Build or buy software: how to compare five years of cost

For most small businesses the answer is to rent the commodity tools and build only the one job that makes you different. Email, documents and accounting are cheaper to buy. A workflow that is unique to how you sell, book or deliver, and that you currently force through several subscriptions and spreadsheets, is often worth building. Compare the two on five years of total cost, not on this month's invoice.

Why is business software getting more expensive?

Business software is getting more expensive because suppliers are raising per seat prices faster than general inflation. Microsoft raised its business plans from 1 July 2026, with Business Basic up 16.7% and Business Standard up 12%, according to TechInformed . Frontline plans rose by as much as 33%.

In pounds, Priority IT lists Business Basic moving from £4.60 to £5.50 per user per month and Business Standard from £9.40 to £10.50. Existing customers feel it at their first renewal after the change.

Microsoft is not unusual. The spend management company Vertice measured software as a service inflation at 16.4% in June 2026, the highest rate it has recorded. Software as a service, or SaaS, simply means software you rent by the month rather than own.

What does "build versus buy" actually mean?

Build versus buy is the choice between paying a subscription for a ready made product and paying once to have software made for your business. Buying, or renting, gets you working the same day. Building takes weeks or months but gives you something shaped exactly around your process, which you own.

There is a middle path that most owners forget. You can keep the rented tools that do their job well and build a small custom piece that sits between them, such as a booking flow, a quoting tool or a customer portal. That is often the cheapest way to stop paying for workarounds.

Which jobs should a small business keep renting?

A small business should keep renting any tool that does the same job for everyone. If thousands of companies need it in exactly the same shape, a supplier can spread the cost of building and securing it across all of them, and you will never match that price.

Good candidates to keep renting:

• Email, calendars and documents. Microsoft 365 and Google Workspace are hard to beat, even after the rises.
• Accounting and payroll. These follow tax rules that change every year, and the supplier carries the work of keeping up.
• Card payments. Payment providers handle security standards and fraud checks you do not want to own.
• Video calls and chat. Commodity tools, cheap per head, nothing to gain from a custom version.

The rule of thumb is simple. If the software is not where you compete, rent it and move on.

When does custom software make more sense than off the shelf?

Custom software makes more sense than off the shelf when the work is specific to your business and the rented options only fit after a lot of bending. The signs are usually visible on a normal Tuesday rather than in a strategy meeting.

Look for these:

1. Paying for seats nobody uses. You pay per person, but most people only need one screen. The SaaS management firm Zylo reports that the average organisation uses only 54% of its software licences.
2. Copying data between tools by hand. Someone retypes orders from one system into another every day. That is a cost, even if nobody invoices you for it.
3. Paying for a whole platform to use one feature. A large system bought for its booking page, with the other ninety per cent ignored.
4. A spreadsheet doing the real work. The rented tools sit around the edges while the process that matters lives in a file only one person understands.
5. Customers notice the seams. Clients get three different emails from three different systems, or have to log in to two places to do one thing.

If two or more of these sound familiar, a small custom tool is worth pricing. Internal tools and customer facing web apps are often far smaller builds than people expect, because they only need to do one job well. Our web app development page shows the kind of work involved.

How do you compare five years of subscriptions with a one off build?

You compare them by adding up everything each option will cost you over five years, then setting the two totals side by side. Five years is long enough for price rises to compound and short enough that you can plan for it.

For the subscription side, include:

• the monthly price per seat multiplied by the number of seats
• a yearly price rise, since rises are now the norm rather than the exception
• add on modules and integrations you pay for separately
• the staff time spent on workarounds, such as copying data between systems

For the custom side, include:

• the build price from a written quote
• hosting, which for a small web app is usually a modest monthly figure
• a yearly support and maintenance amount, agreed in writing up front
• any subscriptions the build lets you cancel, counted as a saving

Here is an illustration using made up but realistic numbers, not a real client. Fifteen staff on a tool costing £25 per seat per month pay £4,500 in the first year. If that price rises by 10% a year, the five year total comes to roughly £27,500, and nothing is owned at the end. Set that against a written quote for a focused custom tool plus five years of hosting and support, and you have a real comparison rather than a gut feeling.

The answer will not always favour building. That is fine. The point of the exercise is to make the decision with numbers, not with frustration at the latest renewal email.

What are the risks of building your own software?

The main risks of building your own software are choosing the wrong supplier, building too much, and being left with something nobody can maintain. Each one is avoidable if you ask the right questions before you start.

• Scope creep. Start with the single job that hurts most. A small tool that works beats a large one that is late.
• Who owns the code. Your contract should say that the code and data belong to you, and that you receive full access to them.
• Support after launch. Agree in writing what happens when something breaks, how fast it gets fixed and what that costs per year.
• Lock in to the builder. Ask which mainstream technologies the agency uses, so another developer could pick the work up if you ever needed one.

Renting has risks too. Prices rise, as this year has shown, features you rely on can be removed, and your data lives on someone else's terms. Neither option is risk free, so compare both honestly.

How to make the decision in an afternoon

You can make a good first decision in an afternoon by listing your subscriptions and marking the ones that cause friction. Pull last year's card statements, write down every software subscription, the number of seats and what it is really used for.

Then sort the list into three groups. Keep the commodity tools that just work. Look harder at anything where seats go unused or staff copy data around it. Circle the one process that would most change your week if it ran smoothly. That circled item is your candidate for a custom build, and the only one worth getting a quote for.

If you would like a second opinion on that list, book a free 15 minute call and we will tell you straight whether building is worth it, even if the honest answer is to keep renting.

Frequently asked questions

How much does custom software cost for a small business in the UK?

Custom software for a small business costs whatever the scope demands, which is why a fixed, written quote matters more than any average figure. A focused internal tool that does one job is a far smaller build than a full platform. Ask for the build price, hosting and yearly support as separate lines so you can compare them with your subscriptions.

How long does it take to build a custom business tool?

A small custom tool that handles one process usually takes weeks rather than months, depending on how many systems it needs to connect to. Larger platforms with many user types take longer. A good agency will give you a timeline in the quote and break the work into stages you can see.

Can a custom tool work alongside Microsoft 365 or Xero?

Yes. Most popular business software offers a way for other systems to read and write data, known as an API, so a custom tool can pull from or send to the tools you already use. This is often the best value approach, because you keep the commodity tools and build only the missing piece.

Who owns the software if an agency builds it?

Ownership depends on your contract, so check it before you sign. You should expect the code, the data and the accounts it runs on to belong to your business. If a contract says the agency keeps the code, ask why and get it changed.