How to Optimise Your SaaS Spend: A Step-by-Step Guide
To optimize your SaaS spend, use systematic processes that improve visibility into software usage, maximize license utilization and streamline procurement of cloud 软件订阅.
This strategy corrects the problem of decentralized SaaS acquisition, which often leads to shadow IT and significant license underutilization, potentially affecting the operational budget.
Observations in the SaaS industry indicate that roughly 53% of licenses within organizations remain underutilized, which could affect cost management.
This guide shows the structured methodology to manage software expenditure and its relation to the return on each subscription investment. For startups looking for guidance on pricing and growth, consider resources on 在线销售软件 and specific insights for a 初创公司.
Perform a Full SaaS Discovery and Audit
Systematically identify every application, its cost, and its 责任 across the organization. This step must consider both officially sanctioned software and shadow IT—applications purchased via expensed credit cards or decentralized department budgets.
- Centralize Financial Data: Scrutinize all transactional data sources, including expense reports, Accounts Payable records and credit card statements. Look for repetitive vendor names (e.g., Notion, Asana, Pipedrive, etc.) indicating subscriptions.
- Communicate with Stakeholders: Connect with department heads (Marketing, Sales, Engineering) to understand the tools they use and their perceived business value.
- Create an Inventory Log: Gather the data into a single, standardized asset register.
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Mandatory Inventory Fields |
目的 |
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Vendor Name & Application |
The exact software being used. |
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Contract Value (Annual/Monthly) |
The total committed cost. For context on tracking this, refer to resources on annual contract value (ACV). |
|
Renewal Date |
Imperative for proactive negotiation (start 90 days out). |
|
Licenses Purchased |
The total quantity of seats paid for. |
|
Technical Owner |
The specific team or person responsible for managing the tool. |
Shadow IT accounts for over one-third of a company’s total applications. Visibility into these applications is critical for far-reaching SaaS cost optimization and for mitigating security risks that come with unauthorized software.
Free SaaS Cost Optimization Checklist
Get instant access to proven negotiation tactics, management, and SaaS spend optimization best practices that save money.
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Discovery & Data
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"Retain, Retire, or Replace" framework
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Eliminate Waste
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Control Future Spend
Measure and Analyze License Utilization Rates
Identify the actual usage of each application to measure waste. Usage data is the basis for rightsizing licenses and validating the tool’s return on investment.
- Consolidate Usage Metrics: For key applications, use the vendor’s administrative dashboard or APIs to extract user activity data. Look at Active Users (users who logged in or performed a meaningful action within the last 30 or 90 days). Calculating metrics like Daily Active Users (DAU give great insights.
- Measure Utilization: Compare licenses purchased to the number of active users. The license utilization rate is Active Users/Licenses Purchased.
- Locate Low-Utilization Apps: Determine where applications with utilization rates below an established threshold, such as 50% are present. This mis likely indicative of shelfware (licenses paid for but not used).
A small B2B product team bought 40 seats for an analytics platform with an annual cost of $8,000. Usage logs show approximately 18 unique active users in the past quarter, making the utilization rate 18/40=45%. License rightsizing therefore present an opportunity for cost savings during the next renewal. Use the resources on SaaS 指标 for data interpretation.
Free SaaS Cost Optimization Checklist
Get instant access to proven negotiation tactics, management, and SaaS spend optimization best practices that save money.
-
Discovery & Data
-
"Retain, Retire, or Replace" framework
-
Eliminate Waste
-
Control Future Spend
Use the Rationalization Framework (Retain, Retire, Replace)
Use a structured, data-driven methodology to decide on the future of each application in your inventory.This process, known as application rationalization, aims to assess each tool for its strategic value, redundancy, and cost-effectiveness.
The decisions for each app should be based on the data gathered in Steps 1 (Cost, Business Value, Technical Owner) and Step 2 (Utilization Rate).
1. Retain (Keep & Optimize)
行动: Keep the application. Criteria:
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- High Utilization: The License Utilization Rate is consistently high (e.g., above 75%).
