5-Year Cost Comparison: Custom Software vs SaaS Licenses

Technology decisions are financial decisions too. I’ve helped many businesses evaluate their options and seen that while SaaS appears cheaper upfront, the long-term cost tells a different story. This 5-year financial comparison breaks down real costs, key factors, and common business scenarios.

SaaS: Low entry, recurring costs

SaaS offers a low initial investment with predictable monthly fees. However, costs scale with growth and customization is limited.

Typical SaaS costs per user:

$15–$70/month
Extra for add-ons, data usage, or premium support
Limited customization, no code ownership

A 40-user business can spend $36,000–$60,000 over 5 years—without custom features.

Custom software: Upfront investment, full ownership

Custom software requires a higher initial investment, but you own the system—no per-user fees, no vendor lock-in, and full scalability.

Typical custom software costs:

$20,000–$70,000 upfront
10–15% annual maintenance
Unlimited users
Full customization
You own the code

Over 5 years, businesses spend $25,000–$80,000 total—with a system tailored to their operations.

Total Cost of Ownership (TCO) Matters

SaaS costs scale linearly
Custom software amortizes better
SaaS often needs extra tools
Support is limited in SaaS, flexible with custom
Customization is minimal in SaaS, unlimited in custom
Vendor lock-in with SaaS, autonomy with custom.

Which is best for your business?

SaaS works if you’re small, need something quick, or have limited customization needs.
Custom works if you’re scaling, need control, or see tech as a strategic asset.

Cost is also a strategy

This isn’t just about numbers—it’s about long-term vision. The cheaper option today may be costlier tomorrow. Smart comparison gives you an edge.