BIZOMAT Tools · Business
Build or Buy Software
Should you build custom software or buy an existing product?
Compares total cost of ownership of custom software and a package, with fit and uniqueness ratings.
Open the calculatorRuns in your browser. No account needed.
How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Custom build cost | $ | Quoted custom build cost |
| Custom annual support | $ | Annual support, hosting and maintenance of custom software |
| Package setup cost | $ | Package implementation and set-up cost |
| Package monthly cost | $ | Package subscription per month |
| Comparison period | years | Comparison period |
| Off-the-shelf fit | 1–5 score | Rating of how well the package fits your process (tested with real scenarios) |
| Uniqueness of requirement | 1–5 score | Rating of how unique your requirement is |
| Need for control | 1–5 score | Rating of how much control you need over the system |
What each input means
Open an input to see what it is, its units, the worked example and the common mistakes, with a small diagram.
What this means: Custom build cost
- What it is
- The one-off cost to design, build, test and deploy custom software, from a developer’s quotation or estimate.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $50000 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Adds directly to custom total cost of ownership.
- Get it right
- Include testing, data migration and project management, which are often outside the build quote.
What this means: Custom annual support
- What it is
- The yearly cost of running custom software after launch: hosting, support, bug fixes, security updates and small changes.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $5000 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Multiplied by the comparison years and added to custom total cost.
- Get it right
- Custom software always needs ongoing maintenance; do not leave this at 0.
What this means: Package setup cost
- What it is
- The one-off cost to implement an off-the-shelf package: configuration, integration, data migration and training.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $5000 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Adds directly to package total cost.
- Get it right
- Ask the vendor or implementer for a fixed implementation quote.
What this means: Package monthly cost
- What it is
- The monthly subscription or licence fee for the package for all the users you need.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $1500 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Multiplied by 12 × comparison years and added to package total cost.
- Get it right
- Check how the price grows with users and modules, and whether yearly increases apply.
What this means: Comparison period
- What it is
- The number of years over which the two options’ costs are added up, for example the expected life of the system.
- Units and format
- Enter a number in years: years. The form accepts 1 years to 10 years.
- Example
- The form opens with 3 years as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- More years add more support or subscription cost to each option.
- Get it right
- The comparison is not discounted, so longer periods weight ongoing costs fully.
What this means: Off-the-shelf fit
- What it is
- How well an off-the-shelf package meets your process, tested with real scenarios, rated 1 (poor fit) to 5 (fits with little change).
- Units and format
- Move the slider to a score from 1 (low) to 5 (high).
- Example
- The form opens with 3 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- A fit of 4 or more gives BUY; 3 or less is needed for BUILD.
- Get it right
- Rate it after a demonstration using your own scenarios, not from the brochure.
What this means: Uniqueness of requirement
- What it is
- How unusual your requirement is compared with what most organisations need, rated 1 (common) to 5 (unique to you).
- Units and format
- Move the slider to a score from 1 (low) to 5 (high).
- Example
- The form opens with 4 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Averaged with need for control; an average of 4 or more is needed for BUILD.
- Get it right
- Ask whether the uniqueness gives a real advantage or is just habit.
What this means: Need for control
- What it is
- How much you need to control the system’s features, roadmap, data and hosting yourself, rated 1 (little) to 5 (full control).
- Units and format
- Move the slider to a score from 1 (low) to 5 (high).
- Example
- The form opens with 4 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Averaged with uniqueness; an average of 4 or more is needed for BUILD.
- Get it right
- Consider regulatory, security and integration needs, not only preference.
Method and formulas
- Custom TCO = build + annual support × years
- Package TCO = set-up + monthly × 12 × years
- BUILD if need ≥ 4, fit ≤ 3 and custom TCO ≤ 1.5 × package; BUY if fit ≥ 4
Limitations
- Undiscounted; delivery risk of custom builds is not priced
Typical uses
- System selection
- Custom development proposals
Who it is for
- Owners and managers
- IT and operations leads
What you get
- BUILD, BUY or COMPARE IN DETAIL
- TCO of each option
Interpreting the result
- A fit-gap analysis is needed whenever the result is COMPARE IN DETAIL
BIZOMAT tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.