- High Business Value: The tool is integral to a core business function (e.g., a primary CRM, ERP, or code repository).
- No Redundancy: The functionality is unique and not duplicated by another tool in the stack.
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Optimization Focus: For retained apps, the focus shifts to rightsizing licenses (Step 4) and negotiating better terms (Step 5). This is where efforts are directed toward influencing the ROI of a potentially beneficial tool.
2. Retire (Cancel & Eliminate)
行动: The subscription cancellation and user de-provisioning process should be applied. Criteria:
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- Low to Zero Utilization (Shelfware): When licenses are purchased but not actively used, with infrequent tool access.
- Low or Obsolete Value: The application no longer serves a critical business need or has been replaced by a superior tool.
- High-Cost, Low-Value Redundancy: It duplicates core functionality of an already approved, widely-used application (e.g., an ad-hoc project management tool when the company mandated a centralized solution).
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Be firm when retiring tools. Clearly communicate the decision and the approved alternative to prevent employees from immediately seeking an unapproved replacement (Shadow IT).
3. Replace (Consolidate & Upgrade)
行动: Phase out the existing application and migrate users to a new, standardized, or consolidated tool. Criteria:
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- Functional Duplication: You have two or more tools performing the same function (e.g., using two separate cloud storage providers or two different internal communication platforms). The objective involves consolidating onto a standardized tool that aims for high performance.
- Cost/Benefit Considerations: The existing tool’s cost, complexity, or feature set may be compared to a more readily available and potentially more cost-effective alternative.
- Security/Compliance Factors: The application’s security characteristics and compliance alignment could be factors in a decision to consider a tool that satisfies necessary regulatory requirements.
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Prioritize the Retire and Replace strategies for applications that are either redundant or have low usage and high cost. Companies often see immediate savings by cutting duplicate tools.
Slack vs. Microsoft Teams.
The Engineering and Sales teams at the startup used different internal communication platforms, which related to distinct subscription costs.
The rationalization decision was to Consolidate (a form of ‘Replace’ or ‘Retire’) onto a single, standardized platform, which freed up capital and streamlined communication.
For products built around usage, this could involve evaluating alternatives with 按使用量计费.
Free SaaS Cost Optimization Checklist
Get instant access to proven negotiation tactics, management, and SaaS spend optimization best practices that save money.
-
Discovery & Data
-
"Retain, Retire, or Replace" framework
-
Eliminate Waste
-
Control Future Spend
Execute License Rightsizing and Reclaim Unused Seats
Actively reduce the count of purchased licenses and downgrade subscription tiers based on the usage data collected in Step 2.
- De-provision Inactive Users: Identify all employees who were assigned a license but have not logged in for 90 days. Initiate the de-provisioning process for these users.
- Downgrade Licenses: If a team is paying for a “Pro” or “Enterprise” tier but only utilizes features available in the “Standard” or “Basic” tier, downgrade the subscription to match actual usage. Learn more about optimizing with 分层定价.
- Implement a Provisioning Policy: Create an automated process to automatically de-provision users after a defined period of inactivity (e.g., 60 days).
A growth-stage SaaS company found that the proportion of provisioned users not utilizing assigned licenses in a particular application category (such as identity management) was 73%. The company observed a reduction in licensing costs for those applications following the de-provisioning of these users, without a noted effect on operational capability.
Free SaaS Cost Optimization Checklist
Get instant access to proven negotiation tactics, management, and SaaS spend optimization best practices that save money.
-
Discovery & Data
-
"Retain, Retire, or Replace" framework
-
Eliminate Waste
-
Control Future Spend
Centralize Procurement and Negotiate Data-Backed Renewals
Centralizing software purchases and analyzing usage data may influence negotiation outcomes during renewals.
- Mandate Central Approval: Institute a policy that requires approval from a central finance or procurement team for all new software purchases or contract renewals exceeding a defined monetary threshold.
