How to Think About the In-House Break-Even
"Build it ourselves or buy it?" Here's a frame to judge not by feel but on both cost and strategy.
Cost-Comparison Components
- SaaS side: monthly × usage scale + integration/operation labor (estimate yearly)
- In-house side: development labor + infrastructure + maintenance + opportunity loss (ramp-up period)
In-house is front-loaded and light on running cost; SaaS is the reverse. The general rule: the larger the usage scale, the more in-house tends to be favorable.
Don't Decide on Cost Alone
The break-even (how many years/scale until in-house is cheaper) is only a starting point. Overlay these strategic axes.
- Is it a source of differentiation?: high value to hold in-house if it's the competitive core
- Data confidentiality: if it can't go outside, in-house/closed is the premise
- Speed of change: in-house flexibility helps if requirements change often
- People continuity: can you maintain it if the builder leaves?
Failure Patterns
- "Build because we can": in-house even generic features unrelated to differentiation → maintenance hell
- Forgetting to include maintenance/operation/hiring cost in the break-even estimate
- PoC succeeded but no production-operation structure, so it's shelved
Realistic Conclusion
Differentiation core = in-house, else = SaaS is the base line. First roughly estimate the break-even, then correct with strategic axes. The next chapter is how to write an RFP when outsourcing.
