Custom Software Maintenance: What It Actually Costs (An Honest Breakdown)

One of the biggest concerns business owners have about custom software is the cost after launch. And it’s a fair concern. With SaaS, you pay your monthly subscription and everything is included — hosting, updates, security, support. With custom software, you’re responsible for all of it.

The problem is that most developers don’t talk about maintenance costs during the sales process. They quote the build, get excited about features, and leave the ongoing costs as a vague “we’ll figure that out later.” Then six months after launch, the business owner discovers they need to budget for things nobody mentioned.

Here’s the honest breakdown. No sugarcoating, no hidden surprises, just the real numbers.

The Four Categories of Ongoing Cost

Custom software maintenance breaks down into four distinct buckets. Understanding each one helps you budget accurately and avoid the “I didn’t know I’d need to pay for that” conversations.

1. Hosting and Infrastructure

Your software needs to live somewhere. Unlike SaaS where the vendor handles this, custom software runs on cloud infrastructure that you pay for directly.

What it includes:

• Server hosting (compute, memory, storage)
• Database hosting
• File storage (documents, images, attachments)
• SSL certificates
• Domain and DNS management
• CDN for performance (optional but recommended)

What it costs:

For a typical business application serving 10-50 users:

Component	Monthly Cost
Application server	$20-$100
Database server	$15-$80
File storage	$5-$30
SSL, DNS, domain	$5-$15
Total	$45-$225/month

For larger applications with heavy traffic, complex data processing, or hundreds of users, hosting can run $300-$800/month. But for most small-to-medium business applications, you’re looking at $100-$200/month.

2. Bug Fixes and Technical Maintenance

Every software system has bugs. Not because developers are incompetent, but because software is complex and edge cases are infinite. A well-built system will have fewer bugs, but zero bugs forever is not realistic.

What it includes:

• Fixing bugs discovered after launch
• Updating dependencies (libraries, frameworks, packages)
• Applying security patches to underlying technologies
• Performance monitoring and optimisation
• Database maintenance (indexing, cleanup, backups)
• Server updates and configuration changes

What it costs:

For the first 3-6 months after launch, expect higher maintenance as you find and fix issues that only emerge with real-world usage. Budget 3-5 hours per month during this period.

After the system stabilises, ongoing technical maintenance typically runs 1-3 hours per month for a well-built application. At developer rates of $150-$200/hour, that’s $150-$600/month.

The industry rule of thumb is that annual maintenance costs roughly 15-20% of the initial build cost. For a $60,000 build, that’s $9,000-$12,000/year, or $750-$1,000/month. This includes both technical maintenance and minor feature work.

3. Security and Compliance

This is the category most businesses don’t think about until something goes wrong. And when it goes wrong with security, it goes very wrong.

What it includes:

• Security patches for frameworks and libraries
• SSL certificate renewals
• Monitoring for vulnerabilities
• Backup management and disaster recovery testing
• Privacy compliance updates (Australian Privacy Act requirements)
• Penetration testing (annually recommended)

What it costs:

Most security maintenance is bundled into general technical maintenance. The ongoing cost is minimal if your developer stays on top of dependency updates and security patches — typically 1-2 hours per month.

However, budget separately for:

Security Item	Cost	Frequency
Automated backup system	$10-$50/month	Ongoing
Security monitoring tools	$0-$30/month	Ongoing
Annual security review	$1,000-$3,000	Yearly
Penetration testing	$2,000-$5,000	Yearly (recommended)

For most small business applications, the annual security budget adds $2,000-$5,000 beyond regular maintenance. For applications handling sensitive data (financial, medical, personal), budget higher.

4. Feature Development and Enhancements

This isn’t maintenance in the traditional sense, but it’s the ongoing cost that most businesses underestimate.

Your business changes. Processes evolve, new services get added, regulations shift, customer expectations rise. Your software needs to keep pace.

What it includes:

• New features requested by your team
• Workflow modifications as processes change
• New integrations with other systems
• Reporting and dashboard updates
• UI improvements based on user feedback
• Mobile optimisations or new access methods

What it costs:

This varies wildly depending on how actively you want to evolve the software. Some businesses are happy with the initial build for years. Others want monthly improvements.

