: about $110,000 over five years.

The 6% borrows Salesforce’s 2025 rise on its bigger editions; Salesforce announced no rise for Pro Suite.

That gap is real only if the app replaces what people actually use, requirements are stable and someone inside the business owns it.

The middle options to try first

Four options sit between renting and building, and suit most small firms better than either.

Connect the tools you already pay for

Zapier costs $19.99 a month for 750 tasks, or $69 for a 2,000-task Team plan, on annual billing (Zapier pricing). Task pricing grows with volume, connections break silently when a field is renamed, and someone must own them. Still, it is often the cheapest fix, and where most workflow automation should start.

Prove it in no-code or low-code

Airtable costs $20 to $45 a user a month (Airtable pricing); Retool charges builders $10 to $50 and internal users $5 to $15 (Retool pricing). Both prove a workflow fast. Check the exit first: Bubble’s manual says “there’s no way of exporting your application as code”, though data can be exported (Bubble manual).

Build a thin custom layer on top

Keep your CRM or accounting tool as the record, and build only the piece that makes you different, such as a client portal, a quoting engine or an AI assistant over your documents, using the vendor’s API. Smaller build, smaller upkeep, less lock-in. Most custom software for small teams should take this shape.

Hire a dedicated developer

For steady work, one developer can beat a string of project quotes. For 160 hours a month, a senior developer costs roughly $4,960–$6,560 from a South Asian firm or $10,240–$12,160 from Central and Eastern Europe (Accelerance); a UK contractor about £10,500 for 20 days at the median rate (ITJobsWatch); a US employee about $16,500 with employer costs, on the BLS figures above. The risk is depending on one person, so insist on your own repository, documentation and a handover plan, whoever you hire, our dedicated developers included.

UK note: for a small private-sector client, the contractor’s own company decides IR35 status (GOV.UK IR35 guidance). Since April 2025, “small” means meeting two of: turnover up to £15m, balance sheet up to £7.5m, 50 employees or fewer (RSM).

What AI really changes

Claims that AI has halved build costs come without evidence. In the one randomised trial we found, experienced open-source developers took 19% longer with AI tools while believing they were 20% faster (METR study); it was small, 16 developers, and may not generalise. Retool found 35% of respondents had replaced a SaaS tool with their own build (Retool report), but they are Retool’s own users. AI speeds up prototypes. It does not remove testing, security, hosting or upkeep.

When building is clearly right, and clearly wrong

Build when:

• The workflow is how you win or keep customers, and the products you trialled miss must-haves.
• Many people use it on expensive seats, and requirements are stable.
• You need to own the data model or logic, for contracts, compliance or the sale value of the business.
• The process is proven and the scope fits on two pages.
• A named owner has 2–4 hours a week, and five years of upkeep is budgeted.

Don’t build when:

• It is a commodity tool: email, accounting, payroll, CRM, helpdesk, project management.
• The process still changes month to month.
• A few people use it, on cheap seats.
• Nobody inside owns it.
• The only reason is “SaaS is expensive”, with upkeep left out.

Hidden risks on both sides

Renting. Vendors change the product under you. Atlassian ended support and security fixes for its Server products on 15 February 2024 (Atlassian); Salesforce ended support for Workflow Rules and Process Builder on 31 December 2025, forcing a rebuild in Flow (Salesforce Help). Leaving is hard too: in July 2025 the UK competition regulator found cloud competition “not working well”, citing egress fees and licensing (CMA). EU customers lose switching charges from 12 January 2027 under the Data Act (European Commission).

You also inherit the vendor’s security. Verizon found third parties involved in 30% of breaches, double the year before (Verizon 2025 DBIR), yet only 22% of UK small businesses reviewed their immediate suppliers’ cyber risks (Cyber Security Breaches Survey). UK GDPR requires a vendor processing personal data for you to be contracted to delete or return it at the end (ICO).

