In the midst of economic changes and shifts, the landscape of software-as-a-service (SaaS) is undergoing a notable transformation due to the impact of inflation. This alteration in economic dynamics has led to a  very noticeable increase in the costs associated with these SaaS offerings, making them more expensive for organizations and business. This trend has prompted a significant upward trajectory in the prices of these services. Vertice, a prominent player in the SaaS industry known for its meticulous tracking of SaaS spending across an extensive network of 16,000 vendors, has conducted comprehensive research, it has been revealed that SaaS costs have witnessed a significant year-on-year increase, with prices rising by an impressive average of 12%. Equally remarkable is the discovery that a staggering 73% of SaaS vendors have opted to implement price hikes during the current year.

The implications of this recent surge in prices are substantial, as Joel Windels, Vice President of Global Marketing at Vertice, emphasized in a recent interview. This increase in prices is a huge change from what we’ve seen before. In the past, SaaS companies made their contracts more valuable by getting more people to use their services. But in the last year, things have changed. 

Looking closer at what’s causing these price hikes and how much they’re going up, it’s clear that whether it makes financial sense is really important. Sandeep Beotra, the Chief Financial Officer of Degreed, an organization that’s deeply connected to the SaaS world, touched upon this briefly in one of her latest discussions. Beotra pointed out that the ability to raise prices isn’t the same for all 150 SaaS vendors his company works with.

But these differences aren’t just about what vendors decide; they’re also about how the price increases occur. Beotra explained this using the example of Salesforce, a instrumental player in the industry. Salesforce recently increased its prices by about 9%. Beotra compared Salesforce to a big player who controls a lot, saying they have a big say in how prices change.

On the other hand, Beotra talked about some SaaS companies whose products aren’t necessary but are more like add-ons. He said that with these companies, you can often get good discounts through strong negotiations. He shared examples where smart negotiations led to much lower prices, sometimes 30% to 40% less than the previous year.

Vertice’s research also showed that prices went up the most in fields like sales, finance and productivity tools. The study also had an interesting idea about why some companies are raising prices. It thinks that companies with complicated pricing structures are more likely to do this.

For Chief Financial Officers (CFOs) trying to deal with SaaS costs, Beotra had a simple idea—talk directly to the companies and try to get better prices. He said that he usually starts by asking for a better deal, and sometimes it works, while other times it doesn’t.

In conclusion, if you’re facing higher SaaS costs, you’re not alone. The SaaS landscape is changing due to inflation, making prices go up. Joel Windels from Vertice says this is different from before. Companies used to make contracts more valuable by getting more users, but now they’re raising prices to earn more. Financial sense is a big factor in these hikes. The differences go beyond vendor decisions.