SaaS Inflation Index 2025

SaaS inflation outstrips consumer inflation once again

Spend on software is on track to increase by 14% over the course of 2025, according to Gartner, coming on top of an 11.7% growth in 2024.

Yet taken as a single data point, it can be hard to distinguish between how much of that is made up of genuine growth - i.e. buying more tools and paying for more users - versus SaaS price rises.

This research examines how SaaS spend is changing, with particular regard to inflation and rising prices.

Key takeaway: a typical business at the start of 2025 is spending significantly more on software than it was a year ago — even without purchasing any new products or licenses.

SaaS spend is surging - by every measure

It is incredibly rare to find any sizable organization that does not have at least 100 different SaaS products in its tech stack. Software has simply become a cost of doing business.

In 2025, global SaaS spend is predicted to hit the $300bn mark.

That represents an approximate average SaaS spend of $9,100 per employee, up from $8,700 mid-2024 and $7,900 in 2023.

This figure often surprises finance and procurement teams.

But just consider the most basic of needs, ranging from IT (collaboration, video conferencing, messaging), HR (resource management), security (SSO, networking, endpoint) and finance (payroll, expense management) - all this before any specific departmental SaaS tools are even included.

And then there are the price increases. The current 2025 rise YTD is above the US median salary increase. It also surpasses, for the first time ever, the average employer contributions for healthcare coverage.

Spend on SaaS per employee is now a bigger contribution than healthcare.

This increase in SaaS spend per employee - up by 31% in only two years - is caused by:

1. More tools per head - the average amount of applications per company hit a high water mark of 132 in 2025.

2. SaaS price increases - it's not uncommon to see vendors increase prices by up to 25%.

3. Widespread headcount cuts combined with inflexible SaaS contracts that won't accommodate fewer users.

This last point is an important one. Many vendors charge by usage, volume, consumption or features, not by user (e.g. Snowflake (queries), Twilio (SMS) or Zapier (API requests) or HubSpot (marketing contacts)), and so reductions in headcount just mean the SaaS cost is spread over fewer employees.

Meanwhile those vendors who do charge per user (45% in fact) are very unlikely to offer meaningful discounts outside renewal times, or without restarting a contract term - an unattractive offer for a business making headcount cuts.

$1 in $8 is spent on SaaS.

And spend on SaaS and cloud combined represents 26% of a typical company’s expenses.

The SaaS Inflation factor

It’s obvious that SaaS spending has grown — as a total, as a share of spend, and per employee. Dissecting the reasons behind it all is a more nuanced matter, and SaaS Inflation is one of the main culprits.

The current SaaS inflation rate is 11.3%.

A business spending $1,000,000 per annum last year can now expect to spend an additional $113,000 - for the same features.

Over half (58%) of all software vendors put prices up over the past 6 months. And compared to the 2024 average, we are starting to see a worrying trend increase after a welcome backslide.

This is driven by significant price hikes from popular vendors, such as Monday (28%) Zendesk (23%) and 1Password (22%).

This average is well above consumer inflation, even after accounting for those that left prices unchanged. Consumer inflation, which includes everything from apparel and food to housing and healthcare, has decreased drastically since a spike in 2021-2022, with most advanced economies hovering around 2%.

While wider consumer inflation has fallen from 3.3% to 1.9% (G7 average according to the IMF), SaaS inflation remains uncomfortably high — 495% higher.

SaaS inflation is less beholden to forces that dictate general consumer inflation, but it means that the growth in the cost of SaaS outstrips the cost of other goods at a swifter pace in some regions than others.

And even though SaaS inflation dropped slightly between 2024 and 2025, it's clearly not decreasing at the same rate as consumer inflation - widening the gap between the two and effectively making SaaS more expensive in real terms.

The rise in SaaS prices is not uniform by product category either. IT Management and IT Infrastructure SaaS categories have seen the biggest category-level price hikes - 17.7% and 16% respectively.

This is compounded by IT tools having the smallest gap between minimum and maximum benchmark prices (1.3x), giving little room in negotiations for discounts - meaning that even the cheapest IT tools are comparatively expensive. Businesses therefore need to be even smarter about the IT SaaS they source to prevent costs getting out of control.

SaaS Shrinkflation is rampant

Inflation is typically a fairly intuitive concept. It’s relatively simple to grasp why a grocery item that cost $1 five years ago now costs $2.

But SaaS is a little more nebulous. The reasons involve a complex and frequently changing constellation of packages, bundles, license agreements and pricing structures.

The complexity often leads to 'Shrinkflation' - a portmanteau to describe obfuscated reductions in value for the same or greater price - which has appeared in 27% of SaaS vendors contracts in 2025... so far.

Only 39% of SaaS vendors publish their pricing publicly, such as on their website.

It’s worth stressing this data point, as it is underlined by the finding that vendors with weak 'Pricing Clarity' scores are much more likely to increase prices than those with stronger scores.

Pricing Clarity is a rating developed by Vertice comprised of three core metrics concerning SaaS vendors' pricing:

• Simplicity: how easy and intuitive pricing is to understand
• Transparency: the availability of published pricing structures
• Parity: the consistency of pricing across similar customer profiles

Vertice research shows that an increase in Pricing Clarity by one standard deviation leads to lower average price increases by 2.7%.

Put simply, the more hidden, complicated and divergent a vendor’s pricing is, the more likely it is to have recently been increased.

Some common tactics among SaaS vendors, which can be important to understand when entering into purchase or renewal negotiations:

1. ‍Bundling of products and features can often hide decreases in real value to end customers. Vendors often position their pricing to compile multiple solutions into a single offering, not all of which are necessarily required by their customers.
2. Equally, unbundling of products and features can achieve the same end result. Some SaaS vendors will start to charge for individual modules rather than a single platform, enabling them to squeeze out more revenue per customer.
3. ‍Non-cumulative pricing limits the amount of value a customer can accrue. Discounts and benefits will apply only in bands - for example rather than offering a simple discount on the overall per user price for more users, discounts are only applied in steps: the first 10 users will be at rate card prices, and then user licences 11-20 are discounted, and users 21+ are discounted further. Such a structure gives the impression of reduced prices, but actually protects revenue for the vendor.
4. ‍Currency harmonization is the practice of adjusting prices regionally to account for currency drift, retaining some parity between pricing in different markets. In reality however, vendors will increase pricing in markets where they spot a greater willingness to spend more, or less tendency to demand discounts.
5. ‍Restructuring pricing often occurs in tandem with a major product shift or launch. Vendors may use these wholesale adjustments to pricing models to mask increases as it becomes near-impossible for customers to compare before-versus-after.
6. ‍Reduced discounting is when vendors reduce the discount levels or that sales teams are authorized to grant or adjust the scenarios in which discounts may apply, and is an often invisible element of shrinkflation.

How to tackle SaaS inflation and 'Shrinkflation'

While consumers face a cost of living crisis across much of the world, businesses are facing their own ‘cost of software’ crisis, with costs rising much faster than may be considered reasonable. This is driven largely by overall SaaS Inflation, and amplified further by the more subtle impact of SaaS Shrinkflation.

But these two dynamics can only be combatted if they are understood.

This is where Vertice comes in.

With access to authentic, validated and uniquely global pricing data for more than 16,000 vendors worldwide, our expert purchasing team will ensure you’re getting the best possible deal on any SaaS contract, enabling you to reduce your annual software spend typically by 20% without compromising on your preferred tech stack.

Chat with our team of experts today to discover how you can combat the effects of SaaS inflation.