The Hidden Cost of SaaS Tools: When to Develop Your Own Solution

SaaS has revolutionized how companies use software. No initial investment, no servers to maintain, pay only what you use. It's the perfect promise. And for many companies, it's exactly that.

But there's a tipping point where the SaaS stack goes from being an economical solution to being a financial drain with side effects you didn't anticipate. This article is about identifying that point and intelligently deciding when it makes sense to develop your own tools.

The Initial Appeal of SaaS (And Why It Works)

Let's start with the obvious: SaaS is great for most cases. Reasons why it works:

1. Zero Initial Investment

€50/month vs €5,000 custom development. The decision is easy when you start.

2. Quick to Implement

Create account, enter data, and you're operational in hours or days. Not months.

3. Automatic Updates

New features, security patches, performance improvements. Everything happens without you lifting a finger.

4. Support Included

Something doesn't work? Open ticket, someone solves it. You don't need internal technical team.

5. Easy Scalability

More users? Change plan. Fewer users? Reduce. Total flexibility.

For most tools, most of the time, SaaS is the right answer.

But...

When the SaaS Stack Gets Out of Control

Real Story: The 30-Person Startup

A Spanish tech startup of 30 people audits their SaaS stack:

• CRM (HubSpot): €1,200/month
• Project management (Asana): €300/month
• Email marketing (Mailchimp): €250/month
• Analytics (Mixpanel): €400/month
• Customer support (Intercom): €500/month
• HR/payroll (Factorial): €150/month
• Accounting (Holded): €200/month
• File storage (Dropbox Business): €180/month
• Video conferencing (Zoom): €150/month
• Password manager (1Password): €90/month
• Design (Figma): €150/month
• Development tools (GitHub, hosting, etc.): €500/month
• Marketing automation (Zapier): €250/month
• Various others: €680/month

Monthly total: €5,000
Annual total: €60,000

For a 30-person company, €60,000/year in SaaS is €2,000 per person/year. And this without counting major SaaS like AWS, Google Workspace, Slack.

The Hidden Costs You Don't See on the Invoice

1. The "Just €X/month More" Effect

Problem: Each individual tool seems reasonable. €50/month, €100/month, what are they compared to a salary?

Reality: Nobody makes decisions about the complete stack. Marketing adds a tool. Sales another. IT another. Nobody adds up the total.

Fix: Quarterly audit of entire SaaS stack. How much do we pay in total? Is each tool actively used?

2. Automatic Price Escalation

Problem: You start with basic plan. You grow, need more features. Medium plan. Then enterprise. Prices don't scale linearly.

Real example: HubSpot

• Startup (5 users): €45/month
• Growing (10 users): €800/month
• Established (25 users): €3,200/month

What changed? Your need is basically the same. But now you pay 70x more.

Reality: SaaS pricing models are designed to grow with you. Which is good until you realize the alternative (custom) grows much more slowly in cost.

3. Features Hostage

Problem: The feature you need is in the upper plan that costs 3x more, but you only need THAT feature, not all the others in the upper plan.

Example:

• Basic plan (€50/month): 1,000 contacts
• Medium plan (€150/month): 5,000 contacts + API access
• Enterprise plan (€500/month): unlimited contacts + white label + priority support

You need API access for integration. You're forced to medium plan even though you only have 1,200 contacts.

4. Vendor Lock-In

Problem: After 2 years using a tool, all your processes depend on it. Changing means:

• Export all data
• Train team on new tool
• Reconfigure integrations
• Risk data loss or continuity

Result: You keep paying even if price goes up or you find better alternatives, because the cost of changing is too high.

Real quantification: Changing CRM in a 20-person company can cost 200-400 hours of internal work. At €40/hour, that's €8,000-16,000 just in internal time.

5. Integration Between Tools

Problem: You have 15 tools. They need to talk to each other. Options:

• Do manually: Copy data from one to another (madness)
• Zapier/Make: €50-300/month extra to connect things
• Custom developers: Development hours for integrations

Result: You not only pay for each tool, you pay to connect them. And integrations break when any updates their API.

6. Features You Don't Need But Pay For

Problem: SaaS is one-size-fits-all. Comes with 100 features. You use 10. You pay for 100.

Example: You buy HubSpot for CRM. Comes with email marketing, automations, social media management, analytics, etc. You only use CRM. You pay for everything.

7. Arbitrary Limits

Problem: SaaS pricing model puts limits that impact your business:

• Only X emails/month
• Only X active users
• Only X GB of storage
• Only X API calls/month

When you reach the limit, either pay more or stop using functionality.

