Your head of product says: "We need AI features to stay competitive."
Your CFO asks: "What's this going to cost?"
You have three options: build in-house, hire an agency, or buy SaaS tools. Each has wildly different costs, timelines, and outcomes.
Here's the real math, based on working with 20+ B2B SaaS companies over the past 18 months.
The Three Approaches
Option 1: Build In-House (Hire an AI Team)
What this looks like:
- Hire 2-3 AI/ML engineers (full-time)
- 3-6 months to build initial features
- Ongoing iteration and maintenance
Option 2: Agency/Consultancy (Like Agensphere)
What this looks like:
- Fixed scope project or retainer engagement
- 6-12 weeks to production
- Transfer code ownership, you maintain
Option 3: Buy Off-the-Shelf (SaaS Tools)
What this looks like:
- Integrate third-party AI tools (chatbot platforms, AI APIs)
- 1-4 weeks to integrate
- Monthly subscription fees, no customization
Let's break down the real costs of each.
Option 1: In-House Team - The $500K+ Reality
Year 1 Costs:
Salaries:
- Senior ML Engineer: $180K-250K
- AI Product Manager: $150K-200K
- Data Engineer (part-time): $80K-120K (50% allocation)
- Total salaries: $410K-570K/year
Infrastructure:
- GPU compute (AWS/GCP): $1K-$3K per month = $12K-$36K per year
- Vector databases: $500-$2K per month = $6K-$24K per year
- Monitoring/logging tools: $500 per month = $6K per year
- Total infrastructure: $24K-$66K per year
Tooling & APIs:
- OpenAI/Anthropic API credits: $2K-$10K per month = $24K-$120K per year
- Fine-tuning costs: $5K-20K one-time
- Development tools (IDEs, testing): $5K/year
- Total tooling: $34K-145K/year
Hidden costs:
- Recruiting fees (20% of salary): $82K-114K one-time
- Onboarding time (3 months unproductive): $100K+ opportunity cost
- Failed experiments (expected): $50K+ in wasted compute/time
- Total hidden: $232K+ one-time
Grand total Year 1: $700K-1M+
Timeline to production: 6-12 months (includes hiring, onboarding, building)
When This Makes Sense
You should build in-house if:
- AI is your core product (e.g., you're building an AI-native SaaS)
- You need ongoing model research (not just integration)
- You plan to hire 5+ AI engineers eventually
- You have $5M+ in funding or revenue
Example companies:
- Midjourney (AI image generation = core product)
- Jasper (AI writing = core product)
- Perplexity (AI search = core product)
You should NOT build in-house if:
- AI is a feature, not the product
- You need production features in less than 6 months
- Your engineering team is under 20 people
- Budget is constrained
Option 2: Agency Build - The $40K-100K Range
Typical engagement costs (using Agensphere as example):
Tier 1: Intelligence Integration ($15K-28K/month, 2-3 month engagement)
- Integrate AI into existing product
- Build RAG systems, embeddings pipelines
- Total: $30K-84K
Tier 2: Custom Intelligence Layer ($28K-45K/month, 2-4 month engagement)
- Multi-agent systems
- Custom model training
- Full architecture design
- Total: $56K-180K
Tier 3: Enterprise AI Systems ($45K+/month, 4-6 month engagement)
- Company-wide AI infrastructure
- Total: $180K-270K+
What you get:
- Dedicated team (2-4 engineers)
- Production-ready code in 6-12 weeks
- Complete code ownership (you keep everything)
- Optional ongoing support (separate retainer)
Hidden costs:
- Your team's time (product manager, engineer for handoff): $10K-$20K equivalent
- Ongoing API costs (if using OpenAI/Anthropic): $500-$5K per month
- Infrastructure hosting: $100-$1K per month
Grand total: $50K-$200K one-time + $600-$6K per month ongoing
Timeline to production: 6-12 weeks
When This Makes Sense
You should use an agency if:
- You need production-ready AI features in 2-3 months
- You don't want to hire a full AI team
- You want to own the code (not depend on SaaS)
- Budget is $50K-200K for initial build
Example use cases:
- SaaS adding AI-powered search
- B2B platform adding intelligent recommendations
- Customer support tool adding AI triage
- Internal tool for AI-assisted workflows
You should NOT use an agency if:
- You need ongoing model research (agencies build, don't research)
- Your budget is under $30K
- You're okay with SaaS vendor lock-in
- You need something off-the-shelf (no customization)
Option 3: SaaS Tools - The $500-$5K Per Month Trap
Common AI SaaS tools:
- Chatbot platforms (Intercom, Drift AI): $500-$2K per month
- AI search (Algolia AI, Elasticsearch): $1K-$5K per month
- Document AI (DocuSign AI, Adobe): $500-$3K per month
- Customer support AI (Zendesk AI, Freshdesk): $1K-$3K per month
Year 1 costs:
Subscriptions:
- Primary tool: $1K-$5K per month = $12K-$60K per year
- Additional seats/usage: $500-$2K per month = $6K-$24K per year
- Total subscriptions: $18K-$84K per year
Integration work:
- Engineering time to integrate: $10K-$30K one-time
- Custom API work (if needed): $5K-$15K
Hidden costs:
- Usage overages (message limits, API calls): $2K-$10K per year
- Vendor lock-in (switching costs if you leave): $20K-$50K
- Feature limitations (can't customize beyond what vendor offers): Opportunity cost
Grand total Year 1: $35K-140K
Timeline to production: 1-4 weeks
When This Makes Sense
You should use SaaS tools if:
- You need something live in less than 1 month
- Your use case is standard (common chatbot, basic AI search)
- You're okay with vendor limitations
- Budget is under $50K
- You don't care about code ownership
Example use cases:
- Basic customer support chatbot
- Simple document search
- AI email drafting for sales team
- Internal FAQ bot
You should NOT use SaaS if:
- Your use case requires customization
- You're worried about vendor lock-in
- You need to control costs at scale (usage-based pricing explodes)
- Data privacy/compliance is critical
The Hidden Costs Everyone Misses
Opportunity Cost of Speed
Scenario: Your competitor ships AI features 6 months before you.
