Build or Buy Calculator — Make vs Buy Decision Analysis
Should you build it yourself or buy an off-the-shelf solution? Enter the upfront and annual costs for both options and the number of years you plan to use the product to get a clear total-cost comparison and break-even year.
years
Build saves this much over 5 years
- 1
Total cost to build
80,000 + 15,000 × 5 = 155,000 - 2
Total cost to buy
10,000 + 30,000 × 5 = 160,000 - 3
Cost advantage (cheaper option)
|160,000 − 155,000| = 5,000Build is the cheaper option over the time horizon.
How does this calculator work?
TCO = Upfront + Annual × Years for each option. Build wins if its multi-year total is lower; buy wins in the short run when upfront costs dominate. The break-even year is (BuildUpfront − BuyUpfront) ÷ (BuyAnnual − BuildAnnual). Use the crossover chart to pick the cheaper option for your time horizon.
Formula
How this is calculated
The total cost of ownership (TCO) for each option is simple: add the one-time upfront cost to the recurring annual cost multiplied by the time horizon. Building typically carries a higher upfront investment — development labour, tooling, infrastructure setup — but lower annual costs if the running overhead is small. Buying or licensing a solution usually has a lower or zero upfront fee but incurs a recurring subscription or licence that accumulates over time.
The crossover (break-even) year is found by setting the two TCO curves equal: BuildUpfront + BuildAnnual × t = BuyUpfront + BuyAnnual × t, which gives t = (BuildUpfront − BuyUpfront) / (BuyAnnual − BuildAnnual). Before that year the buy option is cheaper; after it the build option wins. If the annual costs are equal, there is no crossover — whichever has the lower upfront cost always wins.
This model captures only direct monetary costs. A full decision should also weigh strategic factors: control and IP ownership (build advantage), speed to market (buy advantage), vendor lock-in risk (buy risk), and opportunity cost of engineering time (build risk). The calculator is most useful as a starting filter — if the TCO difference over your horizon is small, non-financial factors become the tiebreaker.
Frequently asked questions
Include developer time for maintenance and bug fixes, hosting and infrastructure, security patching, and internal support. A widely-used rule of thumb is 15–20% of the original build cost per year for software. For physical products, include servicing, parts and labour.
Building wins when your requirements are highly specific and no off-the-shelf product fits, when you expect very high volumes that would make per-unit or per-seat licence costs prohibitive, or when ownership of the IP is strategically important.
Not necessarily. If the break-even year falls beyond your planning horizon, buying is almost always the right answer. If it falls in year 1–2 and you expect to use the solution for 5+ years, building may be worth the upfront pain. Also consider: could you switch vendors later, or does the buy option create lock-in?
TG we-Calculate Editorial Team. (2026). Build or Buy Calculator — Make vs Buy Decision Analysis [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/build-or-buy-calculator
TG we-Calculate Editorial Team. "Build or Buy Calculator — Make vs Buy Decision Analysis." TG we-Calculate. 2026. https://we-calculate.com/calculator/build-or-buy-calculator.
TG we-Calculate Editorial Team, "Build or Buy Calculator — Make vs Buy Decision Analysis," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/build-or-buy-calculator
@misc{wecalculate_build_or_buy_calculator, title = {Build or Buy Calculator — Make vs Buy Decision Analysis}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/build-or-buy-calculator}}, year = {2026}, note = {TG we-Calculate} }
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