# Build vs Buy Decision

**Framework:** Total-cost + strategic-fit sourcing decision  
**Use for:** Deciding whether to build a capability in-house or buy/license it  
**Time required:** 1–2 hours, with input from engineering and finance

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## How to use this template

1. Cost out BOTH options fully, including the hidden costs. The visible price is the smallest part of the decision.
2. The deciding question is strategic, not financial: is this capability a differentiator or a commodity? Build what makes you different. Buy what everyone needs.
3. Be honest about opportunity cost. Engineering time spent building a commodity is engineering time not spent on the product that wins.
4. Price the exit. Vendor lock-in and the cost of switching later are real and routinely ignored.
5. Revisit the decision when scale changes. "Buy" at 10 customers and "build" at 10,000 can both be right.

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## Header

| Field | Detail |
|-------|--------|
| Capability under decision | [What] |
| Owner | [Name] |
| Date | [Date] |
| Decision deadline | [Date] |

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## Strategic fit — answer this first

| Question | Answer |
|----------|--------|
| Is this a core differentiator or a commodity? | [Differentiator / Commodity] |
| Does owning it build a moat, or just create maintenance? | [Moat / Maintenance] |
| How fast is the off-the-shelf market moving? | [Faster than us / Slower than us] |

*If it's a commodity and the market is moving fast, the bar for "build" should be very high.*

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## Build — full cost

| Cost (visible and hidden) | Estimate |
|---------------------------|----------|
| Engineering to build (FTE-months × loaded cost) | [$] |
| Ongoing maintenance (annual) | [$] |
| Opportunity cost — what this team will NOT build instead | [What / $] |
| Knowledge-concentration risk (bus factor) | [Low / Med / High] |
| Time to a first working version | [Weeks] |

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## Buy — full cost

| Cost (visible and hidden) | Estimate |
|---------------------------|----------|
| License / subscription (annual) | [$] |
| Integration engineering (one-time) | [$] |
| Ongoing integration maintenance | [$] |
| Vendor lock-in / switching cost later | [Low / Med / High] |
| Time to live | [Weeks] |

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## Decision

| Field | Detail |
|-------|--------|
| Decision | [Build / Buy / Buy now, revisit at scale] |
| Primary reason | [Strategic fit / Cost / Speed] |
| Biggest risk in this choice | [What] |
| Trigger to revisit | [Scale / cost / market event] |

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*Build what differentiates you. Buy what doesn't. More on build-vs-buy and unit economics at biztechprimer.com.*