Real example: Mailchimp charges by number of contacts. You have 15,000 contacts, use only 5,000 active. You pay for 15,000 because you're not going to delete historical contacts.

8. Nobody Really Owns the Data

Problem: Your data is on someone else's server. If:

• Service closes (happened with many SaaS)
• Your account is blocked by mistake
• There's payment dispute
• They decide to change terms of service

You can lose access to critical business data.

Reality: Most SaaS allows export, but rarely in format useful for easy migration.

The Tipping Point: When Custom Makes Sense

There's no magic number, but there are clear patterns.

Signal 1: You Pay > €500/month for One Tool

If a single tool costs €500+/month (€6,000+/year), do the math:

Option A - SaaS:

• Year 1: €6,000
• Year 2: €6,000
• Year 3: €6,000
• Total 3 years: €18,000

Option B - Custom:

• Development: €8,000-12,000
• Hosting: €50/month = €600/year
• Maintenance: €1,500/year
• Total 3 years: €14,500

Break-even in ~2 years. And with custom you have:

• Exactly what you need
• No arbitrary limits
• Data in your control
• No more price escalations

Signal 2: You Use < 30% of Features

If you pay for a Lamborghini but only use it to go to the supermarket, something's wrong.

Simple test: List features you actively use vs those the tool offers.

If ratio is < 30%, you're probably paying for much you don't need.

Signal 3: Constantly Fighting Against Limitations

Examples:

• "I can't do X because tool doesn't allow it"
• "I have to do weird workarounds to achieve Y"
• "I export to Excel to do Z because tool can't"

When you spend significant time fighting the tool instead of using it, it's a signal.

Signal 4: The Tool Is Core to Your Business

If tool is critical to your competitive advantage, having total control is strategic.

Examples:

• Booking platform for hotel (core business)
• Inventory management system for retailer
• Metrics dashboard for agency
• Client management tool for consultancy

If all your competitors use the same SaaS, nobody has advantage. A custom tool can be differentiator.

Signal 5: Total SaaS Stack > €3,000/month

If your total SaaS stack exceeds €3,000/month (€36,000/year), it's worth auditing what can be consolidated or developed internally.

It's not about eliminating all SaaS. It's about identifying the 2-3 most expensive or limiting tools and evaluating if custom makes sense for them.

Signal 6: You Need Complex Integrations

If you pay Zapier/Make €300/month just to connect tools, consider:

Could a custom solution directly integrate the necessary data sources?

Example: Instead of HubSpot (CRM) + Mailchimp (email) + Zapier (integration), could you have a custom tool that does CRM + email natively?

Decision Framework: Build vs Buy

For each expensive or limiting SaaS tool, evaluate:

1. Real Cost Calculation

SaaS Cost (3 years):

• Current monthly price × 36
• • Estimated increases (you grow, prices rise)
• • Cost of necessary integrations
• • Time wasted on limitations (quantified)

Custom Cost (3 years):

• Initial development (€5,000-30,000 depending on complexity)
• • Hosting (€20-200/month × 36)
• • Maintenance (15-20% initial cost/year × 3)

If Custom Cost < 70% SaaS Cost, custom deserves serious consideration.

The 70% (not 100%) because custom has other benefits not easily quantifiable: total control, no limits, etc.

2. Complexity Evaluation

Questions:

• Does tool do very complex things or is it relatively simple?
• Do you need to replicate everything or just core features?
• Are there libraries/frameworks that facilitate development?

Examples:

• Complex: Email marketing system with deliverability optimization, advanced A/B testing, ML segmentation
• Simple: Basic CRM with contacts, deals, tasks
• Medium: Metrics dashboard with standard API integrations

If it's simple-medium and cost justifies it, custom is viable.

3. Technical Capacity

Do you have or can you have developers?

• Yes, we have team: Custom is obvious option if costs justify it
• No, but we can hire freelance/agency: Custom is option if it's bounded project
• No and we don't want to: Stick with SaaS

4. Time Horizon

How long do you plan to use this tool?

• > 3 years: Custom can make sense
• 1-2 years: Probably SaaS
• < 1 year or experimental: Definitely SaaS

Custom has medium-long term ROI. Doesn't make sense for temporary needs.

5. Competitive Advantage

Is this tool core to your business?

