SaaS Spending Insights

📊 Fresh 2025 SaaS Spending Benchmarks: Just analyzed the latest SaaS Capital data and compared it to 2024 numbers. There's a stark reality check for founders considering their funding path: Bootstrap vs VC impacts everything about your spend profile: - Bootstrapped companies operate at 95% of ARR vs 107% for equity-backed - 85% of bootstrapped SaaS are at/near profitability vs only 46% of VC-backed - Equity-backed spend 89% more on sales and DOUBLE on marketing Most surprising? VC-backed companies also spend 80% more on G&A costs. Growth correlation is exactly where you'd expect - higher-growth companies (regardless of funding) spend ~20% more on Sales and ~40% more on Marketing. For bootstrappers looking to benchmark: at $3-5M ARR, healthy allocation looks like: - 17% on COGS (hosting, devops, services) - 7% on Customer Success - 22% on Sales + Marketing - 20% on R&D - 15% on G&A Feel free to swipe through the carousel for the full breakdown! Anything that surprises you?

Yesterday, Klarna’s CEO announced they were firing several SaaS providers (including Salesforce and Workday). This is just the start of a long, painful trend. Many SaaS companies will soon miss their targets and lose top accounts. Here’s why and how SaaS teams can prepare to avoid this cold winter: BACKGROUND: For those unfamiliar, Klarna offers flexible payment plans for online and offline purchases. With $2B in revenue and a $7.8B market cap, Klarna is a profitable company—a dream client for any enterprise SaaS vendor. Yet, Klarna does not see the need for many SaaS tools. Why? They’re not replacing Salesforce or Workday, but instead reimagining their entire workflows using AI. They’re realizing that many SaaS tools designed for old workflows are now obsolete. They may end up developing some in house AI tools to serve their proprietary workflows. Klarna is setting new benchmarks for AI-driven organizations, and their approach is likely to become mainstream within 18 months. As more companies adopt this model, the TAM for SaaS will shrink dramatically. SaaS vendors that quickly adapt to AI use cases will survive and thrive, but many will fade away as the market contracts. Additionally, Klarna recently announced it would cut over 50% of its workforce, reducing staff from 5,000 to under 2,000, driven largely by AI integration in marketing and CS. This will naturally lead to a reduction in SaaS spend, but the layoffs aren’t the cause—it’s Klarna’s AI-centric organizational design that’s causing the decrease in spend. Mark my words. SaaS vendors must evolve to stay alive. If you are a SaaS vendor, how do you cope with this? 1. Cannibalize your own business: Just like Netflix shifted from DVD rentals to streaming, SaaS companies must embrace AI and be willing to disrupt their own offerings. Those who don’t evolve will face the fate of Blockbuster. 2. Identify your AI use case: Look for adjacent areas where AI can bring quantum leaps and major productivity gains, not incremental improvements. Don’t just build another system of record—focus on real innovation that pushes boundaries and transforms your space. 3. Reduce Costs: The era of zero-interest rates led to bloated processes and structures. Now is the time for SaaS companies to learn to do business with lower costs and operate more efficiently. 4. Prepare for Price Pressures: Expect downward pricing pressure as AI-driven enterprises like Klarna redefine efficiency. Expensive SaaS solutions will struggle, while lower-priced alternatives will thrive in this new wave of innovation.   5. Go Global: In the past, selling in the U.S. alone was enough for a series A/B companies. But as competition in the US intensifies, expanding internationally with competitive pricing will offer much-needed room for expansion. SaaS vendors do have choices, but they ain’t pretty. They can disrupt themselves in the next 12 months, or... They can wait to be disrupted by others later. 

Your SaaS vendors just gave themselves a 12% raise. You didn't approve it. Most teams haven't even noticed. The average SaaS inflation rate in 2026 sits at 12.2% - not because companies bought more software, but because vendors embedded AI features into existing products and repriced accordingly. New “AI tier.” New “intelligent add-on.” Same platform you’ve used since 2022. The result: SaaS spend per employee has jumped from $7,900 in 2023 to $9,100 today. Nearly 15% in two years - with no new headcount, no new tools, no approval process triggered. This is the new vendor playbook: → Embed AI features at the platform level → Shift to consumption or tier-based pricing → Reprice at renewal when you have no time to switch Procurement teams that miss this aren’t being lazy. They’re operating with the wrong mental model - treating SaaS renewals as a once-a-year event instead of a continuous process. The fix: → Audit every contract for embedded AI upsells before renewal → Request usage data. If nobody’s using the AI features, you shouldn’t be paying for them → Push for multi-year price locks now, before the next reprice cycle SaaS inflation isn’t coming. It’s here. Is your team tracking vendor pricing changes proactively - or discovering them at the worst possible moment? #ITProcurement #SaaSManagement

