Are You One of the 90% of SaaS Buyers Who Overpay?

Are You One of the 90% of SaaS Buyers Who Overpay?

By BoppoTechnologies | Updated On: Jan 11, 2024 04:43 PM IST

 Are You One of the 90% of SaaS Buyers Who Overpay?
SaaS Development Software

Companies are allocating too much capital toward buying, selling, and implementing software-as-a-service (SaaS) products, according to new data.

What is a SaaS Development Software?

Software-as-a-service (SaaS) is a type of application that doesn't require hosting on-premises and is typically maintained by a third-party service provider.

Unlike offline software, which you can purchase and use, SaaS products are subscription-based. This means you pay a subscription fee for the amount of time you want to use the product. SaaS products are a package deal including maintenance and other activities related to upkeep.

Because they are hosted in the cloud, SaaS applications can be easily accessed over the internet. Users don't need any extensive hardware for deploying them.

The software-as-a-service on the cloud is managed by the host who provides access to certain features depending on the subscription model chosen by the user. They are also responsible for maintaining and updating the software.

Research states many companies are overpaying for products from an industry that has seen drastic increases in costs. Some companies are paying up to 50% more for SaaS products than they need to, the data showed. By 2025, the combined effects of inflation, competitive labour markets and environmental sustainability factors are projected to increase SaaS costs by 15% to 20%, according to Gartner.

A gradual change in price is usually more accepted by customers and causes less resistance than a spiked increase.

Although there is no specific formula for assessing a software's potential value to a business, if negotiated correctly and efficiently it can be beneficial to the company's pockets.

SaaS is a budding fundamental of Modern Business

SaaS development cost has become a necessary expense for businesses, especially now in the hybrid mode of working. Legacy tools are unable to support the dexterity and agility that are needed to get work done in a distributed workplace. It can therefore be hard to assign a monetary value to SaaS development tools used and SaaS development cost. However, in reality, avoiding it completely is no longer an option.

In a survey of various software providers, 80% said that they had raised prices in the past two years; and of those, prices had increased annually by up to 10%. Because of these significant hikes, it is important companies opting for SaaS set a strict budget. Organizations are spending somewhere between 5% to 15% of their net expenditure custom software development services in developing SaaS and that is a huge investment and needs to be optimized effectively.

Before negotiating for the best price of a software product, it is important to do your research and be prepared. You need to consider the different components and parameters that contribute towards the pricing of a SaaS before striking negotiation like auto-renewals, price increases, and pricing transparency, and equipped with all the necessary information and question you can go explore a better negotiation.

  • Only Buy What You Need

Why custom software development is important? This is a question often asked by companies coming to develop a software for the first time. An unused general software is common as companies often only utilize a portion of the technology they've paid for. In addition, product duplication often happens as clients use multiple tools to solve the same problem. Advantages of a custom software is there is exclusivity and no duplication of work.

  • Check for different Pricing Models

SaaS companies have the unique advantage of being able to offer different pricing models to their customers, which can help both attract and retain them. You can design this to your advantage by finding a pricing model that works best for your client's needs and requirements.


A single monthly price of Rs. X amount that grants access to all features of the company's product


Usage-based pricing is a great option for recurring billing platforms. This type of pricing allows businesses to charge customers based on their usage, which can be a more flexible and sustainable way to grow a business.


A SaaS content marketing company employs tiered pricing to great effect. Each tier is designed around the needs and budget of a different type of customer, from those new to Inbound marketing to professional marketers and marketing teams. This is again a flexible approach to knock down any obstacles that may impede a potential customer from doing business with them.


In per-user pricing the only variable in their pricing plans is the number of users on the account - whether you're a single user or part of a team of 100, the per-user price is the same.


SaaS also offers the provision to price its services according to usage. This means that you will only be charged for the users who use the software, rather than for everyone who is signed up for the service.

While opting for a SaaS service you should contemplate the questions -

1.     Am I paying more than I should for the SaaS service?

2.     Is the market offering more than what I am getting for what I have paid?

3.     Am I getting all the features that my business needs?

4.     Can the features be customized for my business?

Ascertaining the SaaS Usability

There are a vast number of metrics on which many successful SaaS growth strategies are built like:

·        Activation Rate

·        Number of active users using SaaS service

·        Conversion rate

·        Monthly recurring revenue

·        Customer acquisition cost

·        Customer lifetime value

·        Depth of usage

The activation rate is one of the most important metrics to measure for any SaaS company. Simply put, it's the number of users that use your product or service. If a user can't find the value in your product quickly, they're likely to move on and never come back. Therefore, any SaaS company needs to ensure that its users can discover the value of its product right away.

The future of SaaS looks bright. Companies are increasingly adopting SaaS solutions for a variety of business functions, and the overall growth of the SaaS industry is expected to remain strong in the coming years. This trend is being driven by the growing popularity of cloud computing, which makes it easier and more cost-effective for businesses to use SaaS applications.

More and more customers are adopting the subscription-based pricing model to keep up with their IT needs, even though limited budgets can be a challenge, especially for small businesses and start-ups. Even big enterprises are getting on board with this service business model, as it lets them meet a variety of needs with newer and agile solutions.

At Boppo Technologies, we are a full-scale IT Products and Solutions company offering IT solutions for a wide range of industries. Our custom software development process is aligned to efficient solutions. We believe in the scope of SaaS and can help develop a robust SaaS solution as per your specific need.

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