Feeling the pain from increased SaaS costs? You’re not alone

Well, add it to the inflation hit list. CFOs may find their organizations paying more for software as a service this year. Vertice, a platform that tracks SaaS spending across 16,000 vendors, recently found that SaaS prices rose an average of 12% YoY and that 73% of SaaS vendors increased their prices this year.

“This spike is very significant compared to previous years,” Vertice’s VP of global marketing, Joel Windels, told CFO Dive recently. “SaaS companies have traditionally relied on higher usage to boost overall contract value, but in the last 12 months, we have seen price hikes become one of the main levers used by vendors to drive revenue.”

Which providers are increasing prices, and by how much, may be a function of which ones can afford to do so. Sandeep Beotra, CFO of Degreed, itself a SaaS company, told CFO Brew that his firm uses 150 SaaS vendors, and that when considering price hikes, “not all SaaS vendors are created equal.”

Not all price hikes are created equal, either: Beotra said that a product like Salesforce, which last month announced price hikes averaging 9%, is “a bit of a monopoly” (and therefore may wield pricing power).

On the other hand, he said, some providers’ products fall into a category that is merely “nice to have,” and therefore, “I can play super hardball with them, and there are examples of us getting 30% to 40% discounts from last year.”

Vertice found the biggest price hikes in finance, sales, and productivity tools. The firm also suggests there’s a method by which firms get away with charging more: “Vendors with opaque, variable and/or complicated pricing structures are the most likely to implement year-over-year price hikes.”

For CFOs looking to keep SaaS prices down, Beotra recommended reaching out to vendors to negotiate prices.

He said he always starts with an attempt to lower the price, and “you know, sometimes it works and sometimes it doesn't.”