When a SaaS vendor quotes $4,500/month, it sounds manageable. But let's do the math that sales reps hope you won't do.
The Obvious Costs
Base subscription over 5 years:
$4,500 × 60 months = $270,000
That's before we add anything else. Just the base fee to keep the lights on.
The Hidden Costs
Now let's add what actually shows up on your invoices:
Implementation & onboarding: $15,000-$25,000
Custom integrations: $10,000-$30,000
Annual price increases (3-5%/year): $25,000-$40,000 over 5 years
Overage charges: $5,000-$15,000/year for high-volume periods
Feature add-ons: $500-$2,000/month for "premium" features
API call limits: $3,000-$10,000/year if you exceed thresholds
The Real 5-Year Total
Conservative estimate: $350,000-$400,000
Realistic estimate: $400,000-$500,000
Half a million dollars. For software you don't own. That disappears the day you stop paying.
What $400K Buys in Custom Development
For the same budget, custom development delivers:
- Full platform build: $100,000-$150,000
- 5 years of maintenance & updates: $100,000-$125,000
- Major feature additions: $50,000-$75,000
- Infrastructure costs: $25,000-$50,000
Total: $275,000-$400,000
And at the end of 5 years? You own a platform worth $150K+ that you can sell, license, or continue running at minimal cost.
The Break-Even Point
For most operators, custom development breaks even with SaaS at the 18-24 month mark. Every month after that, you're saving $4,500+ while running a better platform.
Year 3 savings: ~$54,000
Year 4 savings: ~$54,000
Year 5 savings: ~$54,000
That's $162,000 in your pocket instead of a vendor's.
The Question You Should Ask
Before signing that SaaS contract, ask yourself: "Would I rather pay rent forever, or own the house?"
Want to see the custom build numbers for your specific needs? Let's run the analysis together.
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