Sep 8, 2022

Choosing The Right Software Model:
Off-The-Shelf vs. Custom Software

By: Nick Mitchell

The right software solution will be unique to every company based on its complexity, size, and needs. Two major models include custom vs. off-the-shelf software. While custom solutions can offer more flexibility, capability, and long-term savings, the latter can keep upfront costs low while providing ease-of-use and simple maintenance. So, which should you use? Custom software development or a solution straight out of the box?  

Read on to compare the costs, pros, and cons and decide which software solution type is best for you.  

Typical Costs Of Off-The-Shelf vs. Custom Software 

Between off-the-shelf and custom software, it can range vastly on what’s more expensive and what’s more affordable. Typically, custom software leans towards the more expensive side. Because an off-the-shelf, pre-built software has already been developed, you are generally charged a recurring monthly fee with the option to unlock additional features behind a paywall or through escalating packages. A custom software, on the other hand, needs to be built from the ground up, so there’s a large development fee behind it. However, after it’s built, maintenance costs are generally lower than using an off-the-shelf product.  

The ballpark range of costs for each varies. An off-the-shelf software can cost anywhere from $0 (by starting off with freemium plans before upgrading) to several hundred or thousands of dollars per month. For a custom software, prices can range from hundreds of dollars to hundreds of thousands of dollars, depending on the complexity. Some Fortune 500 companies spend millions of dollars to develop custom software. 

But what about the pros and cons of each?  

Option #1: Custom Software 

Some pros of purchasing custom software are that it’s built specifically for what you need. You have more control over the features, how it looks, and how it’s managed. However, cons include the larger upfront cost and the continuous need for additional development as technology evolves and business needs change. Depending on the amount and frequency of improvements, maintenance costs can continue to rise over time.   

Custom software is generally a good fit for anyone who can’t find a cookie-cutter tool that does what they need. If you have a unique business case or a company structure, a custom software may be the better fit.  

Option #2: Off-The-Shelf Software 

Off-the-shelf software is often better for those with a lower upfront budget, since you can start off using free versions and gradually progress to fit your needs.  It’s typically more affordable for small to medium sized businesses to choose this option over custom software. Since most features are ready out-of-box, you have everything you need available to you immediately – resulting in quicker startup times if you need to hit the ground running. Additionally, many companies that sell such software provide access to training materials and host forums to answer user questions.   

On the flip side, potential cons include paying for additional features and/or users, as well as heavy limitations. Oftentimes, companies will need to search for a second or third software to have the full range of capabilities a custom developed software can have. Plus, there can be lots of hurdles involved in making sure multiple software systems integrate and communicate properly.  

Overall, off-the-shelf software is good for businesses with less complex processes. Frequently, this option provides enough capability for whatever this company needs – as long as an integrator, consulting company, or technology architect is used to improve what’s included in the off-the-shelf product.  

Option #3: A Hybrid Software Model  

As a final option, a hybrid software model is becoming increasingly popular. This involves taking a solid off-the-shelf software and building upon it with custom developments and code. Most CRMs and marketing platforms allow custom builds using APIs (Application Programming Interface), webhooks, etc.  A hybrid model is most appropriate for when you need slightly more than what an off-the-shelf product offers, and you have the resources to build customizations.  

However, keep in mind some platforms don’t allow these add-ons easily.  

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Choosing the right software solution is a decision you’ll have to weigh carefully. Planning early and evaluating your current business needs will save you time, money, and unnecessary frustration down the line. Review the benefits and drawbacks of each option and select the best software model for your company. 

If you need support choosing the right technology for your business, book a call with our team to explore your options.