The verdict in three sentences
Over 5 years, a vertical SaaS subscription and a custom application often land in the same range, around EUR 110,000 to 130,000 for a 40-user SME. The difference lies in two lines no quote ever shows: time lost on workarounds when the tool covers only 70% of needs, and the cost of getting your data out. SaaS remains the right choice when your processes are standard and you need to start in under 2 months.
Raw TCO year by year
The finance director of a 70-employee London SME compares a vertical SaaS at EUR 45 per user per month for 40 users with a custom application at EUR 75,000 (middle of the EUR 60,000 to 90,000 range) plus EUR 12,000 per year of maintenance from year 2. Figures are in EUR for comparability; at 2026 rates, EUR 45 is roughly GBP 38.
| Year | SaaS (5%/yr increase) | SaaS cumulative | Custom | Custom cumulative |
|---|---|---|---|---|
| 1 | EUR 21,600 | EUR 21,600 | EUR 75,000 | EUR 75,000 |
| 2 | EUR 22,680 | EUR 44,280 | EUR 12,000 | EUR 87,000 |
| 3 | EUR 23,814 | EUR 68,094 | EUR 12,000 | EUR 99,000 |
| 4 | EUR 25,005 | EUR 93,099 | EUR 12,000 | EUR 111,000 |
| 5 | EUR 26,255 | EUR 119,354 | EUR 12,000 | EUR 123,000 |
| 10%/yr scenario | EUR 131,871 over 5 years |
With no increase, the SaaS costs exactly EUR 108,000 over 5 years (EUR 45 × 40 × 60 months). With the 5 to 10% annual increases seen in 2026, it reaches EUR 119,000 to 132,000. From year 6, custom software only costs its maintenance, while the subscription keeps growing.
Hidden costs: functional fit and exit
A vertical SaaS covers on average 70% of an SME's needs; the rest goes through spreadsheets, double entry and manual exports. A well-scoped custom application reaches about 95%.
| Hidden cost item | Vertical SaaS | Custom |
|---|---|---|
| Functional fit | 70% | 95% |
| Workarounds per user | 20 min per week | 5 min per week |
| Hours lost per year (40 users, 45 weeks) | 600 h | 150 h |
| Annual cost at EUR 40 per loaded hour | EUR 24,000 | EUR 6,000 |
| 5-year cost | EUR 120,000 | EUR 30,000 |
| Data exit cost | EUR 8,000 to 15,000 | EUR 0 (you own the database) |
| Extra licences as the team grows | EUR 540 per user per year | EUR 0 |
These are 2026 estimates to recalculate with your own volumes. Workaround time is easy to measure: ask 5 users to log time spent outside the tool for 2 weeks.
When to choose which
| Situation | Recommended choice |
|---|---|
| Industry-standard processes, under 15 users | Vertical SaaS |
| Need to start in under 2 months | Vertical SaaS |
| Differentiating processes, a source of competitive edge | Custom |
| Over 30 users with planned growth | Custom |
| Multiple integrations (ERP, CRM, internal tools) | Custom |
| Limited capital budget, monthly costs acceptable | Vertical SaaS |
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Emma, finance director of a 70-employee trading SME in London, reruns the numbers with her own data. SaaS: EUR 119,354 in subscriptions at 5% increases, EUR 120,000 in workarounds and EUR 10,000 to exit, about EUR 249,000 over 5 years. Custom at EUR 75,000: EUR 123,000 with maintenance and EUR 30,000 of residual workarounds, so EUR 153,000. The gap is about EUR 96,000 in favour of custom. She notes one risk: if scoping is rushed, fit drops to 80% and the gap halves. She therefore requires a paid 4-week scoping phase before any commitment.
FAQ
How do you calculate 5-year software TCO?
Add the initial investment, subscriptions or maintenance, price increases, workaround time and exit cost. For a 40-user SME, the total usually falls between EUR 120,000 and 250,000.
Do SaaS vendors really raise prices every year?
Yes, 5 to 10% annual increases are common in 2026, often justified by new AI modules. Over 5 years, that adds EUR 11,000 to 24,000 for 40 users.
What does EUR 12,000 per year of maintenance cover?
Bug fixes, security updates, monitored hosting and a few days of minor improvements. It typically represents 12 to 20% of the initial build cost.
How much does leaving a SaaS cost?
Between EUR 8,000 and 15,000 to extract, clean and migrate data, plus 2 to 3 months of double subscription during the transition.
Can custom software be delivered quickly?
A first useful version ships in 3 to 4 months for EUR 60,000 to 90,000, then evolves in phases.
Let's scope your project. A 5-year TCO calculation with your real volumes, then scoping of an application between EUR 60,000 and 90,000 deliverable in 3 to 4 months. 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.
