ScriptThe two ways to pay for business software
- SaaS (subscription): you pay every month or year, often per user or per employee. The software and your data live on the provider's servers. Stop paying and you lose access.
- Self-hosted (one-time): you buy a license once and install it on your own hosting or server. You pay for hosting, and the software keeps working whether or not you buy anything else.
Neither is always better. The honest answer depends on your numbers — so let's calculate them.
The formula
Compare the total over the time you expect to use the software. Three years is a fair period for most small businesses.
Self-hosted total = license price + (hosting per month × 36) + your setup time
A worked example
The figures below are examples only, to show how the comparison works. Replace them with real quotes for your own business.
Imagine a business with 20 staff that needs an attendance system.
| SaaS (example) | Self-hosted (example) | |
|---|---|---|
| Software | $3 per employee per month | $24 one-time license |
| Hosting | included | $5 per month (basic shared hosting) |
| Year 1 | $720 | $84 |
| 3 years | $2,160 | $204 |
| If you grow to 40 staff | doubles to $4,320 | stays the same |
In this example the subscription costs about ten times more over three years — and the gap grows with every new employee, because per-user pricing scales with your team while a self-hosted license usually does not.
Costs people forget
On the SaaS side
- Price rises at renewal
- Extra charges for features, branches, devices or API access
- The cost of moving your data out if you ever leave
On the self-hosted side
- Your time to install it (an hour or two with a guided installer)
- Backups — you are responsible for them
- A domain name, if you do not already have one
When SaaS is the better choice
- You have only a few users and need the tool for a short time
- Nobody on your team can manage a hosting account, even with help
- You need features that only a large provider offers
When self-hosted is the better choice
- Your team is growing, so per-user prices keep rising
- You want your data on your own server
- You already pay for hosting (for your website, for example)
- You want to change the software to fit your business — with the source code you can
The bottom line
Do the three-year math with your own numbers before you sign up for anything per user. For many small and growing businesses, a one-time license on hosting they already have is the cheaper and more independent choice.