SaaS Spend per Employee

Software now accounts for 12.5% of a company’s overall expenditure – and, counter-intuitively, may be the most volatile.

To avoid costs running out of control, a popular and powerful metric to track is SaaS spend per employee – and how this compares to industry benchmarks. 

This metric is important for two reasons.

Firstly, for cost management, as it helps identify opportunities for consolidation, renegotiation, or optimization of an organization’s software portfolio. Secondly, it can help procurement and finance leaders understand if they’re overspending relative to the size of their workforce, their industry, and within specific departments.

The average amount spent on SaaS per employee

As of March 2025, companies are spending an average of $9,000 per employee annually on SaaS. This represents a 5% increase since March 2024, and a significant 30% rise in just 1.5 years since Q3 2023.

Although the rate of growth has slowed, the cost per employee remains high due to three core factors:

• Rising software prices – SaaS prices are up by 11.3% in the last 12 months – a stark difference from the 2.7% average market inflation rate of G7 countries.
• Workforce reductions – Almost every industry has been hit by RIFs in the last 24 months, but per-user SaaS contracts can rarely be adjusted in parallel, resulting in the cost per employee rising sharply. 
• The growing use of SaaS point solutions – As SaaS stacks grow, as do integration costs, while economies of scale decrease.

SaaS spend per employee by department

Sales and Marketing SaaS spend has dropped compared to 2023

There has been a steady quarterly increase in SaaS spend per employee across all departments – with the notable exceptions of Sales and Marketing, both of which have decreased by 3% and 2.5% respectively in the last year and a half.

One likely reason for this decline is the speed in which vendors in these areas have expanded their functionality, resulting in many suddenly overlapping with one another within customers’ existing tech stacks.

In addition to this, Marketing and Sales teams have been noticeably faster than most other departments to adopt AI and AI-enabled tools, the impact of which has been to shrink the overall size of some stacks.

Despite the drop from 2023 to 2025, Marketing and Sales SaaS spend per employee has now begun creeping upwards again, just as it has for all other departments – albeit still at a slower rate. Over the past 12 months, spend in these areas has increased by 3% and 4% respectively, compared to an 8% rise in HR and Engineering.

SaaS spend per employee varies significantly across departments

In addition to the differences in growth rates, there is a stark contrast in the actual amount being spent on software per employee across departments.

For those in Finance, the cost of SaaS is more than double that of HR and Engineering teams. This disparity can largely be attributed to the high cost of financial software solutions such as ERPs and business planning tools, as well as the fact that Finance teams’ SaaS requirements are high, while their team size is low, inflating the cost per employee.  

In contrast, while the headcount in Engineering departments tends to be comparable to that of Sales and Marketing, SaaS spend per employee is substantially lower – $6,750, compared to $10,250 for Sales and $13,250 for Marketing.

The higher SaaS spend in Sales and Marketing can be partly explained by the continued reliance on high-cost tools, including CRMs and sales enablement platforms. This is despite the increased adoption of AI solutions to replace some of the more expensive platforms, including sales intelligence software.

SaaS spend per employee by company size

Between Q1 2024 and Q1 2025, SaaS spend per employee increased across all company sizes

Enterprise organizations – which are typically the most cost-efficient per employee – saw a 28% increase, highlighting that no company is immune to rising software costs or shifting vendor pricing dynamics.

Mid-market companies experienced the sharpest rise at 40%, reflecting their need for enterprise-level tools without the pricing power of larger organizations.

While SMBs experienced the lowest percentage increase at 21%, this still marks a significant jump – driven in part by rising list prices and aggressive vendor bundling strategies. Many software providers are consolidating multiple features into higher-tier plans, forcing companies to pay for functionality they don’t require just to access essential tools.

"The shift towards bundled SaaS pricing is a classic example of the cyclical nature of software monetization. Jim Barksdale's famous quote, "there are only two ways to make money in business: bundling and unbundling", rings especially true in the current market. Many vendors are consolidating features into higher-tier plans, often under the guise of simplifying pricing, but in reality, it's a strategy to increase ARPU.

This often means higher SaaS spend per employee as comanies of all sizes end up paying for features they don't need, just to access core functionality. Major vendors have leveraged this approach for years, but it has become more aggresive in a high-growth SaaS market, compounded by per-seat pricing. Once vendors shift customers to a bundled model, they have little incentive to offer more flexible pricing unil market pressure forces them to. The real question is whether we are nearing that tipping point or if companies will simply have to accept rising costs in the short term." Nick Riley, Head of Procurement EMEA

SaaS spend per employee by industry

IT and Healthcare’s SaaS spend per employee is significantly higher than for other sectors

As of Q1 2025, IT companies are spending $10,050 per employee annually on SaaS tools, while Healthcare organizations are spending slightly more at $10,150. These figures are notably higher than those in Financial & Professional Services and Retail & Consumer Goods, where spending stands at $8,750 and $7,750, respectively.

In contrast, the Media & Entertainment sector spends significantly less, with SaaS costs per employee averaging just $3,250 – and the only sector to have consistently dropped quarterly since late 2023. The lower overall spend is largely due to the fact their software needs are generally less complex and specialized, focusing more on creative tools, CMS platforms, and operational software, as opposed to the more expensive industry-specific solutions required in sectors such as Healthcare.

Meanwhile, based on our client engagements in this sector, the sharp decline in spend can arguably be attributed to the fact that media companies are increasingly replacing expensive legacy software with cheaper AI-powered tools for image and video generation.

Companies in the Finance and Professional Services sector are spending less on software per employee now than a year ago

Companies in the Finance and Professional Services sector are also spending less on software per employee in 2025 than they were the previous year, with the average dropping from $9,500 to $8,750.

One reason contributing to this decline is that these sectors are increasingly developing their own tools in-house, moving away from third-party subscriptions in favor of applications tailored to their specific needs and taking advantage of generative AI to both reduce their development costs and increase functionality.  

How to mitigate rising spend per employee

The rise of SaaS spend per employee presents a growing challenge for many organizations. With software prices rising by 11.3% annually, and companies now relying on an average of 132 applications, businesses must take strategic steps to mitigate the impact on their budgets.  

• Rationalize existing software spend – Maintain constant oversight over their software portfolio to identify tools that are either over- or underutilized, or even redundant, using this information to consolidate, rightsize, or terminate contracts, subsequently eliminating unnecessary spend.
• Data-driven negotiations – Leverage pricing benchmark data and market intelligence to strengthen your negotiation position and secure the best possible pricing.‍
• Future-proof contracts – Ensure that contracts account for anticipated growth plans or strategic changes to avoid triggering unexpected fees. This includes locking in pricing that won’t fluctuate with headcount changes, market entries or exits, or evolving requirements that could render certain features obsolete.

How Vertice helps to get your SaaS spend under control

Equipped with a unique database of real-time, validated pricing data for more than 16,000 software vendors worldwide, our expert purchasing team will ensure you’re getting the best possible deal on any contract, balancing price with your business’s ambitions and growth plans.

This approach has helped companies like yours:

• Reduce their annual software spend by 20%
• Increase procurement efficiency
• Minimize contractual risks
• Ensure software investments support long-term business goals