• Yes, it's core and differentiating: Custom makes strategic sense
• It's important but not differentiating: Depends on costs
• It's commodity (email, storage, etc.): Stay with SaaS

Real Examples: Build vs Buy

Case 1: Marketing Agency - Custom CRM

Situation:

• Paying HubSpot €1,200/month
• Only used CRM + sales pipeline
• 90% of features unused
• Needed specific integrations with custom tools they used

Decision: Develop custom CRM

Investment:

• Development: €12,000
• Hosting: €50/month
• Maintenance: €2,000/year

Result:

• Year 1: €14,600 (development + hosting + maintenance)
• Year 2 onwards: €2,600/year
• HubSpot would have been: €14,400/year
• Break-even: 12 months

Additionally:

• Exactly the features they needed
• Native integrations with their tools
• No more contacts/deals limits

Case 2: E-commerce - Stayed with Shopify

Situation:

• Paying Shopify Plus €2,000/month
• Considered custom platform

Evaluation:

• Custom would cost €80,000-120,000 development
• Shopify handles payments, security, compliance, updates
• Didn't want large technical team to maintain e-commerce

Decision: Stay with Shopify

Reason: Although annual cost is high (€24,000), the value of not having to worry about e-commerce infrastructure justifies it. It's not their core competency.

Case 3: SaaS Company - Custom Metrics Dashboard

Situation:

• Paying Mixpanel €800/month + Amplitude €600/month = €1,400/month
• Needed very specific metrics of their product
• Standard tools didn't show exactly what they needed
• Spent time exporting and processing data in Python

Decision: Custom dashboard

Investment:

• Development: €18,000
• Hosting: €100/month
• Maintenance: €3,000/year

Result:

• Year 1: €22,200
• Year 2+: €4,200/year
• Previous SaaS: €16,800/year

Note: Break-even in ~18 months, but non-quantifiable benefits:

• Exact metrics they needed
• Faster (no exporting/processing)
• Data in their database (useful for other purposes)
• Foundation for future analytics features

Hybrid Strategy: Best of Both Worlds

It's not all or nothing. The best strategy for many companies:

Keep SaaS For:

1. Commodity tools: Email (Gmail), storage (Dropbox), video calls (Zoom)
2. Tools you use little: Don't develop custom something you use 2 hours/month
3. Complex things that aren't your core: Accounting, payroll, compliance
4. When you're small: < 10 people, probably SaaS for everything

Develop Custom For:

1. Core business tools: What makes you unique
2. Expensive tools with limited use: You pay €1,000/month, use 20% of features
3. When you need complex integrations: Costs more to connect SaaS than develop custom
4. Tools with limits that impact business: User/contact/call limits slow you down

Common Mistakes

Mistake 1: Developing Custom Too Early

Situation: Startup with 5 people develops their own custom CRM from day 1.

Why it's bad: They spend time/money developing tools instead of building product and getting customers.

Fix: Start with SaaS. Develop custom only when pain/cost clearly justifies it.

Mistake 2: Underestimating Maintenance

Situation: "We develop once, €10,000, and we're done".

Why it's bad: Custom software needs continuous maintenance. APIs change, bugs appear, new features are needed.

Fix: Budget 15-20% of initial cost per year for maintenance.

Mistake 3: Replicating Entire SaaS Tool

Situation: "We want to replicate everything HubSpot does".

Why it's bad: HubSpot has 500+ features developed over 15 years. Replicating everything would cost millions.

Fix: Identify the 20% of features you use 80% of the time. Develop only that.

Mistake 4: Not Considering Opportunity Cost

Situation: You have internal developers, "custom development is free".

Why it's bad: Those developers' time has opportunity cost. Should they develop internal tools or product that generates revenue?

Fix: Evaluate if custom is the best use of development time vs alternatives.

Conclusion

SaaS is not the enemy. It's an extraordinary tool that has democratized access to technology. But like any tool, it has appropriate context of use.

General rules:

1. Start with SaaS almost always
2. Audit your stack every 6-12 months
3. Identify outliers: Tools that cost a lot or limit a lot
4. Do the numbers honestly
5. Consider custom only when ROI is clear
6. Start with one tool, don't migrate everything at once
7. Keep hybrid: SaaS for commodity, custom for core/differentiators

€100/month per tool sounds cheap. But 15 tools × €100 × 12 months = €18,000/year. And that's the conservative scenario.

The question is not "SaaS or custom?". The question is "which specific tools justify custom in my specific situation?".

Answer that question with data, not ideology, and you'll make the right decision.

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Does your SaaS stack exceed €2,000/month? Worth an audit. The numbers are usually surprising when finally added up.