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Build vs buy software: how to decide

Buy software for work every company does the same way. Build it when the work is what sets you apart. A simple test, with the costs people forget.

A balance scale with a boxed product on one side and a set of building blocks on the other.
Written by
BYD Tech
Updated
Topic
Web apps
Reading time
3 min read

The short answer

Buy software when the job is one that most companies do the same way, such as payroll, email or accounting. Build it when the way you do the job is part of why customers choose you, or when nothing on the market fits without painful workarounds. Most companies should buy most things and build only the few that make them different.

Key points

  • Buy the ordinary. Build what sets you apart.
  • Bought software is cheaper to start and costs you flexibility.
  • Built software costs more to start and has to be maintained.
  • Count the hidden costs on both sides before deciding.
  • A middle path exists: buy the base and build the part that is unique.

The one question that settles most cases

Martin Fowler describes a useful split between utility software and strategic software. Utility software does a job every company needs done and nobody wins by doing differently. Strategic software supports the thing that makes your business distinct.

Ask of any system: if we did this exactly like our competitors, would we lose anything? If not, it is a utility, and you should buy it. If yes, it is strategic, and it deserves to be built around how you work.

Side by side

BuyBuild
Time to start using itShortLonger
Upfront costLowHigher
Ongoing costSubscriptions, per user or per useMaintenance and hosting
Fit to your processYou adapt to the toolThe tool adapts to you
Control over changesThe vendor decidesYou decide
Who owns the data and logicShared with the vendorYou

The costs people forget when buying

  • Per-user pricing that grows as the company does.
  • Work done outside the tool, in spreadsheets, because it does not quite fit.
  • Integrations between several bought tools, which someone has to build and keep working.
  • Features you depend on being changed or removed.
  • The effort of leaving, if your data is hard to export.

The costs people forget when building

  • Maintenance. Software that is not maintained decays as the things around it change.
  • Security updates, backups and monitoring, which a vendor would otherwise handle.
  • Scope that keeps growing because building made everything possible.
  • Dependence on the people who built it, unless the code and the reasons are written down and in your name.

Shortcuts taken to ship faster come due later. That is explained in What is technical debt?.

The middle path

Build or buy is rarely all or nothing. A sound pattern is to buy the standard pieces and build only the layer that is yours.

  • Buy payments, sign-in, email delivery and accounting. Build the workflow that uses them.
  • Start on an off-the-shelf tool to learn what you need, then build once the gaps are clear.
  • Use a low-code platform for internal tools where polish does not matter. See Low-code vs no-code.

How to decide

  1. Write down the job and how you do it today.
  2. Ask whether doing it your own way wins or keeps customers.
  3. Try the best existing tools for a real task, not a demo.
  4. List the workarounds each would force, and what they would cost over a few years.
  5. If the workarounds are small, buy. If they change how you serve customers, build.

When we scope a project in web app development, the first step is checking whether something off the shelf already fits. If it does, we say so.

Sources

Checked when this guide was written.

Questions people ask

When should a company build custom software?

When the way it does a job is part of why customers choose it, when no existing tool fits without heavy workarounds, or when it needs to own the logic and the data.

Is it cheaper to build or buy software?

Buying is cheaper to start. Over several years the answer depends on subscription growth, the workarounds the tool forces, and what maintaining your own software would cost.

What are the risks of buying software?

Rising subscription costs, a poor fit that pushes work into spreadsheets, features changing outside your control, and difficulty leaving if data is hard to export.

Can you combine building and buying?

Yes, and most companies should. Buy standard pieces such as payments, sign-in and email, and build only the layer that is specific to your business.

Keep reading

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