Hidden Costs of Saas: Real Examples, Pricing Breakdown & When It Gets Expensive

The issue with Saas pricing is actually the timing. Most of the organizations are unaware of having a Saas cost issue because of three reasons, none of which involve lack of transparency on the vendor’s side or attempts to fool anyone. First, the actual costs do not reveal themselves during the initial subscription process, and second, by the time they become obvious, the organization is already very deep and committed. It will feel like it takes too much effort to change now that your entire team works using the tools at hand, and everything in the stack seems very important.

Affordable and Simple Does Not Always Stay That Way

The truth is that everything looks affordable and simple once you begin to implement your solution. Choosing an app, bringing on more users, and paying a reasonable monthly bill will sound like a good idea. Until the change happens. Once your business starts to mature, more functionalities need to be provided, and one little improvement that closes a gap becomes a full stack of software which in turn becomes expensive.

This is the situation we face at Clarity Tech Labs from many businesses, especially those that have scaled quickly without taking another look at their tech stack.

Saas Does Not Get Expensive Instantly

Every decision makes sense on its own. The tool solves a problem. The upgrade provides basic functionality. Hiring more people seems efficient. But all of these decisions pile up.

A $40-per-user subscription does not look like a big deal – until it reaches 100 users and becomes $48,000 per year. And when you start doing this with your CRM solution, your project management software, your analytics system, and various other services, you get a six-figure spending. Not to mention that most of it goes to waste. 

The Costs You Don’t Plan For Are the Ones That Hurt the Most

The implementation of Saas never takes place individually. The systems must connect to one another. The data must move back and forth. Integrations are required. And this is where additional costs come into the picture. It may seem straightforward enough on paper, but a lot of times you end up spending even more money on software just to have all the other systems talk to each other.

How Investing in Saas Is Actually Cheaper Than You Imagine

In the real world of most organizations, Saas purchases aren’t made at the corporate level. Sales may require something else entirely. Operations will need a different software. It all seems to make sense individually, but collectively, it is a disaster.

Auto-Renewals Are Where Saas Spend Slips Out of Control

This is where the hidden costs emerge. Whether it is true that all these are regularly being paid for by the corporation under the table due to new dynamics and changes in the company’s priorities, one thing is certain – they keep pouring in regardless. It will be just a matter of time until they realize that they are paying for software they are no longer using, or rather useless. As there is no specific person charged with such expenses, and not even an audit to identify them, they go unnoticed. The challenge with this is that it does not occur overnight.

The Real Challenge Is Not in Costing But Saas Sprawl

Finally, it is not an issue of costing any more, but it has turned into one of management. The fact of the matter is that there are increasingly many applications that are stacking up every single day; tasks have become decentralized, and information is scattered around. Where once efficiency was a hallmark feature, the system has become increasingly complicated. There is every reason to believe that what should have been a simplifying factor has only added to the complexity of things.

Saas Works Best Early

Saas itself is not the source of this problem. In my opinion, it represents the biggest revolution that has happened in the world of business application software ever since. Thanks to cloud services such as AWS, Azure, and others like these, the business can create its own product and grow fast without spending a fortune. That is what makes it so attractive at the initial phase of business development. But when your organization grows bigger, everything starts changing.

At Some Point in Time, You Stop Using a Tool and Start Getting Around It

This is the turning point most companies hit. The process is gradual, but inevitable. Workarounds. Complicated workflows. Extra work. And instead of thinking about which additional tool would solve your problems, you realize that… “You may not even need any of these tools anymore.”

Clarity Comes from Seeing the Full Picture

At ClarityTechLabs, conversations never start with technology; it always starts with visibility. What technologies are currently being used? Which of them are providing true value? And where does the actual money go? Once all the answers have been found, it will be a lot easier to consolidate the redundant applications, delete the unused ones, and rethink systems that no longer fit how the business operates.

Saas Is Not The Problem, The Lack Of Management In The Saas Implementation Is The Problem

It takes time for Saas to become costly. Initially, one service is bought, but eventually, there will be a need to buy another service. The renewal process is left unmanaged and unnoticed, and it won’t take long until you notice that you have incurred significant costs. But once the issue has been pinpointed, managing and addressing it becomes easy.

Read more about the difference between custom software and Saas and what you should choose through our blog.