One of the best ways to get great ROI and limit costs is to purchase SaaS tools wisely. Unfortunately, it’s easy to fall prey to common SaaS buying mistakes. Here are eight things you can do to avoid them and save thousands.
Alex Millar, CPA
January 17, 2022
Being cost-conscious is normal for any CFO. One of the best ways to get ROI and limit costs is to purchase SaaS wisely. Unfortunately, it’s easy to fall into common purchasing mistakes. We cover them here, giving you actionable advice on how to avoid them.
1. Purchasing the wrong SaaS subscription plan
Monthly or annual plan? Perhaps a multi-year term? There are pros and cons to each contract term. Choose wisely to avoid being locked into a lengthy subscription.
Ashley Law-Smith, Finance Director at Bizpay, advises to conduct a free trial and walkthrough before committing to the SaaS purchase:
You can assess tool suitability by trialing the product before committing to a longer-term contract. If you're not satisfied with the SaaS performance, you can cancel without incurring major financial losses.
2. Assuming each SaaS tool is scalable
As you scale your company, invest in tools to accommodate your growth. This means spending more time upfront to understand different SaaS solutions.
While the process is time-consuming, an upfront investment pays off over time. Getting it right on the first go ensures scalability and avoids multiple implementation processes. Don’t forget, the cost of SaaS doesn’t stop with the subscription price. It also includes time, effort, resources to train staff and implement software.
3. Picking SaaS based on price alone
Avoid buying SaaS based on price. It's easy to end up with a tool that doesn't fit your needs. When choosing which software to invest in, factor in long-term ROI. This may mean choosing a SaaS with a higher monthly cost to get a better performance that yields a greater return.
4. Not forecasting ROI
When you’re considering a SaaS purchase, consider how you’ll measure the return on your investment. Come up with an ROI metric that you need from the product, and then set data collection processes in place to monitor performance. This will help you make sound financial decisions in the future, such as whether to renew your SaaS or try another tool.
5. Siloing purchases
When you work in fast-growing companies, it can be hard to manage SaaS purchases. Teams get bigger and SaaS tools expand to meet their needs. When SaaS tools aren't managed under one umbrella, you could have overlapping and duplicate tools. This is one example of siloed purchases that can have a big impact on your budget and bottom line.
To avoid this, incorporate a formal SaaS buying process. Consider investing in a SaaS management tool like Hudled. Each team can view the software stack of their department and team. This ensures visibility and prevents sunk costs from duplicate tools.
6. Forgetting SaaS cybersecurity checks
Ensure your potential SaaS purchase has adequate cybersecurity measures. Ashley Law-Smith, Finance Director at Bizpay advises:
7. Leaving employees out of the decision-making process
When choosing a SaaS service, run options by your employees. Make sure they are involved in the process. Ultimately, your employees will be the ones using the tool. In turn, this translates into more efficiency and productivity as the team will have chosen the best SaaS for their needs.
8. Accepting the first SaaS price
Did you know that you can negotiate your SaaS contracts? SaaS contracts mean the subscription plan and contract term you purchase. By contacting the SaaS company's sales team, you can negotiate the terms of your contract and pay a lower price. Consider engaging SaaS buying experts such as Hudled, who can negotiate your contracts for you.
Even the most experienced buyers fall into these SaaS buying mistakes from time to time. Being aware of the top 8 SaaS buying mistakes can help you build a smoother and more efficient purchasing process. The next time you purchase SaaS, you'll know what to avoid.
Best of Luck!
Alex Millar, CPA
CEO & Cofounder of Hudled. A real-time platform for teams in growing companies to track and optimise their software stack