Free tool

Software Total Cost of Ownership Calculator

The build quote is only the down payment. Real total cost of ownership is the build plus every year you host, maintain and support the software. Set your numbers below to see the honest multi-year TCO of a custom build, and where the money actually goes.

How it works

The total cost of ownership (TCO) of custom software is the sum of what you pay once and what you keep paying every year it runs. The build is a single upfront cost; hosting, maintenance and support are recurring, so they scale with your time horizon. Look only at the build quote and you'll routinely under-budget by a wide margin.

Maintenance is the line most teams get wrong. A working system still needs bug fixes, dependency and security updates, and small changes as your business shifts, which is why the accepted planning figure is 15-20% of the original build cost per year. Hosting covers cloud, databases and third-party services; support covers monitoring, on-call and any help desk or SLA you commit to.

This calculator adds those four buckets over your chosen 3, 5 or 7-year window so you can see the real number and, just as important, where it goes, often the running costs quietly overtake the build itself.

TCO = build cost + (hosting/mo × 12 × years) + (build cost × maintenance % × years) + (support/mo × 12 × years)

To pin down the build figure first, run your scope through the software development cost calculator, or weigh custom against off-the-shelf with the build vs buy calculator.

FAQs

What is the total cost of ownership of custom software?
It's the one-time build cost plus every recurring cost of running the software over its life, hosting and infrastructure, ongoing maintenance, and support or operations. Over several years those recurring costs often match or exceed the original build, so TCO is a far more honest number than the build quote alone.
How much should I budget for software maintenance each year?
A widely used planning figure is 15-20% of the original build cost per year, covering bug fixes, dependency and security updates, and small enhancements. Complex or fast-moving products land at the higher end; simple, stable ones can sit lower. Underfunding maintenance is the most common TCO mistake.
Why is TCO higher than the build quote?
The build quote is a one-time cost, but software has to be hosted, maintained and supported for years afterward. Multiply modest monthly hosting and a mid-teens maintenance percentage across a 5-year horizon and the running total frequently rivals the build, which is exactly why comparing TCO, not sticker price, matters.
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