As if the pressure wasn’t already on for finance leaders to minimize costs and remain profitable, the banking crisis of recent weeks, not to mention persistent inflation, has only added to these challenges.
But while this has left many organizations considering the most drastic cost-cutting measures, there is one area of business spend that continues to get overlooked — software spend.
This is despite the fact that it now accounts for $1 in every $8 of total expenditure in the average business.
And it’s also despite the fact that:
- The majority of companies are overpaying for their SaaS tools by at least 20-30%
- A third of all SaaS licenses are underutilized (as we detailed in last month’s SaaS purchasing insights)
- 15% of software users are on a more expensive tier than they need to be based on their usage requirements
So, with pressure mounting and vendors continuing to increase their prices at a rate that is four times faster than market inflation alone can account for, there’s never been a better time to get a handle on your SaaS spend and identify the opportunities to drive down your costs.
The best way to do this? Start by understanding what’s happening across the industry and use the insights and data to your advantage. Then, talk to Vertice.
Here’s our monthly roundup of SaaS purchasing insights for April 2023.
SaaS purchasing insights
Mid-sized companies are spending twice as much on SaaS per employee than enterprises
According to our data, the amount being spent on SaaS per employee varies substantially depending on the business’ headcount.
Enterprises with more than 5,000 employees tend to achieve the biggest savings when it comes to SaaS, for the simple reason that they can benefit from greater economies of scale and have increased buying power. On average, these organizations are spending $4,700 on software for every employee.
This is almost $2,000 less than businesses with between 100 and 500 employees are spending on their employees. But while these smaller businesses are still able to achieve better deals than most due to having fewer functionality requirements and being able to rely on a smaller SaaS stack, it is the mid-sized companies that are getting hit the hardest on the cost of software.
As an example, those with between 1,000 and 2,500 employees are spending a substantial $10,000 per person on SaaS tools. That’s more than double what the largest companies are paying.
This highlights just how important leverage is when it comes to securing the best possible price.
What you may not be aware of, however, is that you can still have leverage even without the enterprise-level headcount.
What you need is intel in the form of pricing benchmarks. Find out what we mean by pricing benchmarks here, or alternatively search through our vendor database to get exclusive pricing and discounting insights for thousands of SaaS providers.
Share of spend for AI tools has increased by 500% since the beginning of the year
Since the launch of ChatGPT last November, artificial intelligence (AI) has not only dominated the headlines, but it’s also transforming the way businesses work. In fact, the AI software market as a whole could reach $14 trillion by the end of the decade.
It therefore comes as no surprise that companies such as Google, Microsoft and Salesforce are all planning on adding AI capabilities to their software, and that an increasing number of new companies are emerging, specializing in everything from AI video and blog creation, to AI voice generation and AI meeting transcription software.
And these tools are in high demand across our network. Our data shows that one in three companies are now using AI software, up from one in ten earlier on in the year. This has resulted in the share of spend for AI tools increasing by 500% in just three months.
But, which tools are leading the way?
- Bizzabo: Share of spend for the AI scheduling tool increased by 300%
- Jasper: Share of spend for the AI content creation platform was up by 250%
- Fireflies: Share of spend for the AI transcription service grew by 200%
- Lumen5: The AI video creation platform was purchased for the first time
- Murf: The AI voice generator was another newly purchased tool amongst our user base
What’s trending in SaaS?
Each month, we’ll be tracking the biggest movers and shakers with our SaaS trend forecast. In addition to highlighting our hot picks for April 2023, we’ve also looked at the SaaS providers that have been the most flexible with their pricing, as well as those with the most seamless renewal process.
With SaaS prices continuing to soar, our expert team of negotiators have been working incredibly hard to secure the best possible deals for our customers.
This month, we’ve seen Loom, Apollo.io and Vanta lead the way by being the most willing to adjust their pricing to meet the requirements of their customers.
Of all the vendors we work with, TripActions, Greenhouse and Heap have provided the most seamless renewal process for our customers in the last month.
Hottest SaaS vendors for April 2023
Each month, we track the biggest movers and shakers in SaaS. These are the vendors that we’re seeing the most activity around and that are well and truly on our radar.
Topping the leaderboard in April are:
Save on your upcoming SaaS purchases and renewals
With access to the pricing and discounting data for more than 13,000 SaaS vendors worldwide, Vertice can see what organizations like yours are actually paying for their software and use this as leverage in negotiations, working on your behalf to secure you the best possible terms and price on any SaaS contract.
Through the Vertice platform, we can also provide you with total visibility of your SaaS contracts and renewal deadlines, while also helping you understand whether or not these tools are being utilized and where cost saving opportunities may exist within your SaaS stack.
Get a better sense of how Vertice works here, or alternatively use our free cost savings analysis tool to see exactly how much you could be saving on your annual SaaS spend.
