The verdict in three sentences
Above EUR 40,000 (about USD 43,000) of SaaS licences per year for poorly connected tools, a custom business application often becomes cheaper within 18 to 24 months and clearly cheaper over 5 years. Custom software only makes sense if your process is genuinely specific and you secure code ownership and a clear support contract. For standard functions (accounting, payroll, email), keep off-the-shelf licences.
Total cost of ownership over 5 years
Take a typical 50-user company in Toronto stacking a CRM, a project management tool, a quoting tool and a scheduling tool, each billed per user, for a total of EUR 85 (about USD 92) per user per month. Vendors have raised prices by 5 to 10% a year on average since 2023; we use 5%.
| Item (excl. tax) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | 5-year total |
|---|---|---|---|---|---|---|
| 4 SaaS licences (50 users) | EUR 51,000 | EUR 53,550 | EUR 56,230 | EUR 59,040 | EUR 61,990 | EUR 281,810 |
| Connectors and Zapier | EUR 3,600 | EUR 3,600 | EUR 3,600 | EUR 3,600 | EUR 3,600 | EUR 18,000 |
| Licences total | EUR 54,600 | EUR 57,150 | EUR 59,830 | EUR 62,640 | EUR 65,590 | EUR 299,810 |
| Custom development | EUR 70,000 | EUR 0 | EUR 0 | EUR 0 | EUR 0 | EUR 70,000 |
| Annual support | EUR 12,000 | EUR 12,000 | EUR 12,000 | EUR 12,000 | EUR 12,000 | EUR 60,000 |
| Hosting and backups | EUR 4,800 | EUR 4,800 | EUR 4,800 | EUR 4,800 | EUR 4,800 | EUR 24,000 |
| Custom total | EUR 86,800 | EUR 16,800 | EUR 16,800 | EUR 16,800 | EUR 16,800 | EUR 154,000 |
Difference over 5 years: about EUR 145,800 in favour of custom. Break-even falls around month 22: licences cost about EUR 4,250 per month against EUR 1,000 of monthly support, and the EUR 70,000 build is absorbed in 21 to 22 months.
The criteria that should decide, beyond price
The financial calculation is not enough. A poorly adopted custom project costs more than a well-used licence.
| Criterion | Off-the-shelf licence | Custom application |
|---|---|---|
| Time to go live | 1 to 4 weeks | 4 to 6 months |
| Process fit | 60 to 80%, Excel workarounds | 90 to 100% with serious scoping |
| Price changes | +5 to 10% per year, imposed | Negotiated support, indexed review |
| Dependency | Vendor, terms can change | Developer, mitigated by code ownership |
| Data | Spread across 4 tools, partial exports | Single database, free queries |
| Adoption risk | Low, proven interfaces | Medium, needs testing and training |
| Accounting treatment | Annual expense | Capitalised asset, amortised over 3 to 5 years |
Custom does not have to be all or nothing. A common approach is to replace the 3 business tools with one application and keep a standard SaaS for accounting, connected by API.
How to limit adoption risk
Plan 3 to 4 weeks of scoping workshops with future users, a clickable prototype validated before development, delivery in 6 to 8 week increments and one month of parallel running. Align SaaS cancellations with the go-live date so you do not pay for both for 6 months.
Mini case study
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Thomas, CEO of a 50-person technical services firm in Toronto, pays EUR 51,000 per year for 4 SaaS tools. His team re-enters each quote in the CRM and then in scheduling, about 6 hours per week for 3 assistants, or 288 hours per year at EUR 35 fully loaded: EUR 10,080 of lost time. He commissions a custom application at EUR 70,000, delivered in 5 months, and keeps his accounting SaaS. Annual saving from year 2: 54,600 - 16,800 + 10,080 = EUR 47,880 per year. Payback in 19 months including time saved. On the tax side, the build is capitalised and amortised over 3 years.
FAQ
At what licence budget does custom software pay off?
As a rule of thumb, above EUR 30,000 to 40,000 of business tool licences per year. Below that, break-even often exceeds 36 months.
How much does a custom business application cost?
Budget EUR 40,000 to 120,000 (about USD 43,000 to 130,000) depending on screens and integrations, with a 4 to 6 month timeline. Support then represents 15 to 20% of that amount per year.
What happens if the developer goes out of business?
If the code sits in a repository in your name, is documented and uses a mainstream framework, another team can take over in 2 to 4 weeks. It is the most important clause in the contract.
Can we keep some licences?
Yes, and it is often recommended for accounting, payroll or video calls. An API connection costs EUR 2,000 to 6,000 per tool.
Can custom development be capitalised?
Yes, software built for the company can usually be capitalised and amortised, typically over 1 to 3 years depending on your accountant and local rules. Licences remain an annual expense.
Let's scope your project. Send us your list of licences, their annual cost and your key processes: we will calculate your break-even and price an application in the EUR 40,000 to 120,000 range with a 4 to 6 month plan. 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.
