Worked example
A four-month build by 1.5 engineers at $180,000 loaded, 20% yearly maintenance and 40 admin hours a month, against a $30,000 licence, $15,000 implementation and 15 admin hours a month, at $60 an hour.
| Input | Value |
|---|---|
| Engineers on the build (FTE) | 1.5 |
| Loaded annual cost per engineer | $180,000.00 |
| Initial build duration (months) | 4 |
| Maintenance per year (% of initial build) | 20% |
| Ops/admin hours per month with the in-house system | 40 |
| Annual software licence | $30,000.00 |
| One-time implementation cost | $15,000.00 |
| Admin hours per month with the software | 15 |
| Loaded hourly cost of admin time | $60.00 |
| Result | Value |
|---|---|
| 3-year difference (build − buy) | $87,000.00 |
| 3-year cost to build and run | $224,400.00 |
| 3-year cost to buy and run | $137,400.00 |
| Initial build cost | $90,000.00 |
| Month the cumulative costs cross | 0 mo |
- Initial build: FTE × annual cost ÷ 12 × build months: $90,000.00
- + Maintenance: 20% × build ÷ 12 × 32 months: $48,000.00
- + In-house admin: hours × hourly cost × 36: $86,400.00
- = 3-year build cost: $224,400.00
- Implementation (one-time): $15,000.00
- + Licence × 3 years: $90,000.00
- + Admin with software: hours × hourly cost × 36: $32,400.00
- = 3-year buy cost: $137,400.00
- Difference: build − buy: $87,000.00
How the comparison is calculated
Initial build = engineer FTE × loaded annual cost ÷ 12 × build months
Build (3 years) = initial build + maintenance % × initial build × (36 − build months) ÷ 12 + admin hours × hourly cost × 36
Buy (3 years) = implementation + annual licence × 3 + admin hours with software × hourly cost × 36
Difference = build − buy
The model runs month by month. Admin hours count in all 36 months for both options, because commissions still have to be paid while a system is being built or rolled out. Maintenance starts the month after go-live.
The crossover month is the first month in which the cumulative cost lines cross. A typical pattern: building is more expensive at first, then a licence keeps adding up. If the lines never cross within 36 months, the tool shows 0.
The assumptions are yours
We do not publish vendor prices or engineering rates. Use real quotes for the licence and implementation, and your own payroll data for the loaded costs.
- Maintenance covers plan changes each year, CRM and payroll API changes, bug fixes and on-call time.
- Admin hours are the hours finance or sales ops spend collecting data, checking results and answering questions.
- Loaded cost includes benefits, payroll taxes and overhead, not just salary.
To estimate the hours software could save versus your current process, use the commission software ROI calculator. To see whether you need a tool at all, try the software check or browse the software rankings.
Limitations
- No discounting: a dollar in year three counts the same as a dollar today.
- Licence price increases, extra seats and payee growth are not modelled; rerun with a higher licence to test them.
- Engineering opportunity cost and the risk of a late or failed build are not priced in.
- Estimates only — not financial or accounting advice.
Frequently asked questions
Is it cheaper to build commission software in-house?
It depends entirely on your inputs. A small build with few plan changes can cost less than a licence; a build that needs constant changes and admin time usually does not. Run your own numbers rather than relying on a rule of thumb.
What maintenance percentage should I use?
We do not publish a benchmark. Estimate the engineering days your team spent last year on plan changes, data fixes and integrations, and express them as a share of the initial build cost.
Why are admin hours included on both sides?
Neither option removes all manual work. Someone still reviews results, handles disputes and maintains plan data. Entering different hours for each option is how the comparison captures the time a tool saves.
What does a negative difference mean?
Building and running the in-house system costs less over three years than buying, under your assumptions. The crossover month shows when the cheaper option took the lead.