Custom Software vs. SaaS Solutions

This gets framed as a fight, and it is not one. Having software built does not mean canceling your subscriptions. The question is not which side wins. It is which jobs belong on which side.

The difference in one sentence

SaaS is software you rent. Custom software is software you own. Everything below follows from that. If you are not yet sure what counts as custom software, part one of this series covers what it is and what it is not.

What SaaS is genuinely good at

• It already exists. You can be using it this afternoon. Nothing custom can match that, ever.
• The upkeep is shared. Servers, security patches, the browser changing under everyone: somebody else’s job, paid for by every customer at once.
• It is the right answer for commodity work. Accounting, payroll, email, calendars, card processing. Your version of those is not different from anyone else’s.
• You can stop. If it turns out to be wrong, you cancel at the end of the term. The commitment is small on purpose.

If a product covers your job and the parts it misses cost you almost nothing, buy the product and stop reading here.

Where renting gets expensive, and it is not the sticker price

The monthly fee is the part you can see. These are the parts you cannot:

• Per seat. When you pay per user, the bill grows with your headcount, and it keeps growing for as long as you use the product.
• The gap tools. When one product does not cover a whole process, the fix is usually a second product, or a connector between the two. Each of those is its own line on the card statement.
• The manual step. Whatever no product covers, a person does. That cost never appears on an invoice, which is exactly why it can sit there for years without anyone pricing it.
• The roadmap is not yours. You can ask for a feature. You are one customer among all of theirs, and the product goes where most of them pull it. That is not a complaint about any vendor. It is what building one product for many companies requires.
• Your data sits in their shape. You can usually export it. An export is not the same thing as having the system.

Where owning it is worth the money

• The part you do differently survives. What your business does that its competitors do not is often the thing customers are paying you for. Software designed for the average of your industry pushes you toward the average.
• One record instead of four. The quote, the job, the parts and the invoice can be the same thing seen from different angles, because one system holds all of it.
• The bill is a project, not a subscription with no end. You pay to have it built. After that you pay for hosting, and for changes you ask for. Adding a user is not a pricing event.
• Nobody can change the terms on you. No repricing, no plan restructure, no feature you depend on being retired, because nobody else is in a position to do any of that.

Comparing the cost honestly

The comparison people make is a monthly fee against a one-time fee, and it is the wrong one. Custom software has running costs too. Put both columns on one page.

Renting: every subscription that touches the process, every seat, the connectors, the extra product bought to cover a gap, and the hours your team spends on the steps nothing covers.

Owning: the build, hosting, and support if you want it.

We can only fill in our own half of the second column, not the industry’s. Ours: discovery starts at $1,500, a fixed fee that is credited against the build if you go ahead. A build starts at $15,000, with the scope and the price signed before work begins. Support is optional and starts at $1,000 a month.

Nobody can fill in the first column for you. Add it up yourself, hours included. Do that before you talk to anyone, us included. If the total comes out small, you have your answer and you saved yourself a meeting.

The test that settles it: what happens if it ends

Ask what you are left holding if the arrangement stops.

Rented: you export what the export supports, and the software stops working for you. That is not a trick. It is what renting means, and it is a fair trade for not having paid to build it.

Owned: you should be left with the code, somewhere to run it, and enough documentation that another developer can pick it up.

Should. It depends entirely on what you sign, so ask rather than assume. Who owns the code when the final invoice is paid? Whose account does it run in? Put the answers in the contract, not in an email. For our work, all deliverables are yours on final payment, and you get the repository plus the documentation for deploying it. No lock-in.

Rent the commodity, own the difference

That is the whole split, and it usually leaves you running both. Keep paying for accounting, payroll and email. Build the process that is specific to you, the one you would have to explain to a stranger before they understood how your business makes money.

Four questions that sort one from the other:

• Does this job work the same way at your business as at every other business in your industry? Rent it.
• Is there a product that covers it, with gaps you can live with? Rent it, and do not overthink it.
• Have you bought three products and a spreadsheet to cover one process? That is the signal.
• Is this the work your customers actually pay you for? That is the part worth owning.