SaaS or Custom Build? A Decision Checklist for Growing Teams
Every growing business runs on SaaS at some point. Sign up, pay per seat, ship this week. The tradeoff shows up around year three, when your workflow no longer matches the roadmap of a vendor serving 40,000 other companies. Here is the checklist we run with clients before anyone writes code. Five signals SaaS stopped fitting You pay per seat for read-only users. Half your licenses belong to…
As businesses expand, they may find that SaaS solutions no longer meet their needs after three years. This article provides a checklist for teams to determine if building a custom solution is the better option. The five indicators that SaaS is no longer fitting include paying for read-only users, relying on a spreadsheet to manage data, using only a few tools despite multiple integrations, needing an enterprise-tier integration, and having exports limited to CSV format.
On the other hand, there are signs that custom building is the right choice, such as having a standard process, relying on the vendor for compliance, having fewer than ten users on a common workflow, needing the software live within a week, and not having anyone on staff own software decisions long-term.
To make an informed decision, teams should compare the costs of SaaS and custom builds. For instance, with 25 seats at $40 per seat per month, SaaS would cost $12,000 a year after the first year, totaling $66,000 over five years. Conversely, a custom build at $30,000 upfront and $5,000 a year in hosting and maintenance would cost around $55,000 over the same period.
This break-even point is reached near year three for this size, with SaaS being the more cost-effective option at 8 seats and custom build becoming more economical at 100 seats or more.
It is essential to consider that the hybrid approach is often the best solution for most teams. Keep using SaaS for commodity functions, build only the one unique workflow that no vendor covers, and connect the two with webhooks and a thin service layer. The custom layer should handle the integration, normalize the data, run business rules, and store it in your database.
When starting development, write a one-page description of the workflow, assign a single owner with decision-making authority, finalize the data model, pick easy-to-hire technology, and include the exit plan in the contract from the beginning. Most teams seek a custom platform for minor tweaks and better integration, while those with a genuine need for a custom solution have a competitive edge that no vendor can provide.
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