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SaaS vendors are hiking subscription costs faster than both inflation and the growth rate of corporate IT budgets. Gartner VP Jo Liversidge revealed that this year, price increases ranged from 9% to 25%. These hikes often result from exchange rate shifts, repackaging of licenses, or changing pricing metrics, with generative AI features adding hidden costs. Techniques like “multipliers” can also unexpectedly double service costs, leaving organizations paying hefty excess usage fees.
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Negotiation is Key
Despite steep hikes, buyers are not powerless. Liversidge recommends long-term planning that starts at least two years before subscription renewal. By mapping SaaS usage across the organization and identifying overlapping licenses—such as multiple Salesforce-owned products—companies can consolidate subscriptions and negotiate better deals. Reviewing usage can also reveal underused subscriptions, allowing downgrades without affecting productivity.
Preparing for Vendor Risks
Geopolitical events and force majeure can affect SaaS continuity. Luke Ellery, Gartner VP, highlighted instances where vendors like Microsoft cut off clients due to sanctions. Vendors also shift governance risks to customers, often without disclosing server locations. Ellery advises negotiating exit provisions and data escrow arrangements to maintain operations if a provider withdraws services. Testing continuity plans, including workload migrations, ensures preparedness for unexpected outages.
Plan, Negotiate, and Stay Resilient
Price increases should never be accepted blindly. Gartner experts stress that continuous negotiation not only reduces costs but also enhances organizational resilience. The “VMware effect”—where Broadcom’s acquisition led to staggering price hikes—illustrates the competitive pressure vendors feel, which buyers can leverage. Organizations that proactively plan, negotiate, and test vendor continuity will maintain control over SaaS spend and operational stability.
