Custom software or an off-the-shelf program - sooner or later, every manufacturing company that outgrows Excel asks itself this question. The answer is: it depends on the numbers, not on convictions. In this article we calculate the TCO (total cost of ownership) over 3-5 years, show scenarios where the off-the-shelf product beats custom software, and give you a checklist that lets you make the decision in a single afternoon.
Article in brief
- An off-the-shelf program wins at the start on price and time - and for small teams with a standard process, it is often the right choice.
- The math flips at scale: in our example with 12 seats, SaaS costs about €100,050 over 5 years, while a custom system costs about €37,950-36,000.
- The break-even point usually falls between month 12 and 18 - from that moment on, every month and every new seat works in favor of the custom system.
An honest framing: off-the-shelf wins at the start
Let's start with what most software houses won't tell you: an off-the-shelf program (SaaS or boxed) almost always wins at the start. It is cheaper in the first year, works from day one, has battle-tested features and ready-made documentation. If your production process is standard - work orders, routings, time tracking - and fits within what an off-the-shelf manufacturing program offers, choosing custom software would be overpaying.
Custom software only starts to win when at least one of four conditions is met:
- A specific process. Your production has stages, billing units, or dependencies that no off-the-shelf product handles without "working around the system". An example from our practice: settling production in kilograms of raw material while selling in pieces of variable weight - in off-the-shelf products this ends with a helper Excel file running alongside the system.
- Team scale. With per-user licensing, every new seat is a new recurring cost. Above a certain number of users, the subscription overtakes the cost of building your own system (we run the numbers below).
- No limits. A custom system has no limits on users, records, orders, or API calls. You don't jump to a "higher plan" because the company grew.
- Code ownership. The code belongs to you. A SaaS vendor can raise prices, remove a feature, or shut the product down - and then you have a migration problem. Your own system evolves with any contractor, at your own pace.
TCO over 3-5 years: let's run an example
Let's compare two paths for a manufacturing company with 45 employees, 12 of whom work in the system (planner, shift leaders, warehouse, quality, back office).
Option A: an off-the-shelf MES/manufacturing system in the SaaS model
Typical market pricing for manufacturing systems is €81-185 net per seat per month, depending on modules. Let's take the middle: €135.
- 12 seats x €135 = €1,625 net per month,
- per year: €19,325,
- implementation and configuration (one-off, typically): €2,650-4,600,
- 3-year TCO: about €62,100. 5-year TCO: about €100,050.
Option B: a custom system
A custom manufacturing system with a scope matching this company's needs (production orders, shop floor reporting, raw materials warehouse, ERP integration) costs €8,050-14,000 net with us. Let's take the upper bound: €16,100.
- build: €16,100 one-off,
- maintenance (hosting, updates, minor fixes): 10-15% of the value per year, i.e. about €1,625-2,100,
- development (new features as needed): let's assume €2,650 per year,
- 3-year TCO: about €25,300-27,000. 5-year TCO: about €37,950-36,000.
Side by side
| Item | SaaS (12 seats) | Custom system |
|---|---|---|
| Upfront cost | €2,650-4,600 | €16,100 |
| Annual cost | €19,325 | €4,275-4,400 |
| 3-year TCO | about €62,100 | about €25,300-27,000 |
| 5-year TCO | about €100,050 | about €37,950-36,000 |
| Cost of the 13th seat | +€1,625 per year | €0 |
| Ownership of code and data | no | yes |
In this example, the break-even point falls between month 12 and 18. From that moment on, every month of SaaS is more expensive - and the gap grows with every new seat.
But let's flip the example
The same math with 3 seats and a cheaper plan (€81 per seat): SaaS costs €245 per month, i.e. €2,875 per year and about €14,375 over 5 years - roughly the cost of just building a custom system, before maintenance. In this scenario, a custom system never pays for itself, unless the off-the-shelf product genuinely cannot handle the process. That's why you need to run the numbers for your own company, not copy them from someone else's case study.
When NOT to buy custom software
We say this openly, even though we make our living building custom systems. Do not order custom software when:
- Fewer than 5 people will work in the system and the process is standard - the subscription for an off-the-shelf product will be lower than the cost of maintaining your own system.
- Your process is typical for the industry. Standard accounting, standard CRM, standard HR and payroll - these are areas where off-the-shelf products have been refined over years and thousands of customers. You won't beat them with one company's budget, and there is no reason to try.
- You don't have a person in the company who will own the system. A custom system needs someone on the company side who gathers needs, tests, and decides on the direction of development. Without that person, the project drifts.
- You need a solution "for yesterday". Building a system takes 2-4 months. If production is at a standstill, deploy an off-the-shelf product now and make the custom decision calmly in a year, with real data on what the off-the-shelf product is missing.
- The budget is stretched thin. If €8,050-14,000 is a borderline expense for the company, the project risk (even a well-run one) is disproportionate to the benefits. An off-the-shelf product shifts the risk to the vendor.
When a custom system for a manufacturing company makes sense
Symmetrically - choose custom software over SaaS when:
- employees keep "helper Excel files" alongside the current program because it doesn't handle the real process,
- the number of seats keeps growing and subscriptions are becoming a visible line item in fixed costs,
- you need to connect several worlds into one: production management, raw materials warehouse, customer orders, and ERP - and each off-the-shelf product covers only a slice,
- production data (technologies, recipes, margins) is too sensitive to keep in someone else's cloud on someone else's terms,
- you plan to grow the company in a direction off-the-shelf products don't anticipate - your own system grows with the process, not against it.
Decision checklist: 8 questions before you choose
Answer honestly - ideally together with the person who will use the system every day:
- How many people will work in the system in 3 years (not today)? Multiply that number by the monthly SaaS seat cost and by 36 months - that's your comparison baseline.
- Is our key production process standard, or does it require features we couldn't find in 2-3 off-the-shelf products we tested?
- How many hours per month does the team lose working around the limitations of current tools (double data entry, Excel files alongside the system, manual reports)? Multiply by the employee's hourly rate.
- Do we have a person who will become the system owner on the company side?
- Can we wait 2-4 months for implementation, or do we need the tool next week?
- What happens to our data and processes if the off-the-shelf vendor raises prices by 50% or shuts the product down?
- Are the planned integrations (ERP, online store, carriers, machines) available in the off-the-shelf product on our pricing plan - and how much extra do they cost?
- Is a one-off expense of €8,050-14,000 safe for the company, or borderline?
The interpretation is simple: if questions 1-3 and 6-7 produce large amounts or real risks, calculate the TCO for a custom system. If the answers to questions 4, 5, and 8 are "no" - stay with the off-the-shelf product, at least for now. A postponed decision backed by data is better than a quick one based on convictions.
The middle path: off-the-shelf plus custom modules
It's worth knowing the choice isn't always binary. A common and sensible scenario in manufacturing companies: the ERP or accounting stays in an off-the-shelf program (because it's standard), while a custom system handles only what is genuinely specific - shop floor reporting, planning, raw material settlement - and exchanges data with the rest through integrations. Such a module costs less than a full system and solves 80% of the real problem.
An off-the-shelf program wins on starting price, implementation time, and predictability - and for small teams with a standard process, it is the right choice. A custom system wins over a longer horizon with specific processes, a growing number of seats, and the need for full control over code and data. In our example (12 seats), the 5-year TCO difference is over €57,500 in favor of the custom system - but with 3 seats, the math flips completely. Run your own numbers with the checklist above before you talk to any vendor.
KamikStudio has been building custom systems for manufacturing and trading companies for over 15 years - if you want to calculate the TCO for your company on real numbers, book a free consultation.
