Build vs Buy - How to Make the Right Call Without Overthinking It

A clear framework turns the build vs buy decision from a months-long debate into an afternoon exercise.

We have watched companies spend six months debating whether to build or buy a piece of software, only to pick the same option they would have chosen in week one. The analysis paralysis around this decision is real, and it costs more in delayed progress than most wrong decisions would cost to fix.

Here is a streamlined framework that gets you to a defensible answer in a single afternoon. It is not perfect - no framework is - but it is right about 85% of the time, which is a better hit rate than most committee-driven decisions.

The Core Competency Test

This is the single most reliable indicator. Ask one question: does the software directly create the value your customers pay for?

If the answer is yes - the software IS your product or directly enables your core service - build it. Full stop. You cannot outsource your competitive advantage to a vendor who sells the same tool to your competitors.

If the answer is no - the software supports your business but is not the reason customers choose you - buy it. Your accounting software, your HR platform, your internal communication tools. These are not what makes you special. Buy them and move on.

• A logistics company's route optimization algorithm - BUILD (this is the product)
• That same company's payroll system - BUY (this is a support function)
• A fintech startup's risk scoring engine - BUILD (this is the core IP)
• That same startup's email marketing tool - BUY (commodity function)
• An e-commerce brand's recommendation engine - BUILD (drives revenue directly)
• That same brand's customer support ticketing - BUY (Zendesk exists for this)

This test handles about 70% of build vs buy decisions instantly. The remaining 30% fall into gray areas, which is where the rest of this framework comes in.

The Gray Zone - When the Answer Is Not Obvious

Some software sits between core product and pure support function. A custom client portal for a consulting firm, for example. It is not the consulting service itself, but it shapes the client experience in ways that affect retention and referrals. A warehouse management system for a distribution company. It is not the product, but it directly impacts fulfillment speed and accuracy, which are competitive differentiators.

For gray zone decisions, add two more tests.

Test 2: The Differentiation Test

If your top three competitors all use the same SaaS tool for this function and it does not hurt them, buy it. There is no advantage in building something custom that produces the same outcome as a $50/month subscription.

But if your approach to this function is genuinely different - your client onboarding process is unique, your quality control methodology is proprietary, your data pipeline has specific requirements no standard tool meets - then building preserves that differentiation.

Test 3: The Integration Depth Test

How deeply does this software need to integrate with your other systems? If it works as a standalone tool with light data exchange, buy it. If it needs to be deeply embedded in your workflow - sharing real-time data with five other systems, triggering automated processes, feeding into custom analytics - building gives you the integration depth that SaaS APIs often cannot match.

A standalone tool for scheduling social media posts? Buy it. A system that needs to pull inventory data from your warehouse, cross-reference it with sales velocity from your POS, calculate optimal reorder points using your custom formula, and push purchase orders to three different suppliers through their respective APIs? Build it.

The 5-Year Cost Model

Once your tests point toward build or buy, validate the direction with money. Here is a quick cost model you can build in a spreadsheet in 30 minutes.

For the Buy Option

1. Current subscription cost x 12 months = Year 1
2. Add 15-20% annual price increases (industry average for B2B SaaS)
3. Add per-seat cost growth as your team scales
4. Add integration costs - Zapier, middleware, custom connectors
5. Add the salary cost of whoever maintains the integrations and workarounds
6. Add estimated cost of productivity lost to tool limitations

A basic 5-year cost model can be built in 30 minutes and prevents six-figure mistakes.

For the Build Option

1. Development cost (get at least two quotes from agencies or estimate internal team cost)
2. Infrastructure/hosting - typically $200-$2,000/month depending on scale
3. Ongoing maintenance - budget 15-20% of build cost annually
4. Feature additions - budget for 2-3 significant updates per year
5. Internal time for project management and testing during the build phase

Plot both options on a graph. In most cases, SaaS is cheaper for years 1-2 and custom is cheaper for years 3-5. The crossover point tells you a lot. If custom becomes cheaper in year 2, building is a strong financial case. If the crossover does not happen until year 6 or 7, buying probably makes more sense unless the strategic tests above strongly favor building.

Three Exception Cases

Every framework has exceptions. Here are three situations where you should override the standard tests.

Exception 1: Build Even Though It Is Not Core - When Vendor Risk Is Unacceptable

If a SaaS vendor going out of business or changing their terms would cripple your operations, the risk alone may justify building. We saw this in 2024 when a popular e-commerce analytics tool was acquired and immediately raised prices 300%. Companies that depended on it had zero alternatives that matched their workflows. The ones who had built their own analytics were unaffected.

Exception 2: Buy Even Though It Is Core - When Time to Market Is Critical

If you need to validate a market opportunity in 60 days, buying an imperfect tool and shipping fast beats building the perfect tool and shipping late. Use the SaaS tool to prove the concept, then build custom once you have validated demand and revenue. Many successful products started as Shopify stores, Airtable databases, or WordPress sites before becoming custom platforms.

Exception 3: Do Neither - When You Need to Rethink the Process

Sometimes the right answer is not build or buy - it is to fix the underlying business process first. Automating a broken workflow just gives you a faster broken workflow. If your team cannot clearly explain the process on a whiteboard, neither a SaaS tool nor custom software will save it.

A consulting firm asked us to build a custom resource allocation tool. When we mapped their current process, we found that the problem was not the tool - it was that three different partners were making allocation decisions independently with no shared visibility. We helped them fix the process with a shared spreadsheet and a weekly 15-minute sync. Total cost: $0. They did not need software at all.

Putting It All Together

Here is the complete decision process in order.

1. Run the core competency test. If software IS the product, build. If it is a support function, buy.
2. If it is in the gray zone, run the differentiation and integration depth tests.
3. Validate your direction with a 5-year cost model.
4. Check the three exception cases to see if any override applies.
5. Make the call and commit. A good decision made quickly beats a perfect decision made slowly.

The entire process should take 2-4 hours for a single system. If you find yourself still debating after a week, you are probably overthinking it. The cost of delay - stalled projects, frustrated teams, missed market windows - is almost always higher than the cost of picking the slightly less optimal option.

Most companies that come to us have already done this analysis intuitively. They know the answer. They just need someone to validate it with numbers and experience. If your gut says build, run the cost model to confirm. If your gut says buy, check the strategic tests to be sure. Trust the framework, trust the math, and move forward.