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Custom software vs SaaS: which is better for your business?

· 6 min read

The decision that can define your competitiveness

When a company needs technology, there are two main paths: subscribing to an off-the-shelf SaaS (Software as a Service) solution or developing custom software. Each option has clear advantages and real limitations. The right decision depends on your specific situation, and this guide helps you make it with data.

What each option means

SaaS (Software as a Service)

A pre-built tool you pay for monthly. You use it as it comes, perhaps with some configuration. Examples: Salesforce, Monday, HubSpot, Xero, BambooHR. You don’t need a technical team to get started and it works from day one.

Custom software

A solution designed and built specifically for your company. It adapts to your processes, your data, and how you work. It requires a higher upfront investment and development time, but the result is exactly what you need.

Direct comparison

Cost

SaaS: low initial cost (€0-200/month), but cumulative. With 5 users at €50/month, you pay €3,000/year. Over 5 years: €15,000. And the day you stop paying, you lose access.

Custom: higher upfront investment (from €3,000 for automations, from €8,000 for complete applications). But it’s yours. Monthly maintenance (€200-800) is significantly less than equivalent SaaS subscriptions long-term. For a detailed cost breakdown, we’ve written a comprehensive guide.

Bottom line: SaaS is cheaper in years 1-2. Custom is cheaper from year 3-4 onwards for most cases.

Adaptation to your business

SaaS: you adapt to the tool. If your process doesn’t fit the software’s options, you change your process or use workarounds. Features you don’t need being paid for, features you need not existing.

Custom: the tool adapts to you. If your car workshop needs a specific flow of calls + WhatsApp + appointments, that’s exactly what gets built. No surplus features, no shortcomings.

Bottom line: if your processes are standard, SaaS works well. If you have specific processes that differentiate you, custom is the way to go.

Implementation time

SaaS: minutes or hours to get started. Basic configuration in days. Learning curve depends on the tool.

Custom: weeks or months depending on complexity. But the final result adapts to how your team already works, reducing the learning curve.

Bottom line: if you need a solution yesterday, SaaS. If you can plan ahead, custom delivers a better final result.

Scalability

SaaS: scales easily in user numbers (more licences = more cost). But it has a functional ceiling: when you need something the tool doesn’t do, you’re stuck.

Custom: scales in features without limit. You can add modules, integrations, and capabilities as your business grows. No artificial ceiling.

Bottom line: for user growth, SaaS. For feature growth, custom.

Vendor dependency

SaaS: high dependency. If the provider raises prices, changes conditions, or shuts down, you have a problem. Your data sits on their platform and migrating can be complex or impossible.

Custom: lower dependency. The code is yours, data sits on your infrastructure. You can change development providers without losing anything.

Bottom line: custom offers more control and less long-term risk.

Integrations

SaaS: predefined integrations with the most popular tools. If you need something not on their list, tough luck or custom development (which sometimes costs more than the SaaS itself).

Custom: integrates with whatever you need, because it’s built with that in mind. APIs, databases, legacy tools: everything is possible.

Bottom line: if your tools are standard, SaaS. If you have a particular ecosystem, custom.

When to choose SaaS

  • Your problem is generic (email marketing, basic project management, standard accounting)
  • You need to start immediately and can’t wait weeks
  • Your budget is very limited in the short term
  • Your processes are standard and don’t differentiate you from competitors
  • You don’t have complex integration requirements

When to choose custom software

  • Your processes are specific and differentiate you competitively
  • Generic tools force you to use workarounds
  • You’re paying for multiple SaaS products that don’t talk to each other
  • You need integrations that standard tools don’t offer
  • You value having control over your data and technology
  • You’re in a sector with specific needs (physiotherapy, consultancies, workshops)

The third way: combine both

The reality is that the best strategy for many SMEs is a combination:

  • SaaS for the generic: email (Gmail), basic accounting (Xero), internal communication (Slack)
  • Custom for the specific: the processes that make you unique, the automations that give you an edge, the integrations that connect everything

This strategy optimises costs (you don’t build what’s already well solved) and maximises value (you build what truly differentiates you).

How to decide: the 3-question test

  1. Does a SaaS tool exist that covers 80%+ of what I need? → If yes, try the SaaS first.
  2. Are my processes what differentiates me from competitors? → If yes, protect them with custom software.
  3. Am I paying more than €500/month on SaaS I’m not satisfied with? → Evaluate whether custom development would be more cost-effective.

Need help deciding which path to take? At Deru we give you an honest opinion based on your specific case, not on what generates more billing for us. You can try our interactive demos or check out our services. We’re based in Madrid and Murcia.