ROI & Business Case · 9 min read

The ROI of Custom Hiring Software

What does a custom hiring system actually deliver? A detailed ROI calculation with real numbers, break-even analysis, and comparison with SaaS.

Door Ingmar van Maurik · Founder & CEO, Making Moves

Why ROI is the right lens

The decision to build your own hiring system is an investment, not a purchase. And every investment deserves a fair ROI analysis. Yet we see that most companies considering custom software make the calculation too simple: they only compare initial build costs with the monthly SaaS license.

That is like comparing the cost of a house with one month of rent. You miss the complete picture.

In this article we present a complete ROI calculation for custom hiring software. We include all cost items, both visible and hidden, and calculate returns in the short and long term. With concrete numbers you can adjust to your situation.

The costs: honest and complete

Initial investment

The initial investment for a custom hiring system depends on scope. We distinguish three levels:

ScopeFeaturesInvestment

|-------|----------|------------|

BasicATS + custom flow + basic assessments25,000 - 50,000 euros ExtendedBasic + AI scoring + analytics + integrations50,000 - 100,000 euros EnterpriseExtended + predictive models + multi-entity + custom AI100,000 - 200,000 euros

For comparison: an extended SaaS stack costs 20,000 to 60,000 euros per year in licenses. The initial investment in custom software is thus equal to 1 to 5 years of SaaS costs.

Ongoing costs

After the initial build, there are ongoing costs:

  • Hosting and infrastructure: 200 to 1,000 euros per month, depending on volume
  • Maintenance and updates: 500 to 2,000 euros per month for security patches, bug fixes, and minor improvements
  • Further development: optional, 1,000 to 5,000 euros per month for new features

    • Total annual ongoing costs typically range between 8,400 and 36,000 euros. Compare that with SaaS costs of 20,000 to 60,000 euros per year, and the savings become visible even in the first year.

    Hidden SaaS costs that disappear

    When switching to custom software, various hidden SaaS costs disappear:

  • Integration middleware like Zapier or custom API connections: 1,200 to 6,000 euros per year
  • Add-on modules for assessments, advanced analytics, or AI: 3,000 to 15,000 euros per year
  • Data export and migration costs with every vendor switch: 2,000 to 10,000 euros per occurrence
  • Productivity loss from tool switching and manual data transfer: 15,000 to 40,000 euros per year in recruiter time

    • The returns: concrete and measurable

    Return 1: lower cost-per-hire

    An integrated system streamlines the entire hiring process. The impact on cost-per-hire is substantial:

    Fewer tools means lower license costs and less overhead.

    Faster process means fewer recruiter hours per hire. If your time-to-hire drops from 40 to 25 days, you save an average of 8 to 15 recruiter hours per vacancy.

    Better sourcing through data showing which channels deliver the best candidates, instead of posting on all channels simultaneously.

    ScenarioHires/yearSavings per hireTotal savings

    |----------|-----------|-----------------|---------------|

    Small company501,500 euros75,000 euros Mid-sized1502,000 euros300,000 euros Large5002,500 euros1,250,000 euros

    Return 2: fewer bad hires

    This is the largest return but also the most underestimated. As described in our article about the cost of a bad hire, a bad hire costs an average of 50,000 to 150,000 euros in direct and indirect costs.

    With predictive hiring and integrated assessments, the percentage of bad hires drops measurably:

    MetricWithout systemWith systemDifference

    |--------|---------------|-------------|-----------|

    Bad hire rate30-40%15-20%15-20 percentage points Cost per bad hire75,000 euros (avg.)75,000 euros (avg.)- Bad hires at 150 hires/year45-6022-3023-30 fewer Annual savings--1,725,000 - 2,250,000 euros

    Even if you calculate conservatively and assume only half of this saving is directly attributable to the system, you are talking about hundreds of thousands of euros per year.

    Return 3: higher recruiter productivity

    Recruiters working with an integrated system are demonstrably more productive:

  • 30 percent less time on administration and tool switching
  • 50 percent faster screening through AI support
  • More time for valuable work like candidate relationship management and employer branding

    • For a team of 5 recruiters with an average salary of 55,000 euros, the productivity gain is equivalent to 1 to 2 extra recruiters without the additional labor costs.

    Return 4: better candidate experience

    A seamless candidate experience leads to:

  • Higher completion rates: more candidates finish the process
  • Better employer brand: candidates share positive experiences
  • Higher acceptance rates: top candidates choose you more often

    • The value is difficult to calculate exactly but is significant. Companies with high-converting job pages and a streamlined process demonstrably attract better talent.

    Return 5: strategic data value

    As we describe in our article about hiring as an asset, a custom system accumulates valuable data that becomes worth more over time. This value is the hardest to quantify but potentially the greatest.

    The ROI calculation: a concrete example

    Let us calculate a concrete example for a company with 150 hires per year.

    Investment

    ItemAmount

    |------|--------|

    Initial build (extended scope)80,000 euros Ongoing costs year 118,000 euros Total year 198,000 euros Ongoing costs year 218,000 euros Further development year 224,000 euros Total year 242,000 euros

    Returns

    ItemYear 1Year 2

    |------|--------|--------|

    SaaS license savings35,000 euros35,000 euros Lower cost-per-hire (150 x 1,500)225,000 euros225,000 euros Fewer bad hires (conservative, 10 avoided x 50,000)500,000 euros500,000 euros Recruiter productivity gain55,000 euros55,000 euros Total returns815,000 euros815,000 euros

    ROI

    MetricYear 1Year 2Cumulative

    |--------|--------|--------|------------|

    Investment98,000 euros42,000 euros140,000 euros Returns815,000 euros815,000 euros1,630,000 euros Net result717,000 euros773,000 euros1,490,000 euros ROI732%1840%1064%

    Even if you adjust the returns down by 50 percent for a conservative estimate, the ROI is already positive in the first year.

    Break-even analysis

    The break-even point, the moment the investment is recouped, typically falls after:

  • 3 to 6 months for companies with 200+ hires per year
  • 6 to 12 months for companies with 100-200 hires per year
  • 12 to 18 months for companies with 50-100 hires per year

    • When it does not pay off

    Honesty demands: custom hiring software is not the right choice for every company. It probably does not pay off if:

  • You do fewer than 30 hires per year, the economies of scale are too small
  • Your hiring process is fully standard and requires no customization
  • You have no long-term vision of hiring as a strategic function
  • You lack the budget for the initial investment and are not willing to finance it

    • In those cases, a SaaS tool is the better option. But as soon as you grow beyond 50 hires per year and your hiring becomes more complex, the balance shifts quickly.

    Key takeaways

  • The ROI of custom hiring software must include complete costs and returns, not just license costs
  • The initial investment ranges from 25,000 to 200,000 euros depending on scope
  • Ongoing costs are typically 40 to 60 percent lower than a comparable SaaS stack
  • The largest return comes from fewer bad hires, followed by lower cost-per-hire and higher productivity
  • The break-even point typically falls after 3 to 12 months
  • Custom software pays off most for companies with 50+ hires per year that view hiring as a strategic function

    • Want an ROI calculation specific to your situation? Schedule a free conversation and we will create a custom analysis. Or first read more about the costs of your current ATS to establish your starting point.

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