Building gives you control and no licence fees, but needs up-front engineering time and ongoing maintenance. Buying is faster and predictable but costs every year. The decision often comes down to how long it takes for the build cost to be recovered.
How to use the Build vs Buy Calculator
- Cost of buying (per year)
- Developers needed
- Time to build
- Developer salary (gross, per year)
- Overhead on salary (taxes, benefits, equipment)
- Maintenance days per year
- Working days per year
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the yearly cost of buying, the developers needed, build time, salary, overhead and maintenance days per year.
Tips
- Use figures for the same period (a month, a quarter or a year) for every input so ratios compare like with like.
- Track the metric over time – the trend usually tells you more than a single value.
- Compare your result with industry benchmarks, which vary a lot between sectors.
- Treat the result as a starting point for a decision, then check the assumptions behind each input.
Common mistakes to avoid
- Mixing monthly and yearly numbers in the same calculation.
- Using revenue where the formula needs profit (or the other way round).
- Forgetting hidden costs such as taxes, fees, overheads or your own time.
Inputs explained
| Field | What to enter |
|---|---|
| Cost of buying (per year) | Amount in your currency |
| Developers needed | A number |
| Time to build | In months |
| Developer salary (gross, per year) | Amount in your currency |
| Overhead on salary (taxes, benefits, equipment) | In % |
| Maintenance days per year | A number |
| Working days per year | A number |
What each result means
- Effective cost per developer per year = [Developer salary (gross, per year)]×(1 + [Overhead on salary (taxes, benefits, equipment)]÷100)
- Cost to build = [Developers needed]×[Effective cost per developer per year]×[Time to build]÷12
- Annual maintenance cost = [Developers needed]×[Effective cost per developer per year]×[Maintenance days per year]÷[Working days per year]
- Annual saving after building = [Cost of buying (per year)] – [Annual maintenance cost]
Example values
How the main result changes when Cost of buying changes and everything else stays at the example values above:
| Cost of buying (per year) | Annual saving after building |
|---|---|
| 30,000 | -1,086.96 |
| 45,000 | 13,913.04 |
| 60,000 | 28,913.04 |
| 75,000 | 43,913.04 |
| 90,000 | 58,913.04 |
| 120,000 | 88,913.04 |
Formula
Cost per developer = salary × (1 + overhead)Cost to build = developers × cost per developer × build months ÷ 12Annual maintenance = developers × cost per developer × maintenance days ÷ working daysAnnual saving = buy cost − maintenance; payback = build cost ÷ annual savingWorked example
Inputs — Cost of buying (per year): $60,000; Developers needed: 2; Time to build: 4 months; Developer salary (gross, per year): $110,000; Overhead on salary (taxes, benefits, equipment): 30 %; Maintenance days per year: 25; Working days per year: 230.
Results — Effective cost per developer per year = $143,000.00; Cost to build = $95,333.33; Annual maintenance cost = $31,086.96; Annual saving after building = $28,913.04; Years until building pays off = 3.3.
Frequently asked questions
When should I build instead of buy?
When the tool is core to your business, the saving pays back the build cost fast, and you can maintain it.
What hidden costs does building have?
Maintenance, security updates, hosting and the opportunity cost of your developers' time.
What does a negative saving mean?
Maintenance costs more than buying – buying is cheaper.
What formula does the Build vs Buy Calculator use?
Cost per developer = salary × (1 + overhead).