Is it worth overpaying for any SaaS? Find out the real cost of your tools

In the digital transformation era, nearly every company uses Software as a Service (SaaS) solutions. Their ease of implementation, flexibility, and low cost of access for a single subscription makes many organizations not even consider alternatives.

Unfortunately, a significant part of them incur a very high cost, which they can't even know without proper calculation. Therefore, in this article, you will learn:

• What is the real cost of SaaS platforms?
• In which cases is their use simply not cost-effective?
• What alternatives should your company consider?

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The Situation in the SaaS Market

The SaaS industry is doing great, estimated to have grown by 500% over the last 7 years. According to an analysis by Grand View Research, in 2022 the global SaaS market reached a value of $261.15 billion, and from 2023 to 2030, the average annual growth of this market will be 13.7%, meaning that by 2030 it will reach a value of $819.23 billion!

Meanwhile, there is an increasing caution among customers of these solutions. According to a 2023 Gartner report, over the next four years as much as 30% of IT service buyers will be looking for alternative providers during the subscription renewal period, while currently, this rate is only about 5%. This stems both from the emergence of new SaaS solutions on the market from the emergence of new SaaS solutions on the market and the fact that more and more companies are deciding to reduce their use and the fact that more and more companies are deciding to reduce the use of some of them. Why?

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Rising Costs of SaaS

The SaaS market is growing, and with it, subscription prices are increasing. When we think of SaaS tools, we often consider the low cost of a single subscription. The problem starts when the number of these subscriptions increases alongside the number of SaaS platforms used. According to data from Statista, companies worldwide use an average of 130 different SaaS applications. Furthermore, the same report indicates that companies are already paying an average of $80.44 per employee for access to SaaS type software, and this value is almost increasing month by month.

Initially, the low entry costs for SaaS solutions can seem attractive, but in the long term, on a large scale, subscriptions generate fixed expenses that can dynamically increase as your company grows, adds new users, or expands functionality. Moreover, you might find yourself trapped in subscriptions to multiple services, which lead to a significant increase in your monthly or yearly costs.

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Don't guess, calculate it

It's worth analyzing whether each tool you use is genuinely needed and whether it is the best available solution on the market—both in terms of cost and feature scope. We do not question the validity of SaaS solutions. They are unquestionably a huge support across many dimensions.

However, being aware of the risks associated with using such tools on a large scale and being cautious in their selection can help you limit potential losses and sometimes even allow you to discover opportunities for new solutions that will bring you real profit.

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Excessive Number of SaaS Tools and the Risk of Dependency

When analyzing the real costs of SaaS solutions, ask yourself: Have you considered how many times you've decided to purchase additional SaaS licenses without analyzing the actual needs of your organization against the size and capabilities of building an internal solution that would pay off, for example, after 1.5 years?

Unfortunately, many people repeat this mistake, and its effect is a saturation of tools, often with overlapping functionalities. Such excess can lead to disorganization, data conflicts, and inefficient use of your company's resources, which in turn translates into an increase in unnecessary costs.

Additionally, with too many tools, the risk of dependency on suppliers grows, which concerns not only technical aspects, such as service continuity, but primarily financial dependence.

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Paying for Features You Don't Need

Adopting a "one-size-fits-all" model in SaaS often leads to situations where you pay for a full package of features, of which you only use a small part. The inability to customize tools to the specific needs of your organization is one of the main limitations of this model, resulting in inefficient IT budget spending.

Although SaaS offers many benefits, its excessive and imprudent use can lead to a series of operational and financial problems. It is recommended to carefully analyze your actual needs and the capabilities of a given tool before deciding on a subscription, and to regularly review and optimize your SaaS portfolio to avoid excessive spending.

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Alternatives to SaaS Solutions

Unfortunately, even such detailed analysis often does not guarantee savings at the level that alternative methods can provide. What are we talking about? About building your own software.

Of course, building your own software may not always be possible or cost-effective. There are many SaaS solutions where attempting to replace them would simply be too costly.

It is worth highlighting the fact that more and more companies are abandoning some SaaS solutions, opting instead to build their own internal tools for things like planning, communication, activity monitoring, optimization, or automation.

This is an attractive solution especially now, when technologies available on the market significantly accelerate the process of creating such software and completely reduce their costs.