The verdict in three sentences
The TCO of a custom SaaS never boils down to the build quote: over 3 years you must add hosting, maintenance and evolutions, which often weigh as much as the initial build. Budget EUR 60,000 to 160,000 of development, then EUR 200 to 800/month hosting and EUR 800 to 2,000/month maintenance, plus 20 to 30% of initial cost per year in evolutions. Well modelled, this TCO compares to the market subscription and reveals the real opportunity cost.
Breaking down the 3-year TCO
Modelling TCO avoids nasty surprises in year 2. Here is a typical breakdown for an average project at EUR 110,000 build.
| Item | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Initial development | EUR 110,000 | — | — |
| Hosting (EUR 450/month) | EUR 5,400 | EUR 5,400 | EUR 5,400 |
| Maintenance (EUR 1,300/month) | EUR 15,600 | EUR 15,600 | EUR 15,600 |
| Evolutions (25%/year) | — | EUR 27,500 | EUR 27,500 |
| Annual total | EUR 131,000 | EUR 48,500 | EUR 48,500 |
Over 3 years, TCO reaches EUR 228,000, about 2.1 times the build cost alone. That figure — not the initial quote — is what a CFO should compare to the market subscription.
Comparing to market and deciding
Custom TCO makes sense against the cumulative cost of an equivalent subscription, seats included.
| Scenario | 3 years | 5 years |
|---|---|---|
| Custom (full TCO) | EUR 228,000 | ~EUR 325,000 |
| Subscription 40 users at EUR 85 | EUR 122,400 | EUR 204,000 |
| Subscription 70 users at EUR 80 | EUR 201,600 | EUR 336,000 |
| Subscription 100 users at EUR 75 | EUR 270,000 | EUR 450,000 |
Reading: under 40-50 users, subscription stays cheaper; above 70 users, custom becomes competitive by year 3-4, with the bonus of code ownership and no per-seat surcharge.
Mini case study
Sarah, CFO of a services SME in Toronto (85 staff), evaluates a custom SaaS at EUR 125,000 build. Her 3-year TCO, hosting EUR 500/month + maintenance EUR 1,500/month + evolutions 25%/year, reaches 125,000 + 36,000 + 62,500 = EUR 223,500. Her current subscription for 85 seats at EUR 78 costs EUR 79,560/year, i.e. EUR 238,680 over 3 years and EUR 397,800 over 5 years. Custom is already cheaper over 3 years (-EUR 15,000) and the gap widens to -EUR 153,000 over 5 years: for her, the decision clearly tilts toward building.
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FAQ
How many times the build cost is a custom SaaS TCO?
As a rule, budget 1.8 to 2.3 times the development cost over 3 years, once hosting, maintenance and evolutions are included. That is the multiplier to keep in mind.
How much to budget for annual evolutions?
Between 20 and 30% of the initial build cost per year. This keeps the product aligned with your business and prevents it becoming obsolete after 2 years.
What share is hosting?
Usually modest: EUR 200 to 800/month depending on traffic and redundancy, i.e. 3 to 6% of 3-year TCO. It is never the item that flips the decision.
When does custom beat subscription?
Generally above 50-70 users and over a 4 to 5 year horizon, with the bonus of code ownership and zero surcharge per new hire.
How to avoid TCO overruns?
By scoping a clear MVP, locking a fixed-fee maintenance contract and planning evolutions in budgeted batches rather than ad hoc.
Let's scope your project. Send us your headcount, current subscription and horizon: we will model the 3- and 5-year TCO and the tipping point. Detailed quote within 48 h. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
