Hidden SaaS Costs: What's Really Driving Up Spend?

SaaS costs are rising fast – and not solely because of inflation which now sits at 13.9%, or even the fact that tech stacks are growing by 11% each year.

The real issue lies in the hidden costs buried within your tech stack: duplicate tools, underutilized licenses, shelfware, and uncontrolled purchasing that is quietly bloating budgets behind the scenes.

With an average of 66% of applications going to waste, these invisible expenses are costing many companies millions of dollars annually.

In this article, we break down what's really driving your SaaS spend – and what you can do to regain control.

‍Common sources of hidden SaaS costs

Beyond the upfront fee that you agree to when you sign up for a SaaS contract, there are a number of hidden – and entirely preventable –costs that may quietly be draining your budget. And we're not talking about onboarding fees or support charges. These aren’t vendor-driven surprises – they’re issues that arise from within your organization’s own processes and oversight gaps.

Maverick buying

One of the biggest challenges in SaaS procurement is maverick buying – when individuals or departments purchase software outside of established procurement channels, often without finance, IT, or procurement teams being aware. While this can give employees flexibility, it comes at a high cost to the organization.

As these tools are purchased under the radar, SaaS visibility suffers – contract terms remain unknown, renewal deadlines get missed, and since 89% of SaaS contracts auto-renew, organizations end up paying for platforms no longer needed, often at higher prices.

Maverick spending also weakens your organization’s negotiating power. Volume discounts hinge on consolidated usage, and if teams buy their own tools, you lose leverage for better deals.

Security is another risk: unauthorized tools – referred to as shadow IT – may not meet security or compliance standards, exposing your data, customer information, and intellectual property to leaks and costly legal consequences.

So, why does maverick buying happen?

• Unmet software needs
• No clear procurement processes
• Urgent or short-term tool requirements

Implementing a robust SaaS procurement process – supported by dedicated procurement software – is the best way to address this issue head-on.

Shelfware

SaaS shelfware – that being the applications that go entirely unused – is another source of hidden, and therefore wasted, SaaS spend.

And it's a major issue, affecting 21% of applications within the average organization – and close to half of all subscriptions for IT Management and Security tools.

To access the rates – and financial impact – of shelfware across the different software categories, company sizes, and industries, download the latest SaaS Wastage 2025 Benchmarks Report.

While shelfware can be a casualty of maverick buying, it can also happen when licenses aren’t canceled after employees leave or when software is purchased but never actually used – for example, when acquired as part of a project that was later shelved or never fully implemented.

Underutilized SaaS licenses

It's not just the applications that have been long forgotten that pose an issue – it's also the tools that are used, but underutilized.

Our own data shows that as many as 45% of software solutions have usage rates below 50%.

This is often the result of overprovisioning – companies purchasing extra licenses “just in case,” only for many seats to remain idle. In other cases, usage naturally declines as teams shift focus or adopt alternative tools.

The upside? Underutilization is one of the most fixable forms of waste. By regularly reviewing usage data, organizations can reassign unused licenses, downgrade plans, or cancel excess seats – helping to cut costs without disrupting workflows.

It also highlights the importance of future-proofing through smarter SaaS contract management.

By building in contract clauses that allow for scaling license counts up or down, or renegotiating terms mid-contract or at renewal, businesses can maintain flexibility as their needs evolve – avoiding long-term vendor lock-ins and aligning spend more closely with actual demand.

Beyond flexibility, there's also value in consolidating spend – centralizing vendors, contracts, and billing. This unlocks visibility across your SaaS stack, making it easier to optimize spend, eliminate redundancies, and ensure that every dollar is driving value.

Duplicate tools

Duplicate tools arise when multiple departments or teams independently subscribe to the same software rather than sharing licenses under a single contract. This can happen due to lack of visibility or communication, leading to paying multiple recurring fees for the same service.

Beyond wasted subscription costs, SaaS duplication increases expenses related to onboarding, training, and management. Additionally, fragmented licensing reduces your ability to negotiate volume discounts and consolidate spend.

Conducting thorough audits of your SaaS stack and consolidating duplicate licenses – even if it requires upgrading to a higher tier – can yield significant savings and improve operational efficiency.

How to take control of your SaaS spend

Uncovering and eliminating hidden SaaS costs starts with gaining complete visibility, leveraging benchmarking insights, and taking strategic action to optimize every dollar spent.

Identifying hidden SaaS costs

You can't control – or in this case eliminate – what you can't see. Taking the following steps is therefore essential to gaining full visibility into your SaaS portfolio:

• Review company-wide expense data as these can shine a light on rogue purchases.
• Request reports from IT and security tools, for example SSO.
• Pinpoint underutilized licenses and instances of shelfware through the use of a SaaS Purchasing Platform with robust spend management, SaaS discovery, usage analytics, and procurement analytics capabilities.
• Collaborate with the department leads to identify maverick buying, overlapping tools, and any team-level subscriptions that may have been purchased outside of the purview of procurement, finance, and/or IT.

Optimizing your software stack for maximum savings

Only once you have a clear picture of your SaaS contrats, terms, and usage can you:

• Cancel unused tools.
• Either reassign underutilized licenses or amend the contract at the point of renewal to reflect actual usage requirements.
• Negotiate contracts that allow flexibility,

The bottom line?

SaaS spend isn’t just a finance issue – it’s a visibility issue. Without a clear, centralized view of your software stack, hidden costs will continue to drain resources unnoticed. But by taking a proactive approach to monitoring usage, consolidating tools, and enforcing smarter procurement practices, you can turn your SaaS portfolio from a budget black hole into a source of strategic efficiency and savings.