Choosing whether to build vs. buy. It’s a critical choice for the tech and SaaS market, the real estate market, retail and manufacturing, and virtually every market sector. There’s a fair amount of pressure on leaders and business owners to use resources well without compromising impact or outcome.
Both solutions have pros and cons, and each developer will have to choose the best direction for their company or project. However, with growth-driving project-based decisions, there are more opportunities to think big.
The first decision point for anyone asking this question is to establish clear goals and desired outcomes. The most aligned process for getting there will become obvious. Here’s what you need to know before deciding to build vs. buy in a variety of scenarios.
When To Build vs. Buy
The number one reason to build vs buy is when you need a custom solution with specialized functionality. This gives you all the control over the goal, the process, the team, and the outcome.
You should also build vs. buy when you’re planning for long-term maintenance and future development, not just the first-version launch. If the tech is central to brand identity or your value proposition relies heavily on its execution, implementation, and success, building is the only viable option.
Growth-driven decisions always prioritize where the business is going and plan for what’s next. If your big-picture goals are three, five, or ten years out, building your tech solution gives you the ability to be agile and create something that works now and later.
The bigger the scope of your project, the more likely you’ll require a more agile solution that adapts to changing needs and new ideas. The most effective way to achieve that is to build vs. buy.
One of the best reasons to buy your solution is that you can outsource to an expert or team with a proven track record of reliable services and working solutions. There’s no trial and error or upskilling required; it’s virtually a plug-and-play solution.
Costs and Challenges to Build vs. Buy
For any tech, real estate, or retail project, the total cost of ownership (TCO) is higher when you build than when you buy. There are significant investments in talent, resources, materials, and more that front-load any project.
Calculate the time cost associated with building vs. buying, or kitchen remodeling vs. buying a new home, or buying an existing business vs. building one from scratch. You could lose months or years waiting to deploy a custom-built solution.
If you’re creating a solution in-house or on your own, you may need to hire new, specialized professionals to augment existing resources. This helps fill skill gaps and increase productivity, enabling more to be done in less time.
Also consider the costs of ongoing maintenance. Managing this in-house will likely cost less financially but may drain internal resources over time. If you buy vs. build, there may be fewer maintenance issues up front, or you can outsource to the original supplier.
When To Buy vs. Build
The best time to buy your solution is when speed matters most. Whether your timeline to deploy SaaS tools looms close, or your Newport Beach dream home is on the market now, or you’re racing competitors to market, buying will always be faster.
If the solution you need is something standardized with no bells and whistles, buying can be both cost-effective and faster. Buying is generally associated with fewer upfront costs, but this depends largely on each developer’s pricing and payment structure.
Ongoing maintenance can be a headache, and that’s not unique to any one industry or solution. When you choose to buy, whether that’s tech or a brand-new home, you can often extend the contract for ongoing support and routine maintenance.
Buying also gives you access to an entire team you don’t have to manage. They’re driven by deliverables and benchmarks, not internal bottlenecks. This gets you access to expert support and insights to augment your internal team’s capabilities, fill knowledge gaps, or accelerate timelines.
Costs and Challenges to Build vs. Buy
The total cost of ownership (TCO) is generally less when you buy, but so are the options. You have less control over the process and may have to accept trade-offs in favor of what your provider is willing and able to accomplish.
Over time, the cost savings from buying vs. building could be offset by ongoing licensing or subscription fees. If you plan to retain a bought solution permanently or indefinitely, you may find the juice of limitations and savings isn’t actually worth the squeeze.
Those who choose to buy may fall victim to vendor lock-in, leaving them dependent on a single provider, since switching takes them all the way back to your initial “buy vs. build” question.
Integration can pose another challenge to buying. Connecting external software, teams, resources, or systems can sap significant time and resources.
Find out what your competitors are using. If they bought the same Saas, plugin, or other solution, will your version be enough to create a clear market differentiation? You could lose any measurable competitive advantage with a boxed or off-the-shelf solution.
Build vs. Buy: What Tips The Scales?
Let the problem drive the solution, vs the approach. You’re aiming for a specific outcome, not just a process. How you get there matters, but not as much as actually attaining the desired solution in the end.
The build vs buy conversation should happen in the earliest stages of planning, when the needs have been clearly identified. If you have a clear direction, you’re ready to choose an approach.
If building something completely custom, where you have full control over the process and can pivot as you see fit, building is your best option. If you need a solution that’s not internally critical and speed over flexibility is your priority, buying can save you time and money.
Author Information
Author Name: Dalip Jaggi
Author Bio:
Entrepreneur, technologist, and passionate business leader sum up the core of Dalip Jaggi, co-founder of Revive Real Estate, a PropTech company with a goal to democratize house flipping. Since its 2020 inception, Revive has become the smartest solution for homeowners across the nation to maximize their home’s value.
