This is one of the few questions where the honest answer isn't "it depends" dressed up — it actually does depend, on one thing specifically: whether your business's website needs to look different from your competitors', or just needs to exist and work.
When a template is genuinely the right call
If you're validating an idea, running a single campaign, or need a professional presence fast and cheap, a well-chosen template is not a compromise — it's the correct decision. Nobody chooses a vendor based on unique typography for a landing page they'll see once. Speed and price should win here, and they usually do.
When custom design earns its cost
Custom design pays for itself when the site itself is part of the pitch — a product company where the UI signals how the product feels, a brand that competes partly on how considered it looks, or a business where "looks exactly like every other theme" quietly costs credibility with the exact customers you want.
The middle ground people don't ask about
Most small businesses actually need something between the two: a structured, no-code build with real brand decisions — a real type system, a real color palette, real photography — but not a from-scratch design system. That's most of what our own Starter Site package is: custom enough to look considered, structured enough to stay fast and affordable.
The one question that actually settles it
Ask yourself: if a competitor used the exact same template with different words, would a customer notice or care? If yes, invest in custom. If honestly no, save the money and ship the template.