Custom SaaS vs. licenses: the 3-year cost calculation
Over 3 years, licenses win with few users and standard processes; custom SaaS pays off as users, add-ons and price increases pile up. Here is the math.
Leer en español →With few users, a standard process and few integrations, licenses almost always win over three years. Custom software starts to win when headcount grows, when you pay for add-ons to cover what the tool can’t do, and when price increases stack up at every renewal. The reason is structural: license costs scale with every person you add, while the cost of your own system barely changes whether 10 people use it or 40.
The usual mistake is comparing a SaaS monthly fee with a development quote. One side leaves out headcount growth, price increases, add-ons and implementation; the other leaves out hosting, maintenance and ongoing development, which exist even if nobody mentions them in the first meeting. Below is the full calculation, with an example and its assumptions in plain sight.
What licenses really cost
The formula is simple: price per user, times users, times months. The problem is that almost none of those factors stays put.
Price increases. On July 1, 2026, Microsoft raised several Microsoft 365 plans: Business Standard went from $12.50 to $14 per user per month (12%), Business Basic from $6 to $7 (16%) and Microsoft 365 E3 rose 8%, according to its licensing notice; existing customers see the change at their next renewal. Salesforce applied an average 6% increase to its Enterprise and Unlimited editions in August 2025. These aren’t isolated cases: Vertice, a software procurement platform, measured 16.4% year-over-year SaaS inflation in June 2026 across the spend it manages, and Zylo’s 2026 index found that 79% of IT leaders faced price increases at renewal over the previous twelve months.
Add-ons and editions. The feature you need often sits in the next edition up or is sold separately: more storage, API access, a connector, priority support. And an edition upgrade usually applies to every user, not just the one who needs it.
Consumption. More and more vendors charge for AI features with credits on top of the license. According to the same Zylo index, 78% of IT leaders saw unexpected charges tied to consumption or AI features.
Paying for what nobody uses. Zylo estimates that organizations use, on average, 54% of the licenses they have provisioned. Its sample skews toward large companies, but smaller ones see the same thing: users who logged in once and are still being billed.
Implementation and internal time. Configuration, migration, training and someone to administer the tool. It doesn’t show up on the vendor’s invoice, but it costs money.
What custom software really costs
The initial build. Analysis, design, development, testing and data migration. An MVP to validate the fit with your process can be small: at Conceptual Creative it is usually ready in 4 to 8 weeks and starts at around €5,000. Replacing a mature tool is a different scale, and it’s best done in phases.
Hosting. Cloud services, backups, monitoring, transactional email and certificates.
Maintenance. Security updates, dependencies and bug fixes. It is the item most often forgotten, and the most expensive one when it is.
Ongoing development. Without a budget to evolve, in three years you’ll have another tool that doesn’t fit, except this time you own it.
Regulatory changes. When regulations change, such as the requirements for invoicing systems, a SaaS vendor spreads the cost of adapting across all its customers. With your own system, you pay for it.
Accounting treatment. In Spain, in-house software can be recorded as an intangible asset and amortized (the corporate income tax table sets a maximum annual rate of 33% for software and computer systems), while a subscription is an operating expense. Check it with your accountant.
The 3-year calculation: an illustrative example
The figures below are an example built for this article, not any vendor’s pricing and not a quote from us. Assumptions, excluding taxes:
- Licenses: €70 per user per month, €250 per month in add-ons and integrations, a 7% annual increase on both (conservative compared with the increases above) and €5,000 for implementation in year one.
- Scenario A: 10 users, flat for three years.
- Scenario B: 25 users in year one, 32 in year two and 40 in year three.
- Custom: a €40,000 initial build, €200 per month for hosting and services, maintenance at 15% of the build cost per year from year two (year one is covered by the warranty) and €5,000 per year for new features from year two. The cost is the same in both scenarios.
| Option | Year 1 | Year 2 | Year 3 | 3-year total |
|---|---|---|---|---|
| Licenses, scenario A (10 users) | €16,400 | €12,200 | €13,050 | €41,650 |
| Licenses, scenario B (25 to 40 users) | €29,000 | €31,970 | €41,900 | €102,870 |
| Custom (A or B) | €42,400 | €13,400 | €13,400 | €69,200 |
How to read it:
- With 10 users, licenses clearly win: about €27,500 less over three years, and they would still be cheaper over five.
- With 25 to 40 users, custom wins: about €33,700 less over three years. In year four, with 40 users and the same increase, licenses would run around €44,800 versus €13,400.
- The result is sensitive to build cost. If the build cost €60,000, the custom total would rise to about €95,200 and the three-year advantage would shrink to about €7,700, although it would keep growing from year four.
The example leaves out your internal time and the months you’d keep paying for the old tool while the new one is built. Add both to your own numbers.
What the table doesn’t show
Fit with your process. A generic tool makes you adapt to it. If what sets you apart is how you sell or serve customers, adapting has a cost that never appears on an invoice: side spreadsheets, manual steps and duplicate data. In the Canary Islands, watch the specifics: whether the tool handles IGIC, the islands’ indirect tax, and its rates properly, or how seasonal peaks are billed if you hire seasonal hospitality staff. Annual contracts commonly let you add users mid-term but not remove them until renewal.
Ownership of data and code. With SaaS, the data is yours but it lives on someone else’s platform. The EU Data Act, which has applied since September 12, 2025, requires providers to allow export in a commonly used, machine-readable format, and from January 12, 2027 it eliminates switching charges entirely. You take your data with you; the workflows, automations and configuration you built inside, not always. With custom software, make sure the contract gives you the code, the repository and the documentation.
Dependency. It exists on both sides. With licenses you depend on the vendor’s pricing and roadmap, and the vendor can repackage editions or retire features. With custom software you depend on whoever maintains it, which is why a standard tech stack, documentation and automated tests matter: they let you switch teams if you need to.
Execution risk. SaaS is proven and works tomorrow. A build can run late or grow in scope; you mitigate that with an MVP, phased delivery and a written scope.
When licenses win and when custom wins
Licenses win when:
- You have few users and a standard process: office software, accounting, payroll or a basic CRM.
- The tool covers what you need without workarounds or spreadsheets around it.
- You need a solution within weeks and don’t want an upfront investment.
- Regulations change often and you’d rather the vendor absorb the adaptation.
Custom wins when:
- Headcount grows and the per-seat cost rises faster than the value you get.
- Your process is your competitive edge and the tool forces you to give it up.
- You pay for add-ons to fill gaps and still rely on workarounds.
- You need deep integrations with your systems: ERP, booking engine, channel manager or online store.
- Your horizon is three to five years and someone in the company will own the product.
Between the two extremes sits the option that most often makes sense: keep SaaS for the generic parts and build only the part that differentiates you, connected to the rest through integrations and automation.
How to run your own numbers
- List your tools, how many licenses you pay for and how many people actually use them each week.
- Project users over three years using your growth plan, not today’s headcount.
- Apply a realistic annual increase based on your renewal history.
- Add add-ons, consumption, support, implementation and internal time.
- Ask for a custom quote that covers scope, hosting, maintenance, new features and code ownership.
- Compare over three and five years, and rerun the numbers with a 30% higher build cost.
- Score fit, ownership, dependency and risk separately.
If the answer still isn’t clear, start with an MVP for the part of the process that costs you most: it’s the cheapest way to test whether custom fits.
At Conceptual Creative we run this analysis with your numbers before proposing anything, and if the conclusion is that licenses suit you better, we’ll tell you. If you’d like to review your case, see how we approach custom software or get in touch.
