4 Steps to Optimize Your SaaS Costs in 2023

SaaS solutions have revolutionized the way businesses work and grow, but the total amount of apps and subscription costs can easily get out of control. On average, mid-sized companies spend $343,000 annually on SaaS tools. The price may vary between $5,000 and $700,000 or beyond.

The downturn is the time to optimize SaaS costs for your company. Below are 4 steps to help you make the best of your SaaS contracts.

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1. Analyze and get rid of the causes of chaos

Why do SaaS costs often get out of control?

• Ad-hoc and last-minute purchases.

Businesses lose track of their SaaS products and subscriptions. They are subscribing to the app they need at that particular moment or in the moments of panic, rather than taking the time out to look at existing software and how it can best be used. Sometimes they have not tried the product before purchasing or even consider long-term use. Creating regulations for employees on how and when they can purchase new tools could help.

• Managing SaaS spending in a manual way.

It is hard to remember and keep track of what to be renewed and which licenses and subscriptions are no longer needed. Sometimes different departments use solutions with overlapping features. Leverage technology to support your efforts with automated SaaS management solutions. They could help you keep track of your apps and tools.

2. Conduct an inventory check of your current SaaS tools

It could take time to identify and remember all the apps your organization has previously purchased. Start with your project management tools, CRM, security and developer tools, communication apps, and other apps you and your teams use daily.

The initial count can be done manually in our Google Spreadsheet template or in a cloud office such as Notion. It could take more time than expected. Asking employees to understand what apps they’ve purchased for their teams could save you some time.

3. Create a SaaS Spend Management Strategy

On average, about 20% of employees will purchase a SaaS application using a credit card or expense reimbursement. The average mid-market company spends roughly $5,800 per employee each year on SaaS software. Almost half of all SaaS licenses remain unutilized in a given 30-day period. That’s the compelling reason to create a proper strategy and follow it along the way in order to avoid overspending.

• Increase efficiencies by reducing underused licenses and avoiding shelfware, trimming overlapping functionality, and consolidating duplicate subscriptions.
• Plan and use data to forecast future SaaS spend. A continually updated SaaS system of record provides a complete view of your software inventory.

4. Lock in better pricing

• The best time for negotiating is at your vendor’s fiscal year end. Ask about promotional deals and discounts when you renew your contract. Their sales reps are more flexible on discounts during this time.
• It’s possible to lock in better pricing now if you’re willing to commit to more licenses and a longer contract.
• Leverage annual subscription discounts. If now you’re paying monthly for a premium subscription, consider switching for an annual subscription. It’s still possible to pay monthly if you ask your vendor to partner up with a BNPL (Buy Now, Pay Later) app. Such B2B BNPL tools as Comfi let the vendors receive the payment upfront while you can still preserve your runway. To save up to 30% on your SaaS spend, ask your vendors to schedule a demo with Comfi today.

Time to take action

SaaS cost-cutting practices seem so tedious to use, but the downturn is the best time to secure and strengthen your business. The strategies mentioned above are some of the most effective solutions to start with.

Don’t get overwhelmed and start with one strategy at a time and you’ll see expenses coming under control within one or two months.

Let’s talk your revenue together

Amal Abdullaev

Co-founder at Comfi

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