The biggest hidden cost in a growing business is the compounding penalty of per-seat software licensing.
If your team uses ServiceNow, you already know how this works. Every new hire increases your operating expenses. You are essentially penalized for scaling your team. We call this the SaaS Tax.
There is a specific inflection point where renting software becomes drastically more expensive than building and owning it. The problem is that most engineering teams do not calculate the 5-year Total Cost of Ownership (TCO) before defaulting to another SaaS subscription.
The Problem with Per-Seat Pricing
Unlike infrastructure costs that benefit from economies of scale, per-seat SaaS licensing scales linearly with your headcount. A mid-market company with 100 users on ServiceNow can easily pay $120,000 to $240,000 per year in licensing fees alone.
Over five years, that is nearly a million dollars for software that you do not own, that limits your data access, and that forces your team to adapt to its generic workflows.
Calculating the Break-Even Point
We wanted to quantify exactly when a company should stop renting and start building. We analyzed 22 major SaaS platforms to map their 5-year TCO against the cost of building and maintaining a custom software solution.
The results are eye-opening. For many mid-market teams, the break-even point for custom software is under six months. After that initial build cost, adding new users costs absolutely nothing.
What You Get with Custom Architecture
Building internal tools or custom platforms used to be a massive risk. Now, with modern TypeScript stacks and AI-native workflows, small engineering teams can deliver enterprise-grade internal tools in weeks, not years.
By building custom, you gain:
- Zero Per-Seat Fees: You own the platform. Adding 100 new users costs nothing.
- Absolute Data Sovereignty: Your data stays on your infrastructure. No export fees or vendor lock-in.
- Exact Workflow Fit: The software does exactly what your operations require, without the bloat of a one-size-fits-all product.
Try the SaaS Tax Calculator
We just released our programmatic SaaS Tax Calculators. You can input your team size and see the true 5-year cost of ServiceNow compared directly to the cost of a custom build.
Run the numbers for your own tech stack here: Slickrock ServiceNow Tax Calculator
I am curious to hear from other developers: at what scale did your team finally decide to rip out a SaaS product and build it in-house?
