Build vs Buy Calculator: Decide whether to build or buy software
When acquiring software solutions for your business, one of the most critical decisions is whether to build custom software or buy an off-the-shelf solution from a vendor. This decision can significantly impact your operations, budget, and overall success.
Our Build vs Buy Calculator is designed to help you navigate this complex decision-making process by providing a clear, data-driven comparison tailored to your specific business needs.
Why Use the Build vs Buy Calculator?
Making the right decision between building and buying software can significantly impact a company’s resources, budget, and operational efficiency. This calculator provides a clear, quantifiable comparison, allowing businesses to weigh the pros and cons of each option based on their specific needs and constraints. By using this tool, companies can:
- Save time in the decision-making process.
- Avoid unexpected costs by planning accurately.
- Allocate resources more effectively.
- Ensure that the chosen solution aligns with their business goals and requirements.
Key Features
1. Comprehensive Cost Analysis: The calculator evaluates all relevant costs, including development, implementation, training, and miscellaneous expenses. This ensures a thorough financial comparison between building and buying software.
2. Time Comparison: Time is a critical factor in any project. The calculator compares the time required to build a custom solution versus the time needed to implement a purchased one, helping businesses understand the time investment involved.
3. Flexibility in Development Type: Users can specify whether the software development will be handled in-house or outsourced, providing a realistic view of costs based on the chosen development model.
4. Customizable Inputs: The calculator allows users to input specific details such as project name, currency, vendor name, deployment type, and various cost factors. This customization ensures the output is tailored to the user’s unique situation.
5. User-Friendly Interface: With a clean and intuitive interface, the calculator is easy to use, even for those who are not technically inclined. The input fields are clearly labeled, and the results are presented in a straightforward manner.
How to Use the Build vs. Buy Calculator
Step 1: Basic Information
- Enter the project name and select the currency for cost calculation.
Step 2: Buying an Existing Software
- Fill in the details about the vendor, including buying cost, implementation cost, and time.
- Specify the deployment type (SaaS or on-premise) and license duration (monthly or annually).
- Enter any additional costs such as miscellaneous expenses, training costs, and hosting or server management costs.
Step 3: Building a Software
- Choose whether the development will be in-house or outsourced.
- Provide the corresponding development costs, implementation costs, and development time.
- Enter any cloud or server costs, as well as other miscellaneous and training expenses.
Step 4: Calculate
- Click the “Calculate” button to compute the total costs and time for both building and buying the software.
- The results will be displayed, indicating which option is more cost-effective and time-efficient.
Explanation of Formulas Used
The Build vs. Buy Calculator uses simple yet effective formulas to compute the total costs and compare the two options:
Total Buying Cost = Buying Cost + Implementation Cost + Miscellaneous Costs + Training Costs + Hosting Costs + Server Management Costs
Total Building Cost = Development Cost (In-house or Outsourced) + Implementation Cost + Cloud/Server Costs + Miscellaneous Costs + Training Costs
The calculator compares these totals and provides a recommendation based on which option is cheaper. Additionally, it considers the time required for each option to give a complete picture.
Example with Sample Calculations
Imagine a company, ABC Corp., deciding between building a custom CRM software or buying an existing one.
Scenario Details:
- Project Name: ABC CRM
- Currency: USD
- Vendor Name: CRM Solutions Inc.
- Buying Cost: $50,000
- Implementation Cost: $10,000
- Implementation Time: 30 days
- Deployment Type: SaaS
- License Duration: Annually
- Miscellaneous Costs: $2,000
- Training Costs: $3,000
- Cloud Hosting Cost: $1,200/year
- Server Management Cost: $0 (since it’s SaaS)
Building Details:
- Development Type: In-house
- In-house Development Cost: $60,000
- Implementation Cost: $5,000
- Development Time: 90 days
- Cloud and Server Costs: $2,500/year
- Miscellaneous Costs: $1,500
- Training Costs: $4,000
Calculations:
Buying Costs:
- Total Buying Cost = $50,000 (Buying Cost) + $10,000 (Implementation Cost) + $2,000 (Miscellaneous Costs) + $3,000 (Training Costs) + $1,200 (Cloud Hosting Cost) = $66,200
Building Costs:
- Total Building Cost = $60,000 (In-house Development Cost) + $5,000 (Implementation Cost) + $2,500 (Cloud and Server Costs) + $1,500 (Miscellaneous Costs) + $4,000 (Training Costs) = $73,000
Result:
- Since the total building cost ($73,000) is higher than the total buying cost ($66,200), the calculator will recommend buying the software from CRM Solutions Inc. Additionally, the building process would take 90 days compared to the 30 days for implementation if purchased.