- Start Negotiations Early: Initiate renewal conversations at least 90 days before the contract end date. This prevents automatic renewal and provides time to research competitive alternatives (your BATNA—Best Alternative To a Negotiated Agreement).
- Utilize Usage Benchmarks: Use your calculated utilization rate and data on redundant tools to request better pricing, term-length discounts, or reduced license counts. Negotiating from a position of data strength can secure 15-25% savings on major contract renewals.
- Proactive Contract Terms: Ask for a multi-year discount (two to three years) and negotiate a right-to-reduce clause that allows you to lower the number of seats during the contract term if user count decreases.
SaaS companies often incur significant spend on a fragmented stack of tools for monetization (e.g., separate providers for subscription billing, payment processing, tax filing, fraud management, 和 催款).
By adopting an all-in-one platform like a full-service 名义商户 (MoR) such as PayPro Global, you eliminate this unnecessary SaaS sprawl. The MoR consolidates all critical functions—global payments, automated tax compliance (collection AND filing to the right authorities), subscription management, and robust fraud protection—built-in for no additional fees. This strategy replaces multiple contracts and integration costs, directly cutting your operational spend and reducing the need for specialized personnel.
Free SaaS Cost Optimization Checklist
Get instant access to proven negotiation tactics, management, and SaaS spend optimization best practices that save money.
-
Discovery & Data
-
"Retain, Retire, or Replace" framework
-
Eliminate Waste
-
Control Future Spend
Implement a Continuous Monitoring and Governance Framework
Maintaining SaaS spend improvements requires ongoing processes and tooling. Set a formal SaaS Management function that prevents recurring and unmanaged spending.
- Renewal Alerts: Automate alerts for all contract renewals at intervals of 30, 60 and 90 days in advance.
- Assign App Ownership: Assign a functional and financial owner for every application to guarantee accountability for usage and cost.
- Standardize Tool Selection: Use approved software for common business functions (e.g., one CRM, one project management tool) to stop shadow IT before it starts.
Automation is a significant driver of efficiency. SaaS organizations that utilize automated solutions for SaaS management often report a significant decrease in wasted spend and simpler automated subscription, billing, and compliance processes.
结论
Effective SaaS Spend Maximizing is an ongoing process built on visibility 和 数据驱动 decision-making.
Start by initiating a thorough audit of all applications and carefully measuring license utilization to uncover waste.
Next, apply a methodical rationalization framework (Retain, Retire, Replace) to eradicate redundancy and right-size license counts.
By centralizing procurement and utilizing a continuous governance framework, you encounter sustained cost management and leverage the strategic value of your entire software portfolio.
常见问题解答
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The biggest driver is Shadow IT and unused licenses (shelfware), which happened due to decentralized purchasing with employees obtaining apps without IT or Finance approval.
This lack of process causes duplicate subscriptions and you’ll end up with employees not using licenses they have paid for.
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Shadow IT means you have software purchased by employees without official procurement channels, often using personal or departmental credit cards.
This is problematic because it creates financial blind spots, causes redundant apps and increases significant security and compliance risks.
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Perform a SaaS audit of your financial records to locate all recurring subscriptions and then configure the license utilization rate for each app.
A low utilization rate (under 50%) is immediate waste that can be reclaimed.
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The Rationalization Framework is a decision-making model—Retain, Retire, or Replace that evaluates applications in your stack.
This indicates which apps to keep, which to cancel (retire) due to redundancy, and which to swap for a better tool (replace).
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Start the renewal process and negotiation at least 90 days prior to the contract’s expiry date.
Being proactive avoids costly auto-renewals and allows you time to leverage your usage data for better terms and pricing.
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Combine your billing and monetization tools (like subscription management, payment processing, fraud detection, and tax compliance) into a single platform full-service Merchant of Record (MoR) and eliminate SaaS sprawl.
Rather than paying for and integrating five different, specialized tools and their corresponding fees, you’ll only need to manage one contract.
This cuts software costs, integration overhead, and the labor required for complex tasks like global tax collection and filing in a big way.
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