Software Rental vs. Custom-Built Solution: Which Is the Better Investment?

Are you considering whether a specific problem could be solved with an application? The real question is how to decide when to buy something that already exists—a “ready-made product,” i.e., SaaS (Software as a Service)—and when it’s better to invest in building your own custom solution tailored specifically to your needs.

Choosing the right solution usually depends on whether the problem will be solved fully or only partially. Other important factors include long-term cost and sustainability, replaceability, ease of use, technical support, and many more. So where and how should you even begin making the decision? What pays off in which situation?

It’s Similar to Real Estate!

When choosing between renting and buying a property, you also consider what you can afford, your long-term plans, available options, financing methods, market conditions, and more.

Imagine buying a property with a mortgage. The monthly loan payment is CZK 2,000 lower than monthly rent. At first glance, buying seems worthwhile—you’ll own the property in 30 years, its value may increase, and you could become a few million richer over time. But many unexpected events can occur that may reduce the property’s value or force you to relocate.

Both options carry risks—tenants usually pay more in the long run and lack full control, while owners take on obligations and have much less flexibility when circumstances change.

How Does This Relate to IT?

Very closely. The real estate comparison applies here as well—you decide based on your needs, options, and circumstances. The main difference lies in market development and the pace of change, which introduce more complex criteria when selecting the right application.

Examples:

• Industry development – The level of innovation and its impact varies by sector. In critical infrastructure (e.g., public sector or energy), decisions tend to be more conservative due to risk. In less critical sectors (e.g., e-commerce or advertising), companies can experiment more freely.
• Replaceability – Needs can change overnight. Companies may scale up by 1000% in a short time. Flexibility, adaptability, and modularity are key. If an application lacks these traits, consider how easy it will be to switch solutions.
• Budget – IT pricing is far more variable than real estate. You might rent software for CZK 200/month—or CZK 1,000,000/month. The same applies to custom development. If you’re not seeking a temporary fix, think long-term.

There are many ways to evaluate and combine these approaches. Let’s now look at the advantages and disadvantages of both models.

Renting Instead of Reinventing the Wheel?

This is where the term “as a Service” comes from. In this context, we mean SaaS (Software as a Service), typically designed to solve common problems “out of the box.” Like renting property, you don’t own SaaS. You simply pay a recurring fee for usage rights.

Main Advantages of SaaS:

• Lower initial costs – you only pay a monthly or annual fee, so there’s no need to invest in software development or hardware purchases.
• Fast deployment – you can start using the application immediately. No need to wait weeks, months, or even years for a solution.
• Continuous updates – you don’t have to worry about new versions or security patches. Providers handle everything automatically, so you always have an up-to-date tool.
• Scalability – SaaS solutions typically evolve and expand over time based on the needs shared by most active users.
• Customizability – different user groups often have different needs. That’s why SaaS providers offer plans, feature tiers, and configuration options that allow the application to be tailored in terms of functionality and pricing.

When does it make sense to choose SaaS?

• When a highly standardized and user-validated solution already exists that sufficiently solves your general problem.
• The long-term costs of existing applications are lower than building a custom solution.
• When it is better to pay only for “what you actually use” rather than invest in high upfront costs.
• If your needs change frequently and significantly, allowing you to easily switch to an alternative solution.
• Your problems are not highly specific, and therefore do not require extensive customization.

Examples:

• Web browsers
• Cloud storage services
• Antivirus software
• Email services
• General ERP or CRM systems

Where to next?

• Switching to SaaS: a strategic change (Tomáš Svoboda)
• SaaS – nejhorší, co potkalo váš obchodní proces (Jan Mazal)
• Může být model SaaS zklamáním? (Pavel Jiruš)
• Porovnejte si řešení na míru a šablonu Shoptet (Petr Hejčl)

However, SaaS cannot satisfy everyone. If your processes are highly specific or complex, an off-the-shelf solution may do more harm than good.

Invest in Your Own Software Under Full Control

Let’s return once more to the real estate analogy. If you’re certain you don’t want to rent and prefer to buy, you usually have several options—purchasing a finished property without modifications, buying one that requires renovation, choosing a standard design, building a custom home, a turnkey solution, a shell structure, building on your own, or working with a construction company.

Before you begin building, you typically do some initial research. For example, you look at what has already been built and is for sale in the area, which planned or ongoing development projects might match your needs, or what plots of land are available along with construction firms or contractors.

It’s also often crucial to move in as soon as possible and make related decisions accordingly—such as selecting furniture, determining terrace size, or deciding on pool placement. You can plan everything in advance, but daily needs and priorities may shift over time. Usually, you also don’t have the full budget available immediately, so you start with only the essentials and complete additional features gradually.

