Custom software (also known as tailor-made software) is software that is specially developed for a specific client. As such, it can be contrasted with the use of software packages developed for the mass market, which a firm decides to ignore market segment differences and appeal to the whole market with one offer or one strategy, such as commercial off-the-shelf (COTS) software.

Custom software development is often considered expensive compared to off-the-shelf solutions or products. This can be true if one is speaking of typical challenges and typical solutions. However, it is not always true; custom software development by a reputable supplier is often a matter of building a house upon a solid foundation and, if managed properly, it is possible to do this quickly and to a high standard. In many cases, COTS software requires customization to correctly support the buyer's operations. The cost and delay of COTS customization frequently adds up to the expense of developing custom software.

The decision to build a custom software or go for a COTS implementation would usually reside on one or more of the following:
a) Finances - Cost and Benefit: The upfront license cost for COTS products mean that a thorough cost-benefit analysis of the business case needs to be done.
b) Time to market: COTS products usually have a lesser time to market.
c) Size of implementation: COTS comes with standardization of business processes and reporting. For a global and national player, these bring in gains in cost savings, efficiency and productivity.