Over 20+ years in software development, I've seen hundreds of companies that started with a SaaS solution, only to return a year or two later requesting custom development. And vice versa—companies that immediately invested in custom development, then realized they overpaid for features they didn't need.
The problem is that choosing between SaaS and custom development isn't a question of "which is better," but rather "which suits your specific business in its current situation." In 2025, this choice has become even more complex due to the emergence of AI tools, no-code platforms, and hybrid solutions.
Let's figure out how to make the right decision.
SaaS (Software as a Service) is software you rent by subscription. You don't own the code, don't manage servers—you simply pay a monthly or annual fee and use a ready-made product.
1. Quick Start
Registration takes 5 minutes, setup takes a few hours or days. You can start working today without waiting months for development.
2. Predictable Costs
$50-500 per user per month. No unexpected bills for developing new features.
3. Regular Updates
New features, bug fixes, security improvements—everything happens automatically without your involvement.
4. Minimal Technical Requirements
No need for your own IT department. The vendor handles servers, security, and updates.
5. Scalability
Added 10 new employees? Simply increase the number of licenses.
1. Limited Customization
You work within what the developer envisioned. Need a specific feature? Wait until they add it (if they add it).
2. Vendor Lock-in
Prices doubled? Service shutting down? Terms changed? You can't do anything about it.
3. Long-term Cost
$200/month × 12 months × 5 years = $12,000. And you own nothing—just renting.
4. Integration Problems
Need to connect 5 different SaaS tools? Prepare for workarounds through Zapier or APIs that can change at any moment.
5. Data Limitations
Your business data is stored on third-party servers. Not all companies and industries can afford this due to security or regulatory requirements.
✅ Standard business processes: accounting, email marketing, CRM for small business
✅ Limited budget: startups, hypothesis testing
✅ Speed needed: launch in days, not months
✅ Small team: no in-house developers
✅ Flexibility more important than customization: easy to switch to another service
This is creating software specifically for your business requirements. You own the code, control every function, define the architecture and system logic.
1. Full Control
You decide which features are needed, how they work, what the interface looks like. No compromises.
2. Competitive Advantage
Unique algorithms, processes, automation—what differentiates you from competitors. SaaS is available to everyone, your solution is yours alone.
3. Perfect Integration
The system is initially designed considering all your existing systems, databases, and processes.
4. Scalability on Your Terms
Architecture is built for your growth plans. The system grows with your business without needing to migrate to another platform.
5. Code Ownership
You're not dependent on a vendor. You can hire another team for support or development at any time.
6. Long-term Savings
One-time investment instead of infinite subscription. After 3-5 years, custom development often proves cheaper than SaaS.
1. High Initial Cost
From $20,000 to $500,000+ depending on complexity. This is an investment, not an operational expense.
2. Development Time
From 3 months to a year. Requires patience and clear understanding of requirements.
3. Technical Risks
Poor quality development can lead to a system that doesn't work or requires constant fixes.
4. Support Required
Need a team (internal or external) for updates, fixes, and system development.
5. Security Responsibility
You're responsible for data protection, standards compliance, and backups.
✅ Unique business processes: your processes are a competitive advantage
✅ Complex integration: need to connect multiple systems
✅ Specific requirements: industry, regulations, security
✅ Long-term strategy: planning to use for 5+ years
✅ Scale: large company with hundreds of users
✅ Critical data: need full control over storage and processing
In 2025, custom development has become significantly faster and cheaper thanks to AI tools. What used to take 6 months can now be done in 3 months.
Important: AI generates code, but architecture, logic, and strategy still need to be designed by an experienced professional.
New approach: take SaaS components for standard functions (authentication, payments, email) and add custom development for unique business logic.
Result: SaaS speed + custom solution uniqueness.
Platforms like OutSystems and Mendix allow quick creation of basic functionality, while critical modules are developed in clean code.
Suitable for: mid-size companies needing customization but lacking budget for full custom development.
Growing number of open-source solutions that can be deployed on your servers and customized. Get benefits of both worlds.
Examples: Odoo (ERP), Mautic (marketing automation), ERPNext.
Over the years, I've developed a decision-making system. Here's how I help clients choose:
1-3 points: Standard processes (accounting, email)
→ Solution: SaaS
4-6 points: Partially unique processes
→ Solution: SaaS + integrations or low-code with customization
7-10 points: Unique processes—your competitive advantage
→ Solution: Custom development
< 1 year: SaaS
1-3 years: Evaluate ROI of both options
3+ years: Custom development likely more cost-effective
SaaS: (Monthly cost × 12 × Number of years) + Integration costs + Cost of working with limitations
Custom: Development cost + (Annual support × Number of years) + Update costs
Important: consider not just direct expenses but also losses from limitations or process inefficiencies.
SaaS Risks:
Custom Risks:
In certain industries (healthcare, finance, government sector), SaaS may be prohibited or heavily restricted due to data storage and processing requirements.
Situation: Fashion retail startup, 2-person team, $5,000 budget
Request: "Need an online store with unique design"
My Recommendation: Shopify + custom theme ($3,000 for theme development)
Result: Launch in 3 weeks, revenue hit $500K after a year. SaaS was absolutely the right choice for market testing.
Next Step: When revenue reached $2M/year, we began developing a custom platform for specific logistics and automation processes.
Situation: Factory with unique production processes, 200 employees
Request: "Need a production management system"
SaaS Analysis: Tested 5 ERP systems. None covered their production specifics. Critical customizations were needed that vendors couldn't provide.
Solution: Developed custom MES (Manufacturing Execution System) integrated with their equipment and processes
Investment: $180,000 development + $25,000/year support
Result:
Situation: Investment management platform, strict regulatory requirements
Solution:
Why:
Result: Launch in 4 months instead of 8-10 with fully custom development
Every business is unique. What works for a competitor may not work for you at all.
Cheaper now doesn't mean cheaper long-term. Calculate TCO for 3-5 years.
If you're not sure the business model works, start with SaaS or MVP. Invest in custom when there's proven demand.
Many companies hire developers directly, skipping the architectural design phase. Result—a system that needs rewriting in a year.
SaaS solutions often require complex integrations between them. Integration costs and complexity can exceed custom development costs.
When I work on custom projects, I apply these principles:
First—deep analysis of business processes, then—architecture, and only then—development. This saves months of rework.
Even in custom development, we start with minimal functionality that solves a critical business problem. Then we develop iteratively.
The system should easily expand without rewriting all the code. Each module is an independent component.
You shouldn't depend on me or my team. Full documentation + training for your team.
Weekly demos, real-time code access, clear progress metrics.
Go through these questions:
About the Business:
About Technology:
About the Team:
About Risks:
You definitely need consultation if:
✅ You're uncertain which option to choose
✅ Project budget > $50,000
✅ Solution is critical for business
✅ Already tried SaaS but have limitations
✅ Planning to use system for 3+ years
✅ Need integration of multiple systems
The right choice at the decision-making stage saves hundreds of thousands of dollars and years of time.
In 2025, the line between SaaS and custom development is blurring. The best solutions often combine both approaches.
My advice:
Technology should serve the business, not limit its growth.
About the Author:
Emil Slavin is a Software Architect with 20+ years of experience. I specialize in strategic IT consulting and custom software development for growing companies. I've helped dozens of companies make the right decision between SaaS and custom development, saving millions of dollars and years of time.
Need consultation on your project?
I offer a free 30-minute strategy session where we can:
Contact me at https://www.slavin.pro/en/Contact
