While the growth prospects for many organizations are now thought to be brighter than predicted back in April, with 68% of finance leaders expecting revenue growth in the next 12 months, cost optimization remains a core focus for many.
Although this likely means that continued layoffs are inevitable, reduced headcount isn’t the only way organizations are planning on trimming costs. According to a recent CFO report by audit, tax and advisory firm Grant Thornton, 44% of respondents cite vendor and supplier costs as the top area for projected cost savings.
This comes as no surprise, given how SaaS alone now accounts for $1 in every $8 of total business expenditure, with as much as 33% going entirely to waste, according to our own internal data. Furthermore, it also backs up Lionfish Tech Advisors’ prediction that more than half of all organizations using multiple software applications will be using a SaaS Procurement Management Platform by 2028, in a bid to reduce spend in this area.
But what’s happening in the world of SaaS procurement today?
Here’s our monthly roundup of SaaS purchasing insights.
SaaS purchasing insights
SaaS prices have increased 12% on average in the past year
It’s not just the end-users feeling the pinch when it comes to soaring prices. SaaS vendors themselves are also looking for ways to maximize their own profit margins, driving many to up their pricing plans.
In the past year alone, SaaS prices increased 12% on average – in many cases, much higher. While HubSpot was bang on the average with a 12% increase, Microsoft hiked its costs by 14% and web development platform, Webflow, raised its prices by a substantial 23%.
And they are by no means the only ones.
According to our data, 73% of vendors have increased their prices this year to date. When you consider that the average organization now uses as many as 130 tools, it’s difficult to ignore the impact this will continue to have on your SaaS spend.
The problem is, it’s not even just the standard price hikes you need to be aware of. We’ve found that certain vendors are driving up their costs in more subtle ways, for example by both bundling and unbundling features, as well as by shifting from drawdown pricing models towards monthly usage ones. We’ve covered each pricing tactic in more detail here.
So, while there’s not much that can be done about soaring SaaS costs, it does become all the more important that you’re in control of your spend and are continually looking for ways to optimize it for maximum cost-savings.
Not sure where to start?
Here’s a selection of resources that might help:
Finance, Sales and Productivity tool vendors are the most likely to hike their prices annually
SaaS price increases may well be occurring across the industry, but we’re certainly seeing emerging trends indicating that vendors within certain sectors are more likely to raise their prices on an annual basis.
According to our data, it is in fact those with opaque, variable and/or complicated pricing structures that are most strongly associated with year-on-year price hikes.
At Vertice, we’ve rated thousands of software providers across each of these factors – pricing simplicity, transparency and parity – and given them a pricing clarity rating. These scores tell us that it is typically vendors across the finance, sales and productivity tool categories that have the lowest pricing clarity ratings and are therefore the most likely to up their costs.
So, why is this?
Well, for one, the more transparent a SaaS company is with its pricing, the harder it is for them to make sporadic changes to their costs. The same applies to those with straightforward pricing models. When companies hide behind complicated pricing models and opaque pricing, it’s easier to make these changes.
And the data backs this up – an increase in pricing clarity by one standard deviation leads to lower average price increases by 2.7%.
But what does this mean for you?
Price increases may well be inevitable, but there are two important ways to mitigate against the impact:
- Request the removal of auto-renewal clauses from your contracts during negotiations, as this can maximize your buying power at the end of your contract. In almost all cases, vendors will do so when asked.
- For your existing contracts that include auto-renewal clauses, allow yourself ample time to negotiate the best deal. The earlier you negotiate a renewal, the better deal you can get.
Despite the average price increase standing at 12%, with the right leverage it is possible to drive down this cost. After all, SaaS prices are rarely set in stone.
To secure the best savings, you ultimately need intel on what other companies are paying for the same subscription. Intel that Vertice can provide, but we’ll get to that later.
Trending SaaS vendors
Which SaaS tools are trending this month?
Looking at the total contract value (TCV) of new transactions across our user base – including both new purchases and renewals – we’ve ranked the ten most popular SaaS vendors and shown their monthly movements.
Auth0, Snowflake, Slack, HubSpot and Highspot may have dropped off the leaderboard this month, but we’ve seen new entrants emerge, including NetSuite and LinkedIn, with the latter climbing into second place, indicating a surge in popularity for the social networking platform.
Also soaring into the top ten for the first time are search-powered solutions provider, Elastic, up from position 16, and business intelligence platform, Looker, up from position 45.
Rising SaaS vendors
In addition to looking at the top ten SaaS vendors by their total contract value (TCV), we’ve also looked at those that have seen the largest month-on-month TCV increase.
Climbing the ranks this month are product analytics platform, Amplitude, business intelligence tool, Sisense, and project management provider, Asana.
Falling SaaS vendors
What goes up must come down. Unless you’re Salesforce, that is.
Unfortunately, the total contract value of transactions for analytics automation software, Alteryx, API platform, Postman, and project collaboration tool, Smartsheet decreased the most significantly since July.
Vendor of the month: Amplitude
With the highest increase in total contract value across our user base, this month’s vendor spotlight is on product analytics platform, Amplitude.
With more than 2,000 customers worldwide and an almost 5-star rating on G2 based on just as many reviews, it’s no surprise that the company has risen in popularity amongst our customer base.
Not yet using Amplitude?
Find out much you can expect to pay for a subscription and more importantly, how you can obtain a discount in our recent pricing article on Amplitude pricing.
Alternatively, access exclusive pricing intel for Amplitude here.
Category of the month: Product Analytics
Despite already being worth close to $11 billion, the increased use of modern technologies such as big data, machine learning and artificial intelligence is set to increase the value of the global product analytics market almost fivefold, seeing it reach an estimated $49.31 billion by 2030.
And if our data is anything to go by, it’s already becoming a staple within the average organization’s SaaS stack, with tools in this market now accounting for 4.3% of total software spend.
Amplitude isn’t the only platform worth being aware of though. Mixpanel, Pendo, Heap and Smartlook are also popular choices across our user base and therefore worthy of consideration if you’re looking to purchase a tool of this kind.
As with any SaaS purchase though – or renewal for that matter – it’s worth remembering that prices are rarely set in stone. Our data indicates that the average discount provided by product analytics vendors is 22%, which means you could be saving more than a fifth of the list price – often substantially more with the right leverage and negotiation tactics.
Secure maximum savings on any SaaS contract
With access to the pricing and discounting data for more than 16,000 software providers worldwide, Vertice can secure you the very best deal on any SaaS purchase or renewal.
What’s more, our experienced team will handle the procurement of these tools on your behalf, saving you a substantial amount of time, while also identifying the cost-saving opportunities that exist within your SaaS stack.
For a better understanding of how Vertice can achieve this and ultimately streamline your SaaS procurement process, take a look at this. Alternatively, search through our vendor database for exclusive pricing intel, or see why Vertice was rated the best SaaS procurement management platform by industry analysts.
