Businesses Affected by SaaS Subscription Cost Increase

With businesses increasingly reliant on software for day-to-day operations, the cost of Software-as-a-service (SaaS) subscriptions increasing businesses are being badly affected.

according to an April report by the IT Asset Management Review, “A significant concern for chief financial officers is the relentless increase in software prices and the impact on businesses.”

 Over the past year, the company has “witnessed a substantial upward trend in software licensing and subscription costs,” making it increasingly challenging to “effectively manage IT budgets.”

The increase of subscription costs with extended contracting periods may undermine profits for businesses for a short term.

“Any SaaS provider can price themselves out of the market, especially international providers who don’t adjust for the dollar/rand exchange rate,” TymeBank chief technology officer Bruce Paveley said while speaking to TechCentral.

Paveley urged software companies not to highly increase their prices as they might risk losing customers.

Yatin Narsai CEO of Bank Zero warned businesses who are paying for software to think carefully about software contracts before signing with a specific vendor.

“While the rand has deteriorated against the dollar, causing cost pressures, companies using these services cannot easily migrate,” said Narsai. “There are always cheaper options available. However, once software systems are entrenched and integrated, they are nearly impossible to undo.”

Paveley said, “Negotiations with the SaaS providers should be robust and should present value to both businesses. Make sure you sign up for the minimum offering to support your business at a price point that makes sense. The market has competition, and this should assist in managing costs; just don’t be scared to move.”