AI Build vs Buy Cost Analyzer
Comprehensive analysis of building AI in-house vs buying SaaS vs outsourcing with tunable risk, compliance, and ROI assumptions—plus downloadable reports.
*These calculations provide estimates based on industry data. Actual costs and timelines may vary significantly based on specific requirements.
Project Fundamentals
Requirements & Risk
Typical range: 15-30%
Cost Analysis & Recommendations
Build In-House
Initial Investment: £1,249,082
Annual Operating (Years 2+): £327,689
Expected Annual Benefit: £184,250
Total Year 1: £1,576,771
Break-even: Not reached
Success Rate: 55%
Buy SaaS Solution
Subscription (Monthly): £3,804
Implementation & Setup: £141,640
Annual Operating (Years 2+): £51,127
Total Year 1: £192,767
Break-even: 7 months
Success Rate: 85%
Outsource Development
Initial SOW & Handoff: £993,788
Annual Operating (Years 2+): £249,902
Expected Annual Benefit: £201,000
Total Year 1: £1,243,690
Break-even: Not reached
Success Rate: 60%
Total Cost of Ownership (5-Year View)
Build In-House
£2,887,525
Initial build + 5 years of operating costs
NPV (discounted): £2,557,448
• Full control & IP ownership
• Highest maintenance costs
• Scaling costs included
SaaS Solution
£417,274
Implementation + 5 years of subscription
NPV (discounted): £359,386
• Fastest time to market
• Predictable costs
• Vendor dependency risk
Outsource
£2,243,299
Partner delivery + 5 years of governance & support
NPV (discounted): £1,991,575
• Balanced cost-control trade-off
• External dependency
• Knowledge transfer challenges
Scenario Financial Summary
| Scenario | Year 1 Cost | Annual Operating | 5-Year Total | Break-even | ROI (5 yrs) | NPV ROI | Success Odds |
|---|---|---|---|---|---|---|---|
Build In-House | £1,576,771 | £327,689 | £2,887,525 | Not reached | -68.1% | -71.2% | 55% |
Buy SaaS | £192,767 | £51,127 | £417,274 | 7 months | 241.2% | 216.4% | 85% |
Outsource Build | £1,243,690 | £249,902 | £2,243,299 | Not reached | -55.2% | -59.7% | 60% |
Recommended Path: Buy SaaS
Highest composite score balancing ROI, success odds, and time-to-value. Break-even projected in 7 months with an expected annual benefit of £284,750 and 241.2% ROI across5 years.
- #1 Buy SaaS: Score 164 | Year 1 £192,767 | Success 85%
- #2 Outsource Build: Score -39 | Year 1 £1,243,690 | Success 60%
- #3 Build In-House: Score -54 | Year 1 £1,576,771 | Success 55%
What this means
• Adjust the assumptions to stress-test best and worst-case scenarios.
• Validate recruiting, vendor, and subscription quotes with procurement.
• Use the break-even timeline to frame stakeholder expectations.
Decision Matrix & Key Factors
Time to Market
SaaS: 2 months
Outsource: 5 months
Build: 6 months
Customization
Build: Full control
Outsource: High flexibility
SaaS: Limited options
Risk Level
SaaS: Lowest risk
Outsource: Medium risk
Build: Highest risk
Expected ROI
Build: -68.1% (-71.2% NPV)
Outsource: -55.2% (-59.7% NPV)
SaaS: 241.2% (216.4% NPV)
Comprehensive Decision Factors
Build In-House - Consider When:
- • Unique competitive advantage required
- • High customization needs
- • Long-term strategic investment
- • Strong internal AI expertise
- • Data security/IP control critical
- • High project complexity acceptable
SaaS Solution - Consider When:
- • Fast time to market critical
- • Standard functionality sufficient
- • Predictable, operational costs preferred
- • Limited internal AI expertise
- • Proven solutions available
- • Lower risk tolerance
Outsource - Consider When:
- • Custom solution needed
- • Cost-effective alternative to building
- • Access to specialized expertise
- • Medium-term project timeline acceptable
- • Risk sharing with vendor desired
- • Knowledge transfer plan in place
Technical Factors:
- • Data integration complexity
- • Scalability requirements
- • Performance benchmarks
- • Technology stack compatibility
- • MLOps and monitoring needs
- • Model governance requirements
Business Factors:
- • Available budget and cash flow
- • Internal resource capacity
- • Competitive market timing
- • Regulatory compliance requirements
- • Change management capabilities
- • Vendor relationship preferences
Hidden Costs to Consider:
- • Training and change management
- • Data preparation and cleaning
- • Integration with existing systems
- • Ongoing model retraining
- • Compliance and audit costs
- • Scaling infrastructure
Important: This analysis provides directional guidance based on industry benchmarks. Actual costs, timelines, and success rates will vary significantly based on your specific requirements, team capabilities, and market conditions. Consider conducting a proof of concept before making final decisions.
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Disclaimer
The calculations provided by this tool are estimates based on publicly available information and typical usage patterns. Actual costs may vary depending on your specific usage, pricing changes by service providers, additional features, and other factors. We strive to keep information accurate and up to date, but prices and features may change. Please verify current pricing on the official provider websites. This page may contain affiliate links, which means we may earn a commission if you click through and make a purchase at no additional cost to you. For more information, see our affiliate disclosure.