The verdict in three sentences
A custom subscription billing system in New York costs USD 40,000-110,000 over 10-18 weeks, versus Stripe Billing or Chargebee at 0.5-1 % of revenue plus transaction fees. At low ARR the SaaS wins hands down; custom only pays off at high volume or with unusual billing logic. The real hidden value is dunning recovery of 5-10 % and automated tax compliance.
Custom vs SaaS: the 2026 costs
Subscription billing stacks plans, proration, trials, coupons, failed-payment retries and tax calculation (US sales tax, EU VAT).
| Item | Custom (USD) | SaaS billing (USD) |
|---|---|---|
| Initial build | 40,000 - 110,000 | 8,000 - 25,000 (setup) |
| Recurring cost | Maintenance ~15 %/yr | 0.5-1 % of ARR |
| Proration / dunning | Custom | Native |
| Automated tax | To integrate | Add-on (Stripe Tax) |
| Timeline | 10 - 18 wks | 4 - 8 wks |
| Ownership | Full | None |
SaaS is unbeatable at launch; custom becomes relevant when the percentage of ARR exceeds the cost of an in-house team.
TCO at USD 2M ARR: the tipping point
Here is the annual cost at USD 2M ARR (estimate, 2026 order of magnitude).
| Scenario | Yr 1 cost (USD) | Yr 2 cost (USD) | Dunning recovered |
|---|---|---|---|
| Custom (build 75,000) | 86,000 | 11,000 | 5-10 % |
| Stripe Billing (0.7 %) | 14,000 + setup | 14,000 | 5-8 % |
| Chargebee (0.75 %) | 15,000 + setup | 15,000 | 7-10 % |
At USD 2M ARR, SaaS costs USD 14,000-15,000/year, well below custom. The tipping point appears around USD 5-8M ARR, where 0.75 % (USD 37,500-60,000/year) exceeds the maintenance cost of an in-house system.
Need a professional website?
Kolonell builds websites that attract clients, optimized for the Sénégalese market. Free quote in 2 minutes.
Mini case study
Marcus, operator of a B2B SaaS in New York, does USD 2M ARR with a 6 % unrecovered payment-failure rate, i.e. USD 120,000/year lost. He deploys Stripe Billing (setup USD 18,000, 0.7 % or USD 14,000/year) with smart dunning. Recovery rises to 8 % of failures, about USD 9,600 recovered per year, and Stripe Tax automates multi-state compliance. Rather than build a USD 75,000 system, he confirms SaaS is the right call up to ~USD 5M ARR, revisiting a build beyond that.
FAQ
What does a custom subscription billing system cost in New York in 2026? USD 40,000-110,000 depending on plan, proration and tax complexity. A standard system lands around USD 70,000-80,000.
Stripe Billing or Chargebee? Stripe Billing if you are already on Stripe and want the smoothest integration; Chargebee for complex subscription logic and richer dunning.
What is dunning and why does it matter? It is the automatic retry of failed payments: a good strategy recovers 5-10 % of otherwise-lost revenue, often the first ROI of a billing tool.
When should you build your own? Generally above USD 5-8M ARR, when the percentage taken by the SaaS exceeds the cost of an in-house team and maintenance.
How do you handle tax automatically? Via Stripe Tax or Avalara, which compute US sales tax and EU VAT in real time; must be explicitly integrated in a custom system.
Let's scope your project. Give us your ARR, plan logic and tax needs: we cost build vs SaaS and your 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.
