How to Evaluate Build vs Buy Decisions
Build vs buy is one of the most consequential decisions a PM makes. Building gives you control and customization but costs engineering time. Buying gives you speed but creates vendor dependency.
This guide provides a framework for evaluating build vs buy decisions systematically.
Step-by-step guide
Step 1: Assess core vs context
Is this capability core to your product (differentiating, competitive advantage) or context (necessary but not differentiating)? Core capabilities should usually be built. Context capabilities should usually be bought. Email sending is context for most products. Recommendation algorithms are core for Netflix.
Step 2: Calculate true cost of building
Include development time, testing, documentation, maintenance (ongoing), infrastructure, and on-call burden. Most teams underestimate ongoing maintenance: multiply the initial build estimate by 3-5x for the first-year total cost including maintenance.
Step 3: Evaluate vendor risk
Assess vendor risk: financial stability, product roadmap alignment, data portability, and lock-in degree. If the vendor goes down or changes pricing, what is your mitigation plan? Higher vendor risk favors building.
Step 4: Consider speed to market
If time-to-market is critical (competitive pressure, window of opportunity), buying is often right even for core capabilities. You can always build a replacement later. You cannot recover lost market timing.
Step 5: Make the decision reversible
If possible, structure the decision to be reversible: buy first with an abstraction layer so you can swap to built later, or build a minimal version with plans to evaluate vendors if the minimal version is insufficient.
Common mistakes
Not invented here syndrome
Engineering teams often prefer to build because it is more interesting. Buying context capabilities lets engineers focus on core product work where they create the most value.
Ignoring maintenance costs
The initial build is a fraction of the total cost. Ongoing maintenance, upgrades, and on-call support are the real expense. Factor these into the build cost before deciding.
Tips
- Create a decision document: criteria, options, evaluation, recommendation
- Revisit build vs buy decisions annually: the landscape changes
- If you buy, maintain an abstraction layer so switching vendors is possible
How Vantage helps
Vantage helps PMs evaluate build vs buy by connecting codebase context to PRD generation. When generating a spec, the AI can reference your existing architecture to assess integration complexity with vendor solutions.