Introduction
As your business expands, your software decisions soon become financial decisions. Do you continue to use the same, inexpensive subscription tools that everyone else uses? Or do you invest in creating something that is tailored to your specific workflows?
At face value, off-the-shelf software is less expensive. It's fast to set up, easy to purchase and often comes with a small monthly fee. Custom software, on the other hand, appears to be a large and risky investment. But things are not always as they seem. When you zoom out and look at the numbers over a period of several years, the story changes.
So, which one is really cost effective? Let’s break it down.
The Popularity of Off-the-Shelf Software
There’s a reason off-the-shelf tools are popular:
- Lower upfront cost - you only pay for seats per month.
- Faster onboarding – you can start working the same day you sign up.
- Well-documented support - lots of guides, FAQs, and forums.
This can be ideal for a small team. The issue comes up when your business grows. A license that costs EUR30 per month doesn't seem like much - until you multiply it by 70 employees. Suddenly, you pay 25,200 per year, each year. Add premium features, integrations, and the fact that people often have more than one tool, and the cost increases quietly but significantly.
Even worse, if your workflows don't quite fit the software, your team creates workarounds. Additional spreadsheets, manual data transfers, duplicated data - all of which cost time, money and accuracy.
The Promise of Custom Software
Custom software reverses the model:
- Built specifically to your business - no workarounds, just workflows that match how you operate.
- Ownership instead of rent - no per seat licensing fees that expand forever.
- Smooth integrations - designed to fit your current systems, not fight them.
- Built for growth - you can choose how and when to scale features.
Yes, the initial investment is higher. But unlike subscriptions, you aren't committed to a recurring fee. The cost per employee usually drops significantly over five years when compared to off-the-shelf tools.
Breaking Down the Costs
1. Upfront Costs
- Off-the-shelf: licenses, onboarding, training, and often external consultants for integrations.
- Custom: one-time development investment, followed by predictable maintenance.
2. Ongoing Costs
- Off-the-shelf: monthly or yearly license renewals, add-ons, and feature unlocks.
- Custom: updates and hosting, usually a fraction of what licenses would cost.
3. Hidden Costs
This is where many businesses get it wrong:
- Productivity lost to workarounds.
- Mistakes in payroll, reporting, or compliance tracking.
- Security and compliance risks if your industry requires specific reporting (GDPR, ISO, audits).
An easy way to think of this is like renting vs. owning a house. Renting can be affordable in year one. But if you stay for five or ten years, almost always, ownership makes more sense from a financial perspective.
ROI Comparison: Beyond the Price Tag
Money saved goes beyond subscription fees. Consider the return on investment:
- Time saved: If every employee saves as little as 30 minutes a day by not having to do duplicate work, across 70 staff, that's over 1,000 hours a month.
- Error reduction: Errors in payroll or reporting can cost thousands in corrections or penalties.
- Compliance security: Automated, customized compliance procedures are your best defense against fines and reputational harm.
- Growth without changing: With custom, you don't outgrow the system in 2-3 years.
Mid-sized companies often find that custom software, while more expensive initially, pays for itself several times over.
Which One Is Right for You?
There’s no single answer, but here’s a basic guide:
- If your processes are standardized and not likely to change much, off-the-shelf may still be the right choice.
- If your processes are unique, or scale or compliance intensive, custom software is almost always the better investment.
Most mid-sized firms reach a friction point where off-the-shelf is no longer "good enough" and the hidden costs of off-the-shelf exceed the subscription price.
Conclusion: Making Smart Investment
Software should be adapted to your business - not the other way around. Custom software may have a higher ROI in the long term, but off-the-shelf tools may seem more attractive in the short term. The question isn't just "what's less expensive today?", but what saves us the most in five years?
Ready to See the Numbers for Your Business?
Wondering where your software costs are going?
Book a call to talk about your workflow and we'll help you determine if custom or off-the-shelf is the right choice for your business.