The SaaS Spend Problem
The average company wastes 30-40% of its SaaS budget on unused licenses, duplicate tools, and contracts that no longer match how the team works. This isn't a new problem — but it gets worse every year as the number of tools grows and the people who approved original purchases move on.
The good news: SaaS waste is recoverable. Unlike headcount or office space, software costs can be cut quickly, with minimal operational disruption, and often without any negotiation at all. Tools simply get turned off.
This guide covers a systematic approach to finding the waste and recovering it.
Step 1: Get a Complete Inventory
You can't optimize what you can't see. Most companies have no single, accurate list of every tool they're paying for. Finance sees approved invoices. IT sees provisioned accounts. Individual teams use tools that never got official approval.
How to build the inventory:
- Pull credit card statements and expense reports for the last 12 months — filter for recurring software charges
- Check your SSO provider (Okta, Azure AD) for all connected applications
- Survey team leads: "What SaaS tools does your team use in a typical week?"
- Review AP invoices from each vendor
- Check Chrome extension inventory (shadow IT vector)
What to capture for each tool:
- Vendor name and URL
- Annual contract value
- Contract renewal date
- Number of licensed seats vs. active users
- Primary owner or admin
- Business function it serves
This audit typically reveals 15-30% of tools that nobody in the room can name a primary user for.
Step 2: Classify Usage
Once you have the inventory, classify each tool by actual usage:
Active tools: Used by the majority of licensed users, regularly, for core workflows. Keep these.
Underutilized tools: Purchased for a project or use case that has since changed. Limited to a few users or occasional use. Candidates for right-sizing or consolidation.
Abandoned tools: Nobody uses them. Often this happens after a team reorganizes, a project ends, or a competing tool was adopted without canceling the first one.
Shadow IT: Tools teams are using that aren't officially approved or centrally managed. May represent legitimate needs — or security risk.
How to measure usage accurately:
- Pull login reports from your SSO/IdP
- Ask vendors directly — most enterprise contracts include usage reports
- For tools without SSO, check browser extensions or direct vendor reports
- Audit seat count vs. active users monthly (not quarterly — this gets stale fast)
Step 3: Identify Consolidation Opportunities
Most software categories have significant overlap. Teams often end up with multiple tools that do similar things because different people bought them independently at different times.
Common consolidation opportunities:
Project management: Jira + Asana + Linear + Notion (all four in the same org isn't unusual). Usually reducible to one.
Communication: Slack + Teams + Zoom + Google Meet. Teams often uses multiple video tools unnecessarily.
Document creation: Google Docs + Notion + Confluence. Pick one collaborative wiki.
Analytics: Mixpanel + Amplitude + Heap + GA4. Multiple analytics platforms collecting the same data is pure waste.
CRM: Salesforce + HubSpot + a lighter outreach tool. Often the lighter tools are redundant.
AI writing tools: Grammarly + Jasper + Copy.ai + Claude. Define a standard; cancel the rest.
The goal isn't to minimize tools — it's to eliminate tools that cover the same ground without differentiation.
Step 4: Right-Size Before You Cancel
Before canceling a tool, check whether you're paying for more than you need.
Seat reduction: Most contracts allow you to reduce seats at renewal. If you have 100 seats and 40 active users, negotiate down to 50 at the next renewal cycle.
Tier reduction: Many SaaS products sell features you don't use. Check what tier you're on and whether a lower tier covers your actual use cases.
Annual vs. monthly: If you're paying monthly for tools you'll use long-term, switching to annual typically saves 15-25%.
Plan migration: Some vendors have introduced lower-cost tiers since you first signed. It's worth asking whether you qualify for a migration.
Step 5: Negotiate Renewals (Don't Auto-Renew)
Auto-renewal is the vendor's best friend. You never think about the contract until it's already renewed for another year.
Create a renewal calendar: Every contract should have a renewal date and a 90-day lead reminder. That's when negotiations actually happen — not in the last week before renewal.
Leverage you have at renewal:
- Usage data showing you're below licensed seats
- Competitor quotes (get one, even if you don't intend to switch)
- Budget constraints (always true, and always worth stating)
- Willingness to commit to a multi-year term in exchange for a discount
What to ask for:
- Price lock for 2-3 years (especially effective in inflationary environments)
- Additional seats at no charge
- Reduced seat count at same unit price
- One-time true-up credit if you overpaid for unused seats
Most B2B SaaS vendors will negotiate. The worst answer is no — and you're already at the same price.
Step 6: Build Evaluation Discipline for New Tools
The most sustainable way to reduce SaaS spend is to not create waste in the first place.
Problems that create waste:
- Tool decisions made at the team level without central visibility
- No formal evaluation before committing to contracts
- "Try it free, worry about cost later" culture that leads to forgotten commitments
- No offboarding process when employees leave (orphaned licenses)
What rigorous evaluation looks like:
- Clearly define the problem being solved before evaluating any tool
- Evaluate 2-3 alternatives, not just the first vendor who demos
- Get references from companies with similar use cases
- Review pricing structure carefully — understand what happens when you scale
- Get IT and security review before adding SSO access
- Set a 90-day check-in to review whether the tool delivered on its promise
Step 7: Maintain Ongoing Visibility
The biggest reason SaaS spend creeps back up: no one is watching.
Assign ownership: Someone needs to own the software inventory. In small companies, this is often the CFO or COO. In larger companies, it's an IT or procurement function.
Monthly check:
- New tools added (approved or shadow IT)
- Upcoming renewals in the next 60 days
- Usage reports for highest-cost tools
Quarterly check:
- Full usage audit for the top 20 tools by cost
- Consolidation opportunities review
- Shadow IT sweep
Annual check:
- Full inventory rebuild
- Contract renegotiation calendar for the next 12 months
- Benchmark current prices against market (pricing changes constantly)
Realistic Outcomes
What can you actually save? Based on typical software audits:
- Quick wins (30 days): Canceling outright unused tools typically saves 5-10% of the total SaaS budget immediately
- Right-sizing and consolidation (90 days): Reducing seats on underutilized tools and consolidating duplicate categories typically saves another 10-20%
- Renewal negotiations (6-12 months): Working renewal timing with prepared leverage typically yields 10-15% reductions on major contracts
Combined, a systematic audit and ongoing management process typically reduces SaaS spend by 25-35% in the first year.
Using Trackr for Evaluation Discipline
When you do need new tools, research before you commit:
- Compare user sentiment across G2, Capterra, Reddit, and 20+ other sources
- Get AI-generated pros/cons and scorecard analysis in under 2 minutes
- Track which tools your team is evaluating and the current status of each decision
- Set scorecard criteria that match your actual priorities (not vendor benchmarks)
Spend 10 minutes on research before signing a contract that might cost $50K/year.