Managing SaaS spending is crucial, especially during economic downturns. As businesses look for ways to cut costs without compromising their growth, understanding how to balance spending on SaaS becomes increasingly essential. This article will provide an overview of critical tips for reducing your SaaS spending while being pragmatic about what a company can implement.
Periodically evaluating your SaaS stack is essential for optimizing SaaS management. The first step is to get visibility on how you are tracking your SaaS spending. Utilizing a free SaaS management software like Hudled can help you track expenses. You can't evaluate what you don't know.
Analyze the mix of monthly, annual, and multi-year plans for your software subscriptions. Our data suggests that nearly one in five subscriptions are on annual plans. By evaluating your mix of subscription plans, you can identify if you should move more plans to annual and unlock further savings.
Many software vendors offer discounts to customers who commit to prepayments. This can lead to significant savings, particularly for tools that represent a substantial portion of your software expenses. Vendors offering significant discounts include Hubspot, Salesforce, Docusign, and Mixpanel. By taking advantage of these discounts, you can optimize your spending on essential services while benefiting from these tools' features and capabilities.
When reducing your SaaS spending, focus on the most significant costs can lead to the greatest savings. One way to achieve this is by negotiating better terms with your vendors. Many software vendors are willing to offer more favorable conditions, such as annual commitment with monthly or quarterly payments, in exchange for a longer-term partnership.
The 80/20 rule applies well to software spending: 80% of your savings will likely come from 20% of your software investments. By concentrating your negotiation efforts on the most significant expenses, you can maximize your cost-saving potential and improve your overall SaaS management strategy.
Becoming a reference for the vendor or featuring your logo on their website can result in mutual promotion and improved brand visibility. In exchange for these partnerships, vendors may offer discounts or other incentives, helping to reduce your SaaS spending further. This can lead to savings on your software expenses and strengthen your relationships with vendors, which can lead to more favorable terms and conditions in the future. This collaborative approach can be a win-win situation for your business and your software vendor.
A critical step towards reducing your SaaS spend is conducting a thorough audit of your software tools. Evaluating current and predicted usage can help determine where changes can be made. Examine how each tool is being used and its overall contribution to your business; you can make informed decisions about which tools to retain, modify, or remove.
Pay particular attention to underutilized or redundant tools during the SaaS audit process. Removing these from your software stack can help streamline your software usage, increasing efficiency and cost savings. This will ultimately allow you to allocate resources more effectively and invest in the tools that truly drive your business forward.
Reducing your SaaS spending in 2023 involves:
SaaS management is typically overlooked because it's so difficult to understand. Luckily, Hudled can do this for you without the overhead. Get started for free with Hudled and request a SaaS audit.