🔨 Build vs. Buy Calculator
Compare costs and make an informed decision
Initial development cost
Time to develop
Purchase/license cost
Time to implement
Ongoing maintenance for built solution
Monthly subscription/fees for bought solution
Period for comparison
To calculate time cost (optional)
How to Use This Calculator
Enter Build Costs
Input the initial development cost, development time in months, and monthly maintenance costs for building the solution in-house.
Enter Buy Costs
Input the purchase/license cost, implementation time, and monthly subscription or maintenance fees for buying the solution.
Set Analysis Timeframe
Choose the period for comparison (e.g., 36 months for 3 years). This affects the total cost calculation including maintenance.
Review Results
Examine the recommendation, total costs, savings, ROI, and break-even point to make your decision.
Formula
Total Build Cost:
Total Build = Build Cost + (Build Time × Hourly Rate × Hours/Month) + (Maintenance Build × Timeframe)
Total Buy Cost:
Total Buy = Buy Cost + (Buy Time × Hourly Rate × Hours/Month) + (Maintenance Buy × Timeframe)
Net Savings:
Savings = Total Buy Cost - Total Build Cost
ROI:
ROI = (Savings / Build Cost) × 100%
Example: Software Development Decision
Build: $50,000 cost, 6 months, $500/month maintenance | Buy: $20,000 cost, 1 month, $1,000/month | Timeframe: 36 months
Total Build: $50,000 + ($500 × 36) = $68,000
Total Buy: $20,000 + ($1,000 × 36) = $56,000
Savings: $56,000 - $68,000 = -$12,000 (Build costs more)
Recommendation: Buy (saves $12,000 over 36 months)
About Build vs. Buy Calculator
The Build vs. Buy Calculator helps businesses and organizations make informed decisions about whether to develop a solution in-house or purchase an existing solution. This comprehensive tool compares total costs, including development, implementation, and ongoing maintenance, to provide clear recommendations based on your specific needs and timeframe.
When to Use This Calculator
- Software Decisions: Evaluate whether to build custom software or buy off-the-shelf solutions
- Business Processes: Decide between developing internal processes or using third-party services
- Technology Investments: Compare building vs. buying technology solutions
- Resource Planning: Understand the total cost implications of each option
- Strategic Planning: Make data-driven decisions about core competencies vs. outsourcing
Why Use Our Calculator?
- ✅ Comprehensive Analysis: Considers all costs including development, implementation, and maintenance
- ✅ Clear Recommendations: Provides straightforward build or buy guidance
- ✅ Time Consideration: Accounts for development and implementation time differences
- ✅ Long-Term View: Analyzes costs over your chosen timeframe
- ✅ ROI Calculation: Quantifies return on investment for each option
- ✅ Break-Even Analysis: Shows when initial cost differences are recovered
Common Applications
- Software Development: Decide between custom development and commercial software
- Infrastructure: Compare building vs. buying IT infrastructure
- Business Services: Evaluate in-house vs. outsourced business functions
- Technology Stack: Choose between building proprietary tools or using existing platforms
Tips for Best Results
- Accurate Cost Estimates: Base costs on realistic estimates from developers or vendors
- Include All Costs: Don't forget hidden costs like training, integration, and opportunity costs
- Realistic Timeframes: Be conservative with development time estimates
- Maintenance Estimates: Consider long-term maintenance and support costs
- Consider Non-Financial Factors: Factor in control, customization, and strategic value
Frequently Asked Questions
What factors should I consider beyond cost?
Consider control over the solution, customization needs, time to market, strategic importance, core competencies, vendor lock-in risks, and scalability. Cost is important but not the only factor.
How do I estimate development time accurately?
Base estimates on similar past projects, consult with developers, add buffer time for unexpected issues, and consider the complexity of requirements. It's often better to overestimate than underestimate.
Should I include opportunity costs?
Yes, if you're using internal resources, consider the opportunity cost of what those resources could be doing instead. This is especially important for strategic decisions.
What if the bought solution doesn't meet all requirements?
Factor in customization costs, integration costs, and potential workarounds. Sometimes a "buy" solution needs significant customization, making "build" more attractive.
How do I account for vendor lock-in risk?
Consider switching costs, vendor stability, and exit strategies. You might add a risk premium to the buy cost or factor in migration costs at the end of the timeframe.
What if requirements change over time?
Consider flexibility and adaptability. Custom-built solutions may be more flexible, while bought solutions may have limitations. Factor in the cost of adapting to changes.