Why your SaaS strategy is failing: a wake-up call for 2025 I've spent years watching companies waste millions on software they don't need, can't track, and barely use. As a 3-time tech founder, it never ceases to amaze me how much gets lost between the cracks. At one of my previous companies, I vividly remember the day we audited our SaaS stack - and discovered we were spending more on unused software licenses than we were on our entire team’s annual offsite. I have concerning news for every business leader: You're likely hemorrhaging money on software you don't need, can't track, and aren't fully using. Our research has uncovered 4 concerning trends in the SaaS landscape: • Software spend has reached $8,800 per employee annually (up 27.5% YoY) • Global SaaS spend will hit $300 billion in 2025 • Per-employee SaaS costs have jumped 37% in just two years • The average company now juggles 130 different applications Behind these numbers lies what I call the "Perfect Storm of SaaS Waste" - and it's getting worse. Let me explain why... The Visibility Problem: Most companies can't see their full software picture. They don’t, or can’t, track it. On top of that, our data shows 61% of SaaS providers hide their pricing, with only 39% showing clear pricing on their websites. This lack of transparency gives vendors the upper hand in deals. The Shrinkflation Effect: We've spotted a trend we call "SaaS Shrinkflation" - hitting 27% of businesses as of January 2025. It shows up as: 1. Bundling or unbundling features to mask value changes 2. "Use-it-or-lose-it" pricing (like Snowflake and Zapier use) 3. Price adjustments hidden as "currency updates" 4. Less room to negotiate discounts on longer contracts 5. Complete pricing overhauls that make comparing costs impossible The Utilization Crisis: The hard truth: 66% of software licenses dont get used. Your team is spending time and money renewing software nobody uses. Procurement teams are doing their best -  but the odds are stacked against them. Our research shows only 17% have the tools, visibility, and influence they need to truly drive impact across the business. The solution? Data-driven SaaS management. At Vertice, we're tackling this crisis head-on. With validated pricing data for over 16,000 vendors worldwide, our approach helps organizations reduce annual software spend by up to 30% without compromising their tech stack. The businesses that thrive in 2025 will be those that treat SaaS spending as a strategic imperative, not an unavoidable cost center. P.S We built Vertice to combat the effects of SaaS inflation, so if you are ready to regain control of your SaaS spending chat with our team: https://lnkd.in/efed685q

The story of many 3+9 rolling AI budget reviews this month: What is our “AI spend? Or - it’s Why do finance, IT and the business all have different AI numbers? Your 2026 AI budget risk IS NOT OVERSPEND, but INVISIBLE SPEND. I’m seeing the same pattern on repeat.  - cloud line items tagged as “platform,”  - vendors rebadging old SaaS as “AI,”  - internal teams parking time under “innovation,” and  - business units expensing copilots and point tools on credit cards. Recent studies put global AI spend at roughly 1.5 trillion by the end of 2025, but a large chunk of that now hides inside generic IT, SaaS, and “productivity” budgets where nobody can see it cleanly. Shadow AI makes the problem worse, not better. Around 80% of office workers already use AI, yet only about 22% stick solely to employer-approved tools, which means most organisations are paying twice:  - once for official platforms,  - once again for unsanctioned apps and duplicated workflows. Data from security and breach reports shows that incidents involving shadow AI cost on the order of hundreds of thousands more per breach, because nobody budgeted for the clean-up! Copilot rollouts are the current slow-motion car crash. - Gartner expects AI-related SaaS costs, especially copilots, to grow 30–50% annually as licences and usage outpace governance. - Enterprises are discovering that what started as “a few pilot seats” has quietly turned into one of the fastest-growing opex lines once you add usage-based fees, training time, storage growth, and auto-renewals finance never saw. If you want a practical 90-day fix, skip the pretty dashboards and do this sort of cost hygiene:  1. define 3-4 AI cost buckets (cloud AI services, model/API, copilots and AI-SaaS, internal labour),  2. enforce tagging by workflow or product,  3. separate elastic inference from fixed platform and people costs so you can actually see unit economics.  4. Then put one simple guardrail in place: no net-new AI spend without a costed workflow and a named owner on the hook for value, not just “adoption.” Because if you don’t get AI spend to finance-grade visibility this year, procurement and the CFO’s office will eventually “solve” it for you. Likely with blunt cuts that don’t distinguish between flaky experiments and the workflows that are actually moving the needle.