A reasonable budget for ongoing development is $500-$2,000/month, allocated in blocks or sprints. Some months you’ll use it, others you won’t. Having the budget earmarked means you can respond to business changes without treating every improvement as a new project.

The Full Picture: Year-by-Year Costs

Here’s what a realistic five-year cost profile looks like for a $60,000 custom build:

Cost Category	Year 1	Year 2	Year 3	Year 4	Year 5
Development	$60,000	—	—	—	—
Hosting	$2,400	$2,400	$2,400	$2,400	$2,400
Maintenance & bugs	$6,000	$4,800	$4,800	$4,800	$4,800
Security & backups	$3,000	$3,000	$3,000	$3,000	$3,000
Feature development	$6,000	$12,000	$12,000	$8,000	$8,000
Annual Total	$77,400	$22,200	$22,200	$18,200	$18,200
Cumulative	$77,400	$99,600	$121,800	$140,000	$158,200

Year one is heavy because of the build cost. From year two onwards, total ongoing costs of $18,000-$22,000/year are typical. That’s $1,500-$1,850/month for a system that would cost $3,000-$6,000/month as SaaS subscriptions for a 25-30 person team.

How to Keep Maintenance Costs Low

Not all custom software costs the same to maintain. The decisions made during development have a massive impact on ongoing costs.

Invest in quality upfront. A well-architected, well-tested, well-documented codebase costs more to build and dramatically less to maintain. The $40,000 build with no tests and no documentation will cost more to maintain over five years than the $60,000 build that was done properly.

Use standard technologies. Software built on widely-used frameworks (React, Node.js, Python, PostgreSQL) is cheaper to maintain because any competent developer can work on it. Exotic or proprietary tech stacks mean fewer available developers and higher rates.

Insist on documentation. Your developer should document the architecture, the database schema, the API endpoints, and the deployment process. This isn’t optional — it’s insurance. If you need to switch developers, documentation is the difference between a smooth handover and a costly reverse-engineering project.

Set up monitoring from day one. Automated monitoring catches problems before your team does. Server down? You know immediately. Database filling up? You get an alert. Error rate spiking? It’s flagged before customers notice. Monitoring costs $20-$50/month and saves thousands in emergency fixes.

Schedule regular maintenance. Don’t wait for things to break. A monthly maintenance window — updating dependencies, reviewing performance, checking backups — prevents small issues from becoming expensive emergencies.

The Maintenance Agreement

When you engage a developer or agency for custom software, clarify the maintenance arrangement before the build starts. Key things to agree on:

Response times. What happens when something breaks at 2pm on a Tuesday versus 10pm on a Saturday? Define expected response times for critical issues (system down), moderate issues (feature broken but workaround available), and low-priority requests (minor bugs, cosmetic issues).

What’s included. Is bug fixing included in the maintenance fee, or billed separately? Most arrangements include bug fixes in the retainer and bill new features separately. Get this in writing.

Rate and billing structure. Monthly retainer (predictable) or hourly as-needed (flexible)? Retainers are better for budgeting. Hourly is better if your needs are minimal and sporadic. Some developers offer hybrid models — a small retainer for priority support plus hourly for additional work.

Code ownership. Confirm you own the source code and can take it to another developer if the relationship ends. This should have been established during the build contract, but verify it covers maintenance-phase code as well.

The Honest Comparison

Custom software maintenance is real, ongoing, and non-negotiable. But so is SaaS — you’re just paying someone else to handle it, bundled into a per-user fee that scales against you.

The question isn’t whether maintenance costs exist. It’s whether you’d rather pay $1,500-$2,000/month for a system you own, control, and can modify — or $3,000-$6,000/month for a system someone else owns, controls, and modifies on their schedule.

Both are legitimate choices. But make sure you’re comparing the real numbers, not the sticker price of SaaS against the full lifecycle cost of custom. When you lay them side by side honestly, the gap is rarely as wide as people assume — and often favours custom by year two or three.