An app builder needs a custom solution and is considering using either AppExchange or their...

The best option is a managed package from AppExchange.

Managed packages are designed for distributed apps where the provider can deliver upgrades. Salesforce documentation states that upgrades are supported for managed packages only. This reduces manual maintenance compared with unmanaged packages or custom open-source development, where updates typically require more manual replacement, deployment, or rework.

Why not the others? Unmanaged packages and open-source custom development can be useful, but they do not provide the same upgrade path and vendor-managed maintenance model as a managed AppExchange package.

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