The hidden costs of SaaS: how companies maintain control in 2025 (with playbook)

Software-as-a-Service (SaaS) is now indispensable in the business world. From communication and HR to security and finance—virtually every department nowadays relies on a range of tools. But while SaaS was once seen as a scalable and relatively cost-effective solution, in 2025 we face a new reality: the explosive growth of costs.

According to recent analyses, global software costs per employee are rising by an average of 10% this year compared to 2024. The total SaaS market volume is approaching $300 billion, with annual growth rates of 18-20%. 

SaaS inflation: higher than consumer prices

What stands out most is that SaaS inflation (averaging 11%) is much higher than regular consumer inflation (around 2.8% in G7 countries). This means that companies often pay more for the exact same software stack, without any new features.

In addition, we are increasingly seeing a form of 'shrinkflation': hidden price increases as suppliers restructure bundles, reduce discounts, or let unused credits expire. More than 25% of companies will be directly affected by this in 2025. 

 

Impact on business operations

With SaaS and Cloud now accounting for 25% of total IT spending, these rising costs are becoming a strategic issue. IT infrastructure and management tools are among the largest expenditure items, while the room for (re)negotiation for customers remains very limited after the contract is signed.

Without a clear, even aggressive, strategy, companies risk not only higher costs but also an impact on profitability and liquidity. 

 

What can companies do?

Here are some concrete measures:

  • Supplier consolidation: fewer different tools means more clarity and better negotiating positions.

  • Negotiate early: don't wait until the last few weeks before renewal, but start well in advance.

  • Transparency in usage: by knowing exactly which licenses are actually being used, you prevent waste.

  • Flexible contracts: build in room to adapt to changes in your organization.

  • Awareness among employees: encourage a critical attitude regarding which functions and tools are truly necessary. 

And fortunately, there are still more

Conclusion

The SaaS market continues to grow, but the price increases and opaque models make it difficult for customers. SaaS has not been a cost reducer for some time – it requires active management, smart negotiations, and strategic choices.

PACT Association emphasizes that transparency, benchmark data, and professional contract management are the key elements to control costs in 2025 and continue to reap the benefits of SaaS and Cloud. 

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