RBC calculator shows building custom software often costs more than buying

Wall Street weighs in on the build-versus-buy question

RBC Capital Markets has released an interactive calculator designed to settle a debate gaining urgency in the AI era: Should companies build their own business software or continue buying it from vendors?

The tool allows companies and investors to input the cost of a software subscription, then compare it against the full expense of developing and maintaining an in-house alternative. According to Business Insider, which first reported the calculator's release, RBC's analysis reaches a conclusion that may disappoint vibe-coding enthusiasts.

The hidden costs beyond initial development

The calculator accounts for expenses that extend well beyond the upfront coding work. RBC's model includes ongoing maintenance, security vulnerabilities, bug fixes, and the productivity impact of using tools that may be less polished or feature-complete than commercial alternatives.

For simpler, non-critical applications, the math can favor custom development. But for core business systems — payroll platforms, customer relationship management software, productivity suites — buying typically proves more economical than building.

The analysis arrives as AI coding assistants have made software development more accessible. These tools have enabled employees without traditional programming backgrounds to create functional applications, a practice sometimes called "vibe coding." The ease of spinning up custom tools has prompted some organizations to reconsider their software procurement strategies.

The opportunity cost question

RBC identifies talent allocation as perhaps the most significant hidden expense. Even when building a custom application is technically feasible and financially viable, companies must consider whether their AI-capable employees should spend time replicating existing software rather than developing genuinely novel solutions that could provide competitive advantage.

This opportunity cost doesn't appear as a line item in traditional build-versus-buy analyses, but it may be the most consequential factor for organizations with limited engineering resources.

Why it matters

The calculator provides a reality check for the enthusiasm around AI-powered development. While coding assistants have lowered barriers to software creation, they haven't eliminated the total cost of ownership for business applications. Organizations rushing to build custom alternatives to commercial software may find themselves shouldering unexpected expenses in maintenance, security, and lost opportunity — costs that subscription fees effectively outsource to specialized vendors. The tool gives finance and technology leaders a framework for making these decisions with fuller information.

Business Insider's Alistair Barr first reported on the RBC calculator and its implications for the build-versus-buy debate.