I’ve worked through Y2K, the dot-com bust, Covid’s WFH explosion, software eating the world…and now AI eating software? Among stages we analyzed, YoY growth in spend for AI-Native tools is increasing mightily among MM/Enterprises while spend for primarily SaaS tools among SMBs are declining: For Mid-Market/Enterprise: → AI-Native tools: +94% → Hybrid SaaS + AI tools: +51% → Primarily SaaS tools: +8% For SMB/Growth: → AI-Native tools: +24% → Hybrid SaaS + AI tools: +30% → Primarily SaaS tools: -8% Dig through more of this data here from our latest report: https://lnkd.in/ehjecdFZ Here’s how you should be interpreting these stats for your next renewal: 1. If 30%+ of your spend is still traditional SaaS, you have leverage. Vendors are desperate to prevent switching. Use declining growth as negotiation signal. 2. For AI-Native tools, expect less pricing flexibility. Cursor is up 660% in contract count. Anthropic up 428%. Clay up 304%. Focus on terms, not discounts: price caps, usage guardrails, uplift protection. 3. Fast-growing AI tools (ElevenLabs, Fireflies, Nooks) may negotiate more with you. They need case studies and market share. Even with all this said, what surprises me is that despite AI proliferation, your top 10 suppliers still command nearly 3/4 of your software budget. We’ve seen Microsoft, Google, and Salesforce capture AI spend by acquiring AI-native companies. Do you consolidate with your existing top 10 or diversify with specialists. Both work. But you need to pick one that fits your needs/budget.

B2B marketing teams are spending at record highs. And missing their targets. Latest Wynter Index is out (Q1 2026). It's a quarterly survey of 200 B2B SaaS marketing leaders tracking where budgets are flowing and how teams are performing across five core areas: performance, headcount, ads, software, and agency spend. The headline: 58.6, up 5.4 points. Strongest acceleration we've measured. But here's what the headline doesn't tell you: Software spend? All-time high. Paid media? Record. Headcount? Strongest hiring signal in recent quarters. Performance-to-plan? Still in contraction. Teams are aggressively buying their way into pipeline. The results haven't caught up. Some findings that jumped out: 49% of all new software investment is going to AI. But it's not new budget, teams are gutting legacy tools to fund it. 26% of software cuts are consolidation plays. Brand hit 45.5% as a top priority, up from 39%. The biggest shift in the data. AI search is a major driver—when clicks disappear, you need to be the name buyers already know. Bootstrapped companies are outperforming VC-backed ones. Turns out setting targets based on reality instead of next-round valuation models helps. The full report has the complete breakdown across all five index components, by company size, funding type, and channel allocation. Available at wynter . com / index

Yesterday’s SaaS selloff is the marketing starting to price in a structural shift in where software value and revenue durability actually live. Don Muir lays it out cleanly in this Forbes piece (link in 1st comment). I want to push it one step further. Most people are still framing this as AI inside applications. That misses the point. A few hard truths: 1. Application < intelligence ➡️ In SaaS 1.0, the container mattered. Licenses, seats, workflows trapped inside apps. ➡️ In SaaS 2.0, intelligence executes work across systems. The container commoditizes. Revenue durability moves to whoever owns execution and outcomes, not deployment. Stickiness now comes from labor displacement, not contracts ➡️ Recurring revenue used to mean predictability because replacing software was painful. ➡️ AI collapses that friction. What sticks now is intelligence embedded in daily work that replaces expensive human throughput. If you remove it, cost snaps back immediately. Agent TAM > SaaS TAM ➡️ Classic SaaS competed for software budgets. Those budgets are shrinking. ➡️ Agentic systems compete for labor, software, and entirely new categories of spend that were previously infeasible due to headcount and efficiency constraints. That budget pool is expanding. The real dividing line is vertical vs horizontal ➡️ Horizontal SaaS, AI-branded or not, still fights over the same shrinking SaaS budget. ➡️ Vertical AI competes directly with labor on the P&L. That is a much larger and growing line item. This is where the economics actually reprice. The market is underpricing the second-order effects ➡️ Yesterday’s multiple compression is not the end state. It is the opening move. As intelligence migrates closer to execution, software margins, contract structures, and valuation heuristics have to reset. Slowly at first, then all at once. This is not theoretical for us at F2. Our revenue growth is coming from exactly this shift: replacing offline human workflows with vertical, execution-oriented intelligence that sits between systems of record and decisions. Customers are not buying software. They are buying fewer hours, faster decisions, and higher returns on judgment. The selloff Don describes is rational markets pricing in changing assumptions of a category long seen as the pinnacle of earnings quality and growth. But to me, it's underprice: there's too much complacency around the disruption that's just around the corner.