Organisations spend around £7,500 on SaaS for every sales employee. This is double the average for employees in other departments
Vertice, a leading SaaS purchasing and spend management platform, today released a comprehensive pricing guide into sales software.
Total spend on SaaS has exploded. Recent research by Gartner estimates that the industry was worth $171 billion in 2022, up 42% from 2020. SaaS adoption has ballooned so much that the average business of 1,000 employees now maintains around 177 active software subscriptions, several of which are focused on streamlining and improving sales processes.
Data from Vertice’s Sales Tools Report highlights that sales teams are the most expensive department in the average organisation when it comes to SaaS, with the cost of these sales tools representing 18% of all SaaS spend. The data also revealed that the average business spends £7,500 on SaaS for every sales employee — almost double the £3,762 that is spent on employees in other departments. However, ensuring that these sales reps actually take advantage of the licences that have been purchased for them is a challenge for many revenue leaders.
Analysis of usage at hundreds of businesses globally reveals just how significant this problem is at many organisations. Only 67% of licences being paid for are actively being used by employees. This under-utilisation represents an overspend of one third, a needless cost that will number in the millions at larger organisations. This wastage is even more pronounced among sales tools, with over half of users frequently failing to even login to platforms, let alone get maximum utility from them.
Additionally, revenue teams are the least likely of any department to efficiently use the SaaS licences they have invested in, with only 48% of total seats being accessed in the last 30 days. Even those that do login don’t always require the licences they have been assigned – around 16% of sales users are on tiers more expensive than their usage would require.
The cost of SaaS is also rising four times faster than economic inflation. A third of sales vendors contractually include language that supports pricing increases. This is a higher proportion compared with some product categories, such as DevOps (24%), but lower than some others, such as marketing (47%). Almost all SaaS companies make use of auto-renewal language, with 9 in 10 sales vendors including it in standard contracts with customers — slightly higher than the average of 88%.
However, transparency remains a key challenge in the SaaS purchasing process. With low visibility into pricing and tool usage along with limited negotiation bandwidth, businesses are overpaying for SaaS products. While some vendors publish their pricing directly onto their websites or through certain third parties, many SaaS companies intentionally keep their pricing hidden. Only 45% of SaaS vendors publish their pricing, with the remainder obscuring the cost of at least some of their licensing — a technique that typically works to the advantage of the vendor rather than the customer.
Looking at sales tools specifically, this technique is even more prevalent. Among the 50 tools analysed, only 36% featured transparent pricing models — meaning almost two thirds of sales SaaS is murky and more difficult to navigate. This lack of transparency works to the vendor’s advantage, however Vertice aims to showcase a better way to purchase and manage SaaS.
This presents the CFO with big challenges in ensuring that revenue teams are not only equipped with the best and most capable SaaS platforms, but also that they are being purchased and managed efficiently. This speaks to a fundamental need to invest in SaaS purchasing software, to keep spend low and value at the maximum, generating a significant capital and efficiency advantage over the competition.
Joel Windels, Vice President of Marketing at Vertice stated “This research is interesting, and probably not especially joyful reading for sales leaders. It’s clear that getting a good price on SaaS sales can be a challenge, but that even once the right tooling has been purchased it’s no guarantee that team members will actually use it. In a climate where most execs are looking for ways to embrace lean growth models, the sales SaaS stack looks like a very attractive place to start making optimisations.”
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.