Build or Buy Calculator
Compare the total cost of building a solution in-house against purchasing a third-party product over a defined time horizon.
How to use this tool
- Enter in-house development cost, annual maintenance / support (build), vendor implementation / setup cost, annual license / subscription (buy) and evaluation period in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your savings (build vs buy) and the full breakdown beneath it.
Formula
Total Build Cost = Development Cost + (Annual Maintenance × Years)
Total Buy Cost = Implementation Cost + (Annual License × Years)
Savings = Total Buy Cost − Total Build Cost
How it works
This calculator performs a straightforward total cost of ownership (TCO) comparison over a fixed time horizon. All costs are treated as nominal (undiscounted), so it is most accurate for shorter evaluation periods or when the discount rate is low.
A positive Savings figure means building in-house is cheaper over the chosen period; a negative figure means buying is the better financial choice. The model assumes costs are stable year-over-year and does not account for opportunity cost, risk, or time-to-market differences.
Worked example
5-year build vs SaaS subscription
- Total Build Cost = $80,000 development + ($3,000/yr × 5 yr) = $80,000 + $15,000 = $95,000
- Total Buy Cost = $5,000 setup + ($25,000/yr × 5 yr) = $5,000 + $125,000 = $130,000
- Savings = $130,000 − $95,000 = $35,000
Building in-house saves $35,000 over 5 years.
Key terms
- TCO (Total Cost of Ownership)
- The complete direct and indirect costs associated with acquiring, deploying, and operating a solution over its useful life.
- Annual maintenance cost
- Ongoing costs to keep an in-house solution running, including staff time, infrastructure, and bug fixes.
- Implementation cost
- One-time costs to deploy a vendor product, such as configuration, data migration, and training.
- Evaluation period
- The time horizon over which costs are compared; a longer horizon typically favors the lower-variable-cost option.