Cost: Lost market share, customers choosing them, harder sales cycles.
Math: If AI features increase conversion by 10%, and you close $500K/year in new business, 6 months delay = $25K-50K lost revenue.
Who wins on speed:
- SaaS tools: 1-4 weeks (fastest)
- Agency: 6-12 weeks
- In-house: 6-12 months (slowest)
Maintenance and Iteration
Year 2+ costs:
In-house:
- Salaries continue: $410K-570K/year
- Infrastructure: $24K-66K/year
- Iteration budget: $50K-100K/year
- Total: $484K-736K/year ongoing
Agency:
- Optional retainer: $10K-30K/month = $120K-360K/year
- Or: DIY maintenance with your team: $50K-100K/year
- Total: $50K-360K/year (you choose)
SaaS:
- Subscriptions: $18K-84K/year (same as Year 1)
- Overages increase as you scale: +$10K-30K/year
- Total: $28K-114K/year (but no control over pricing)
Flexibility and Ownership
What happens when your needs change?
In-house:
- Full control: Pivot freely
- Cost: Existing team can adapt
Agency:
- You own the code: Modify yourself or hire agency again
- Cost: $0 if DIY, $10K-50K if agency helps
SaaS:
- Vendor lock-in: Can't customize beyond API limits
- Cost: Switch to new vendor ($20K-50K migration) or build from scratch
Real-World Comparison: Same Feature, Three Approaches
Let's compare building AI-powered customer support triage (routes tickets to right team, suggests answers).
Approach 1: In-House
Timeline: 9 months (3 months hiring, 6 months building)
Cost:
- Year 1: $750K (salaries + infrastructure)
- Year 2: $550K (ongoing team)
- Total 2-year: $1.3M
Outcome: Fully custom system, exactly what you want, ongoing iteration
Approach 2: Agency (Agensphere Tier 1)
Timeline: 10 weeks
Cost:
- Build: $60K (3 months @ $20K/month)
- Ongoing: $50K/year (your team maintains)
- Total 2-year: $160K
Outcome: Production-ready system, you own code, moderate customization
Approach 3: Zendesk AI Add-On
Timeline: 2 weeks
Cost:
- Year 1: $36K ($3K/month subscription)
- Year 2: $42K (price increase + overages)
- Total 2-year: $78K
Outcome: Working system quickly, limited customization, vendor dependency
Which wins?
- Cheapest 2-year cost: Zendesk ($78K)
- Best customization: In-house ($1.3M)
- Best value: Agency ($160K) - Balance of custom + cost + speed
Our Recommendation: The Staged Approach
Most B2B SaaS companies should follow this path:
Stage 1: Validate with SaaS (Months 1-3)
Goal: Prove AI features drive value
Action: Use off-the-shelf tools (Intercom AI, Algolia, etc.)
Cost: $5K-15K
Outcome: Learn what users actually want, validate hypothesis
Stage 2: Build Custom (Months 4-6)
Goal: Own your AI stack, optimize costs
Action: Hire agency to build production system
Cost: $50K-150K
Outcome: Custom system, code ownership, no vendor lock-in
Stage 3: Hire In-House (Year 2+)
Goal: Continuous innovation, research capabilities
Action: Hire 1-2 AI engineers to iterate on agency-built foundation
Cost: $200K-400K/year
Outcome: In-house team building on proven foundation (not starting from scratch)
Why this works:
- Avoid wasting 6 months building wrong thing
- Validate before big investment
- Agency accelerates you past MVP stage
- In-house team has working codebase to start from
Decision Framework: Which Option For You?
Answer these questions:
1. What's your timeline?
- Need production in less than 1 month → SaaS
- Need production in 2-3 months → Agency
- Timeline flexible (6+ months) → In-house
2. What's your budget?
- Less than $30K → SaaS
- $30K-200K → Agency
- $200K+ → In-house or Agency
3. How custom is your use case?
- Standard (chatbot, search) → SaaS
- Moderately custom (tailored workflows) → Agency
- Highly custom (novel AI research) → In-house
4. Do you want to own the code?
- No (okay with vendor) → SaaS
- Yes (but don't want to maintain) → Agency initially, then decide
- Yes (and want full control) → Agency or In-house
5. How critical is AI to your product?
- Nice-to-have feature → SaaS
- Competitive differentiator → Agency
- Core product value → In-house
How Agensphere Fits In
We're the agency option, optimized for B2B SaaS companies who:
- Need production AI in 6-12 weeks (not 6-12 months)
- Want to own the code (not rent from SaaS)
- Don't want to hire a full AI team yet
- Budget $50K-200K for initial build
What makes us different:
- Complete ownership: You keep all code, no licensing fees
- Production focus: We build systems that ship, not research projects
- Fixed timeline: 2-week guarantee on prototypes
- No lock-in: After handoff, you can maintain or hire us for ongoing work
Pricing:
- Tier 1: $15K-28K/month (2-3 month engagements)
- Tier 2: $28K-45K/month (2-4 month engagements)
- Tier 3: $45K+/month (enterprise)
Not sure which approach makes sense for your use case? Let's talk and we'll help you decide (even if that means recommending a SaaS tool over working with us).
Questions about build vs. buy? Email hello@agensphere.com