Business & Revenue OpsFree
Build vs Buy Analysis Template
Send the vendor's quote and your build cost, get a three-year total for both paths with maintenance, switching cost, and opportunity cost priced in.
River's Build vs Buy Analysis tool prices a vendor's quote against the cost of building the same thing internally, using the full three-year picture rather than the first invoice. Send the vendor's quote, including any multi-year or escalator terms, and a build estimate: the engineers, the months, and the loaded rate. It reads the quote for the price increase usually buried in a renewal-terms section rather than the headline number, and prices the build side with the ongoing maintenance and internal opportunity cost most build estimates leave out.
Most build-vs-buy guidance stops at listing the categories a serious comparison should include. Zylo's own build-vs-buy research names the same gap: total cost of ownership is where both paths get underestimated, usually by a factor of two to three. Build TCO hides in opportunity cost; buy TCO hides in renewal uplifts and switching costs at end of life. Naming the categories is not the same as pricing them against a specific quote and a specific team's own numbers, which is the step this tool runs.
On a worked comparison for Marrow Digital, a mid-market software company, a vendor's expense-reimbursement quote read $50 per employee per month for 100 employees, a $60,000 first year. Tripled naively, that gives $180,000. The contract's renewal-terms section specifies a 10% annual increase, putting the true three-year quote at $198,600 plus an $8,000 switching cost. Building it instead at $96,000 looks like an $84,000 saving. Once maintenance and opportunity cost are added, the true advantage falls to $18,200, a figure that pairs with reviewing what you already pay for and the inventory it would join.
What a vendor quote and a build estimate both leave out
A vendor's headline price is rarely the number that survives three years. Zylo's research on build versus buy names renewal uplifts, add-on pricing, and consumption-based charges as the line items that raise the number every year, the kind that surprise a team that budgeted for a flat subscription. The Marrow Digital quote's 10% annual increase was not on the pricing page at all; it sat in the contract's own renewal-terms section, the document most quote comparisons never open before a signature goes on it.
A build estimate has its own blind spot, and it is not the sprint itself. Marrow's two engineers for three months priced the work at $96,000, a number most build-vs-buy write-ups stop at entirely. Two years of maintenance at a stated 20% of the build cost added $38,400. Pricing those same six engineer-months at the company's own $9,000 tracked roadmap value added $54,000 more: the true build cost is $188,400, nearly double the sprint number alone.
The two true totals, $206,600 to buy against $188,400 to build, still favor building, but by $18,200, not the $84,000 the sticker prices implied. That result is worth checking for its breaking point: the roadmap value per engineer-month would need to reach $12,033, 33.7% above what Marrow tracks today, before buying became the cheaper path. The recommendation names that specific number, so the decision gets revisited the day the real value actually moves past it.
How it works
Send both numbers
The vendor's full quote with any multi-year terms, and your build estimate with engineers and months.
Read the escalator
The quote's renewal terms for the price increase that rarely sits on the headline pricing page.
Price both totals
Three years for each path, with maintenance, switching cost, and opportunity cost added to the build side.
Get the recommendation
The true gap between the two totals, and the specific number that would flip it.
What you get
- The vendor quote's own escalator clause priced out, not just the flat headline rate multiplied by three
- The build estimate priced with maintenance and internal opportunity cost added, not just the sprint
- A three-year total cost comparison for both paths, reconciled to the same time horizon
- The specific number that would flip the recommendation, stated before you need it
- A one-page recommendation memo naming the true gap and what changes it
- A slide built to present the comparison, not just the sheet behind it
Common questions
We already have a three-year quote from the vendor. Isn't that the total cost?
Usually not the full one. Zylo's build-vs-buy research names renewal uplifts and consumption-based pricing as the line items that raise a quote every year, often sitting in a renewal-terms section rather than the headline price. On the Marrow Digital example, that section's 10% annual increase raised the true three-year quote from $180,000 to $198,600, before switching cost.
Our build estimate is just the engineering sprint. What's actually missing from it?
Two things most build estimates skip: ongoing maintenance and the opportunity cost of the engineers' time. On the worked example, $96,000 of build cost grew to $188,400 once two years of maintenance and the roadmap value of six engineer-months were priced in. That total, not the sprint cost alone, is the number that should be compared against the vendor's quote.
How do you price the opportunity cost of engineering time?
By multiplying the engineer-months the build takes by whatever your team tracks as the average value of an engineer-month of roadmap work, revenue, or cost savings. If you do not have that number, say so in the context field and the analysis will ask for your best estimate and flag it plainly as an assumption rather than a measured figure.
What if the numbers come out close and we're not sure which way to go?
That is exactly what the sensitivity check is for. The recommendation names the specific number, usually the opportunity cost per engineer-month, the maintenance rate, or the escalator, that would have to change before the decision flips, so a close call becomes a stated threshold instead of a guess.
Does this replace getting the contract reviewed by legal or procurement?
No. It reads the quote for the cost terms that change the three-year number, the escalator and any one-time fees, so the comparison is priced correctly. Legal review of liability, termination, and data terms is a separate pass this tool does not run.
How is this different from the vendor renewal or rationalization tools?
Those two assume you already own the tool and are deciding whether to keep paying for it. Software renewal and rationalization compares seats against actual usage on a contract you already signed. This tool runs before that contract exists, when building instead is still genuinely on the table.
Build vs Buy Analysis Template
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