Off the Shelf vs Custom Software: 5-Year Cost Calculator

Frequently Asked Questions

How do off the shelf vs custom software costs compare for companies under 100 employees?

Small companies typically save 40–60% with off-the-shelf solutions over five years. Custom development base costs remain fixed while per-user licensing scales favorably. At 50 users, commercial software costs $300,000-$500,000 total versus $1.2-$1.5 million for custom development. The equation shifts around 200–250 users where custom solutions achieve better per-user economics.

What percentage of custom software projects exceed their original five-year TCO projections?

Analysis of 500+ implementations shows 67% of custom projects exceed TCO projections by 20% or more. Primary overrun causes include scope expansion (45%), technical debt accumulation (30%), and developer turnover (25%). Off-the-shelf implementations exceed projections in 43% of cases, mainly due to customization requirements and integration complexity.

When calculating off the shelf vs custom software TCO, which hidden costs impact the comparison most?

Integration rework represents the largest hidden cost differential, adding $200,000-$400,000 to off-the-shelf implementations versus $100,000-$200,000 for custom solutions. Data migration costs hit equally at $120,000-$240,000. Vendor lock-in penalties for commercial software average $500,000-$1,000,000 when switching, while custom solutions face $300,000-$500,000 in technical debt remediation.

How do cloud infrastructure costs differ between off the shelf vs custom software deployments?

Off-the-shelf SaaS solutions include infrastructure in licensing, typically $15,000-$25,000 per 100 users annually. Custom solutions require separate infrastructure costing $10,000-$20,000 monthly for comparable capacity. Over five years, custom infrastructure totals $600,000-$1,200,000 versus included SaaS costs. However, custom deployments allow rightsizing and cost optimization reducing expenses 30–40% after year two.

What ROI timeline should executives expect when choosing between off the shelf vs custom software?

Off-the-shelf solutions deliver positive ROI within 6–12 months for standard use cases. Custom development typically requires 18–24 months to break even on initial investment. By year three, custom solutions matching unique processes show 15–25% better ROI. Year five comparisons depend on growth rates: high-growth favors custom (saving $30,000-$50,000 per 100 users), while stable organizations benefit from commercial software predictability.

Originally published at https://horizon.dev on May 13, 2026.