SaaS vendors are hiking costs, fast, but you can push back

"SaaS vendors are increasing prices faster than both inflation and the typical growth rate of corporate IT budgets, but Gartner VP analyst Jo Liversidge thinks that canny buyers can reduce their bills by anticipating price hikes and planning to negotiate hard. Speaking at the analyst firm's Symposium event in Australia last week, Liversidge said SaaS vendors have hiked prices by between 9 and 25 percent this year. While some price increases reflect exchange rate shifts or a vendor's desire just to charge more for their wares, many come after SaaS companies change the metrics they use to set prices or repackage licenses in ways that make them more expensive."

""Hidden costs are not new in SaaS - Salesforce customers have dealt with storage costs for years," Liversidge explained. "But we're now seeing a proliferation of hidden costs, particularly around generative AI capabilities." Another way SaaS vendors increase costs is with "multipliers," a scheme that includes credits customers can spend on services under their subscription. "Many of these vendors reserve the unilateral right to change that multiplier," Liversidge said. A service that costs 10 credits can rise to 20 credits overnight, doubling the price. Users then burn through the credits in their subscriptions more quickly than anticipated and soon find themselves paying expensive excess usage fees."

SaaS vendors have raised prices between 9% and 25% this year, often exceeding inflation and the typical 2.8% growth rate of corporate IT budgets. Several price hikes stem from exchange rate shifts, repackaging licenses, or changes to pricing metrics. Hidden costs are increasing, especially for generative AI capabilities. Vendors deploy "multipliers"—credit-based schemes that can be unilaterally changed—to inflate effective prices and trigger excess usage fees. Organizations that forecast renewals and map SaaS use up to two years ahead can identify consolidation opportunities, understand true consumption, and prepare stronger negotiations to reduce future bills.

Read at Theregister