Technical debt costs B2B SaaS companies 15-30% of engineering budgets. Learn how to calculate ROI of addressing technical debt and when to rebuild.
What is Technical Debt?
Technical debt is the cost of shortcuts, quick fixes, and deferred maintenance. It includes code quality issues, outdated dependencies, architectural problems, security vulnerabilities, and infrastructure inefficiencies.
The Cost of Technical Debt
Monthly Impact: 15-30% of engineering budget typically goes to technical debt. For a $50K monthly engineering budget, that's $7,500-$15,000 per month or $90K-$180K annually.
Hidden Costs: Slower feature development (30-40% slower), increased bug rates, security vulnerabilities, developer turnover, and inability to scale.
Calculating Technical Debt ROI
Formula: Monthly Debt Cost = (Engineering Budget × 0.25) + (Cloud Waste) + (Security Risk Cost)
Example: Engineering budget $50K, technical debt 25% = $12,500/month, cloud waste $3,000/month, security risk $2,000/month. Total monthly debt cost: $17,500.
Rebuild ROI: Rebuild cost $85K, new monthly cost $15K (70% reduction), monthly savings $35K, payback period 2.1 months, 5-year ROI 1,733%.
When to Address Technical Debt
Rebuild if: Technical debt >30% of monthly costs, security risks exist, scalability is blocked, or tech stack is obsolete.
Refactor if: Technical debt <20% of monthly costs, architecture is sound, or incremental improvements work.
ROI of Professional Rebuilds
Average Results: 70% reduction in monthly costs, 2.1 month payback period, 1,733% 5-year ROI, 3x faster feature development, 99.99% uptime.
Real Example: Legacy app $50K/month, rebuild $85K, new app $15K/month, savings $35K/month, payback 2.1 months, 5-year ROI 1,733%.