At what annual SaaS cost does custom become cheaper?

Rule of thumb: if your annual SaaS cost (including all users, add-ons, and integrations) exceeds £40,000–£60,000, custom software is worth serious evaluation. At £40,000/year, a 3-year SaaS TCO is £120,000+ (before escalation) — comparable to a custom build that you own forever. Use our free software cost calculator or book a consultation for a specific comparison.

Does the compliance cost argument for custom software hold?

For UK regulated sectors (NHS DTAC, FCA Consumer Duty, GDS Service Standard): yes, definitively. NHS DTAC Domain 2 and 3 require specific UK data residency and security evidence — many SaaS products cannot provide this. FCA Consumer Duty requires specific UX evidence — off-the-shelf products may not be configurable to meet FCA UX requirements. GDS Service Standard: most off-the-shelf products cannot satisfy all 18 points.

Saas Vs Custom Software Tco Uk

SaaS vs Custom Software for UK Businesses — Honest 3-Year TCO Comparison (2025)

Updated: June 20259 min read

🇬🇧 UK💷 GBP📊 Comparison🔒 UK GDPR⚖️ UK Law

Direct Answer

For most UK software decisions: the 3-year TCO question is the right frame. SaaS wins on year-1 cost. Custom wins on 3-year cost when the SaaS licence scales with users, the SaaS has significant customisation costs, or the SaaS cannot meet UK regulatory requirements. The break-even point is typically £40,000–£80,000 in annual SaaS costs. SaaS vs custom software is frequently framed as "upfront cost vs monthly subscription." The right frame is 3-year Total Cost of Ownership — including SaaS price escalation, integration costs, and the competitive value of owning vs licensing.

Cost Component	SaaS Product	Custom Software (ClickMasters)
Year 1 — software cost	Low (monthly licence)	£30,000–£150,000 (build cost)
Year 2 — licence escalation	Typically +10–30% (price increase)	Zero (you own it)
Year 3 — licence + user growth	Typically +20–50% vs Year 1	Zero (you own it)
Integration costs	£5,000–£30,000 (SaaS API limits)	Built-in per spec
Customisation costs	£10,000–£50,000 (consultancy/config)	Included in build
UK GDPR compliance remediation	£5,000–£25,000 (if SaaS non-compliant)	Built-in per Article 25
Exit/migration cost	£20,000–£100,000 (data migration, retraining)	Zero (you own data/code)
3-year TCO (50-user team)	£85,000–£250,000+	£40,000–£180,000 all-in
IP ownership	None — you license, not own	100% IP transferred at handover