A realistic 3-year and 5-year TCO comparison of SaaS vs custom software for Indian businesses, with the exact crossover point where custom wins.
The "should we buy SaaS or build custom?" debate is usually decided emotionally. It should be decided on a one-page TCO sheet — here is how to build that sheet.
Quick answer
SaaS wins on day one because there is no upfront cost. Custom software wins by year 2–3 because there is no per-user monthly fee. The crossover is almost always between 12 and 20 users. Below that, buy SaaS. Above it (or for non-standard workflows), build custom.
What goes into real TCO (the parts you forget)
- SaaS — subscription × users × 12 × years
- SaaS — add-on modules, integrations, API call limits
- SaaS — extra storage, premium support, sandbox environments
- Custom — one-time build cost
- Custom — hosting (₹3K–₹15K/month typically)
- Custom — small ongoing maintenance (5–10% of build/year)
- Both — internal team time on configuration, training, change requests
A real 3-year comparison (25-user team)
- SaaS @ ₹2,000/user/month × 25 × 36 = ₹18,00,000
- SaaS add-ons (integrations, API): ₹3,00,000
- SaaS 3-year TCO: ₹21,00,000
- Custom build: ₹8,00,000 one-time
- Custom hosting 3 years: ₹2,16,000
- Custom maintenance (5%/yr): ₹1,20,000
- Custom 3-year TCO: ₹11,36,000
Where custom always wins
- Industry-specific workflows (real estate, hospitals, schools, jewellery)
- Multi-entity / multi-brand structures
- Deep integration with internal ERP, billing or production systems
- Plans to productise as your own SaaS later
- Data sovereignty / compliance requirements
Where SaaS is the right call
- Under 10 users with a vanilla workflow
- You need to be live in 7 days
- No in-house technical owner to oversee a build
- Founder still validating the business model
The smartest hybrid: validate on SaaS, scale on custom
Many of our customers spend 6–12 months on a SaaS tool to learn exactly what their workflow needs, then commission a custom build that wraps around the validated process. This sequence avoids both the "wrong custom build" and the "trapped on SaaS forever" traps.
How Pacewalk helps
Pacewalk builds web applications, SaaS products and business management platforms for Indian companies — with IP transfer and full source code handover. Contact us for a free TCO worksheet for your team size.
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Our Chandigarh team has done it for 1854+ brands. No obligation, no sales pressure.
Questions people ask about this
Is custom software always more expensive?
Only in year one. Once you have 12–18 users, custom software is almost always cheaper than SaaS over 3 years because there is no per-user monthly fee.
What is the typical crossover point?
12–15 users for CRM/operations software; 20–30 users for HR/payroll; almost immediately for industry-specific workflows where no SaaS fits.
Who owns the code in a custom build?
You do — including source code, database schema and deployment scripts. We sign IP transfer in the contract.
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