Building. You depend on your supplier. Builder.ai, a Microsoft-backed UK app builder, entered insolvency in May 2025 after a lender seized most of its cash (Bloomberg). A client holding its own repository and cloud accounts could, in principle, move to another developer; one without them would face the insolvency process. Security becomes your job: ask builders to work to the OWASP Top 10:2025. And watch for domain, cloud or payment accounts in the developer’s name.

Who owns the code: US and UK in plain English

United States

Code your employee writes as part of their job is a “work made for hire”, so the business owns it (17 U.S.C. §101). Code from a contractor, freelancer or agency belongs to them by default. A work-for-hire clause alone does not fix that: commissioned work qualifies only in nine listed categories, with a signed written agreement, and software is not one of them. You need a written, signed assignment, because a copyright transfer “is not valid unless” in writing and signed by the owner (17 U.S.C. §204). Contracts commonly use both wordings. Some states add rules, so check locally.

United Kingdom

An employee’s work in the course of employment belongs to the employer unless agreed otherwise. Commissioned work belongs to its creator, “not you the commissioner, unless you otherwise agree it in writing” (GOV.UK, Ownership of copyright works). Without that, you may get only an implied licence to use it, not ownership. Every contract with a freelancer or agency needs a written assignment.

This is general information about US and UK law, not legal advice; ask a lawyer to read any contract that matters.

What to put in the contract

1. Assignment of all intellectual property in the deliverables to you (in the US, plus work-for-hire wording).
2. Ownership passing as work is created or each milestone is paid, not “only on final payment”.
3. A permanent, royalty-free licence to earlier code the developer reuses.
4. A list of open-source components and their licences.
5. Data protection terms, including UK GDPR processor clauses for personal data.
6. A security standard such as OWASP Top 10:2025, and who pays for later security fixes.
7. Handover: source code, deployment scripts, documentation and credentials.
8. Termination help, and no withholding of code beyond the amount in dispute.

Own these accounts from day one, with the developer as a user, not the owner: domain and DNS, cloud hosting, code repository, app stores, payment processor, API keys and a password vault.

The Own-or-Rent Worksheet

Our framework for making the call in an afternoon: fill in Part A from real quotes, score Part B honestly, check Part C before signing.

Part A: five-year cost lines. Leave no line blank; blanks are where surprises hide.

Part B: the build test. Score each question 0 (no), 1 (partly) or 2 (yes).

1. Is this workflow how we win or keep customers?
2. Have we trialled two or three products and found must-haves missing?
3. Will users or usage grow enough that per-seat or metered pricing hurts?
4. Do we need to own the data model or logic (contracts, compliance, sale value)?
5. Is the process proven and stable enough to scope on two pages?
6. Do we have a named owner inside the business with 2–4 hours a week?
7. Can we fund five years of upkeep, not just the build?

Reading the score. 0–5: rent. Right-size your seats and ask for a cap on renewal rises. 6–9: take one of the middle paths. 10–14: build, with the ownership checklist in hand. Hard stop: if question 6 or 7 scores 0, do not build, whatever the total. These thresholds are our judgement, not a formula.

Part C: ownership. Before signing, tick off the eight clauses and the accounts list above. A builder who resists any of them has told you something.

Common mistakes

1. Setting a one-off build price against five years of SaaS, with no upkeep counted.
2. Pricing SaaS at entry-tier or promotional rates.
3. Signing without reading the renewal clause.
4. Rebuilding a CRM, helpdesk or accounting tool to “save on seats”.
5. Building before the process is proven.
6. Relying on a work-for-hire clause alone (US) or no written assignment (UK).
7. Letting the developer hold the repository, cloud account or domain.
8. Believing AI makes custom software nearly free.

You can start today. Pull twelve months of software invoices, name the one process no tool handles well, and fill in Part A. If the numbers say rent, rent with a cap on renewals. If they say build, build the smallest piece that pays for itself, and make sure you own it.