Similar principles apply in IT. From this perspective, the advantages of building your own solution include:

• Ownership – you typically hold full rights to what is developed. However, pay attention to licensing terms and transfer of rights, as in the Czech Republic the author is automatically considered the legal owner of the software.
• Maximum control – you have full control over the implemented functionality. You get exactly what you need without worrying about missing or unnecessary features.
• Tailored customization – the software is built according to your needs, which is especially valuable for specific processes or integration with existing internal systems.
• Independence from a provider – if a SaaS vendor suddenly stops providing or maintaining the service, you may face a serious issue and need to find an entirely new solution. With your own application, you can switch vendors more easily. However, if the original provider did not build the solution with sufficient quality and documentation, transferring it may be difficult.

When to Build Custom Software:

• There is no alternative solution on the market, or existing options are very limited, insufficiently standardized, and not validated by a broad user base.
• The long-term cost of renting does not provide a good price/performance ratio compared to developing your own software—and you have the capital to invest.
• You have many specific and complex requirements that change frequently and need to be addressed flexibly.
• You are working with sensitive data that you want to share only with approved parties.
• You aim to solve a previously unresolved problem with unique added value for the market—not just for your own internal needs.

Examples:

• Innovative startup applications
• Highly specialized software
• Internal system integrations
• Extensions of existing systems

Where to next?

• ERP: Má smysl vyvíjet vlastní systém řízení zdrojů? (iQuest)
• 6 důvodů, proč vyvíjet mobilní aplikaci (Kristýna Lang)
• 8 věcí, než podepíše smlouvu o vývoji software na míru (Michal Ohrablo)
• Přechod z krabicového řešení webu na vlastní (Ondřej Hájek)

Economic Comparison: Renting vs. Building

In the long term, custom software development may offer a better return on investment. The following examples are purely illustrative economic comparisons based on real-world practice. They do not take into account the number of potential customizations, the time and effort invested in development, the quality of support, or other critical factors.

Example 1: E-commerce Store

In the Czech Republic, one of the most common situations where this decision arises is in the case of e-commerce stores. Let’s therefore look at a cost comparison of typical options—e-commerce platforms such as Shoptet, Shopify, or WordPress WooCommerce, alongside template-based custom development and fully bespoke solutions.

Based on the simulation above, it may seem that building your own custom software is the better option. However, when factoring in your own time investment, solutions such as “Rental: Custom (template-based)” or, for risk minimization, “Rental: Shoptet” might be more appropriate. In any case, long-term costs tend to be relatively comparable, and many other factors will play a significant role in the final decision. You can find an in-depth review of one of these tools in the following article:
Nástroj Shoptet: Cena, funkce, zkušenosti (Lukáš Martínek).

Example 2: Food Delivery System

Now imagine a different scenario: you run a company that needs software for food delivery. Let’s say the company is growing rapidly and already has a large user base. Most existing solutions charge high per-user fees. What might the financial costs look like in an extreme case?

The second example is not science fiction, but an illustrated case based on real-world experience. Why do many entrepreneurs choose an option such as “Rental: Existing Solution 2” instead of building a solution from scratch, even when the difference is so significant? There can be many reasons. Based on our consulting experience, here are some of them:

• Lack of knowledge and experience in the field, leading to fear of unknown risks.
• The need to invest personal time and effort into building a custom solution.
• Insufficient capital for the initial investment, despite lower long-term costs.
• Focusing only on short-term cash flow rather than long-term strategy.
• Previous negative experiences with software development.
• Limited business viability, resulting in short-term planning.
• Concerns about long-term commitment requiring ongoing internal capacity.
• Viewing custom IT solutions as a necessary burden rather than a strategic investment.

What Does This Mean?

Based on the information provided, it is not possible to generally determine which option is financially more advantageous in a specific case. It is also true that every company evolves over time—both in terms of processes and size—and at different speeds and intensities. Therefore, decisions should always be made based on verifiable information about the company’s needs, challenges, and available options in the given situation.

Summary

Choosing between renting software and investing in a custom-built solution is a complex process, and it may be difficult to determine the right path at first glance. It depends on the quality, relevance, and maturity of existing solutions, the specificity and importance of your requirements, the expected volume of changes, the initial budget, and many other factors.

Larger companies and corporations typically prefer custom-built solutions due to their specific processes, need for data control, and lower long-term costs. In contrast, small and medium-sized businesses often choose to rent software, as they tend to pivot more frequently, adapt to changes, and prioritize short-term cash flow. In both cases, related services such as research, support, project management, legal services, and others can be handled through an outsourcing approach.

Whichever option you choose, there are usually multiple ways to technically address your problem or need. Before taking a specific path, it’s advisable to consult with an expert in the field rather than deciding based solely on who puts on the biggest sales show at the seemingly lowest price. We’re happy to help you find the right solution tailored to your individual needs – contact us.