At a certain team size, per-seat SaaS pricing stops being a convenience and starts being a material line item. We examine the thresholds where self-hosted alternatives become financially and operationally justified.
Most businesses adopt SaaS tools one at a time, solving immediate problems with fast onboarding and predictable monthly billing. At five or ten employees, this is sensible. The math changes at thirty.
The Compounding Problem
Per-seat pricing is designed to scale with vendor revenue, not with your business efficiency. A tool that costs $12 per seat per month at ten employees costs $360 per month. At fifty employees, that same tool is $600 per month — and you likely have twelve such tools.
Run that calculation across a realistic SaaS stack for a 40-person company:
- —Team communication: $8/seat/month
- —Project management: $15/seat/month
- —Document collaboration: $12/seat/month
- —CRM: $25/seat/month
- —Support ticketing: $20/seat/month
- —Password management: $4/seat/month
- —Video conferencing: $16/seat/month
That's $100 per seat per month across seven tools — $4,000 per month for a 40-person team, or $48,000 annually. For tools where your organization generates and owns the data.
Where the Threshold Lies
The financial threshold for self-hosted alternatives typically appears somewhere between 25 and 40 employees, depending on the tool category. This is also where governance requirements start to matter: a team of that size likely has some regulatory exposure, client data obligations, or internal policy requirements that consumer SaaS tools weren't built to satisfy.
The operational threshold is a separate question. Self-hosting requires deployment, maintenance, upgrades, and monitoring. For most teams at 25–40 people, there's no internal capacity to take this on reliably. This is where managed self-hosting addresses the gap — you get the economics and control of ownership without carrying the operational overhead.
The Right Questions to Ask
The decision isn't binary. Not every SaaS tool should be replaced. The right analysis asks:
Volume exposure: How much are you paying, and how does that scale with headcount over the next two years?
Data sensitivity: What category of data flows through this tool? Would you prefer it stayed in your environment?
Customization ceiling: Are you working around the tool's limitations because it wasn't designed for your workflows?
Vendor dependency: How locked in are you? What would a migration cost if the vendor changes pricing, terms, or discontinues the product?
Operational complexity: How complex is the self-hosted equivalent to deploy and maintain? Is managed operation available?
For tools scoring high on the first three and low on the last, the case for replacement is strong. For tools with low volume exposure and high operational complexity, SaaS may remain the right answer.
A Practical Starting Point
Most businesses benefit from starting with one or two replacements rather than a full migration. Communication and document collaboration are typically high-volume, well-supported by open-source alternatives, and operationally straightforward to run at a managed level.
The goal isn't to eliminate SaaS. It's to stop paying for infrastructure you could own, govern, and control — where the math and operational conditions support it.
Related: how TrySelfHost approaches SaaS replacement
If you're evaluating whether open-source replacements make financial and operational sense for your stack, our SaaS Stack Replacement engagement begins with a structured assessment of your current tools, costs, and replacement feasibility. We also cover Governance & Security Controls as part of every migration — because the compliance benefits are often as valuable as the cost reduction.