SaaS vs custom development

The cost of SaaS looks low because it’s paid monthly, but it accumulates. A €500/month tool is €30,000 over 5 years, not counting user growth or premium features. Custom development has a higher upfront cost but, once built, recurring costs are limited to hosting and maintenance.

To calculate the real TCO of a SaaS, add: licences × users × years + customisation cost + integration cost + future migration cost. For custom development: discovery + development + testing + infrastructure + annual maintenance (15–20% of initial cost).

Vendor lock-in is the most underestimated risk when adopting SaaS. The longer you use a platform, the harder and costlier it becomes to migrate: data in proprietary formats, configured workflows, integrations built on their API, users trained on their interface.

This isn’t just a theoretical risk. Providers that raise prices by 40% year over year, discontinue features you rely on, or unilaterally change their terms of service are common occurrences. With your own software, you control the roadmap, the data and the infrastructure.

SaaS offers configuration, not customisation. You can adjust fields, activate modules and set rules within the boundaries the vendor has defined. When you need something outside those boundaries — an approval flow with complex logic, a custom pricing calculation, an unsupported integration — you hit a wall.

Custom development offers limitless customisation: every screen, every flow, every business rule is built exactly as you need it. The trade-off is that every change requires development, whereas in a SaaS many configurations can be handled by an admin without code.

With SaaS, your data lives on the vendor’s infrastructure. Technically you can export it, but reality is more complicated: proprietary formats, partial exports, lost histories, metadata excluded from exports.

In regulated sectors (healthcare, finance, GDPR), data location and control are non-negotiable. With custom development, you decide where data is stored, how it’s encrypted, who accesses it and how it’s deleted. Regulatory compliance is your responsibility, but also your guarantee.

SaaS scales automatically in infrastructure, but its pricing also scales — often non-linearly. Going from 50 to 500 users can multiply the cost by 8, not 10. Moreover, performance with large data volumes depends on the vendor’s architecture, which you have no control over.

Custom software requires planning scalability into the architecture, but gives you total control over performance. With modern cloud infrastructure (AWS, GCP, Azure), you can auto-scale resources paying only for what you use, without costs multiplying artificially by number of "seats".

There is no universal answer. The decision depends on your specific context. Use these criteria as a guide to evaluate each particular case within your organisation.