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Compare the costs of building your own software versus buying an external service. Calculate total build costs, annual maintenance, break-even point, and years to profit to make an informed decision about whether to build or buy software for your business.
Last updated: January 28, 2026
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Monthly or annual license fee for the external service.
Number of developers needed to build the software.
Overhead costs as a percentage of gross salary (e.g., insurances, benefits).
Number of days per period that an employee will spend on maintenance.
Effective cost per employee
$10,000 / month
CE = SE × (1 + OV)
Cost to build
$120,000
N × T × CE
Annual maintenance
$24,000 / year
D × CE × 12 / 5
Annual buy cost
$10,000 / year
Annual savings
-$14,000 / year
Annual buy cost − Annual maintenance
Years to profit
Never
Break-even = Cost to build ÷ Annual savings
Building costs more annually than buying — building is not profitable.
The build vs. buy calculator compares the total cost of ownership for building your own software versus buying an external service. It calculates development costs, ongoing maintenance, and determines when building becomes profitable compared to buying.
Cost to build = N × T × CEwhere CE = SE × (1 + OV)N = Number of employees required
T = Time to build (converted to months)
CE = Effective cost per employee per month
SE = Monthly gross salary per employee
OV = Overhead percentage (e.g., 25%)
Annual maintenance = D × CE × 12 / 5D = Days of maintenance per month
CE = Effective cost per employee per month
12 = Months per year
5 = Working days per week
Years to profit = Cost to build ÷ (Annual buy cost − Annual maintenance)If break-even occurs in under 3 years, building is typically a good investment.
If break-even occurs in 3-5 years, consider your long-term needs carefully.
If break-even occurs after 5+ years, building may not be profitable unless you plan long-term use.
Recommendation: In this example, buying is more cost-effective since building costs more annually than buying.
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