Is it worth overpaying for any SaaS? Find out the real cost of your tools

In the era of digital transformation, nearly every company uses Software as a Service (SaaS) solutions. Their ease of implementation, flexibility, and low cost of access for a single subscription make many organizations not even consider alternatives.

Unfortunately, a significant part of them incurs a very high cost, about which they can't even know without proper calculation. Therefore, in this article, you will learn:

  • What is the real cost of SaaS platforms?
  • In which cases is their use simply not cost-effective?
  • What alternatives should your company consider?

The Situation in the SaaS Market

The SaaS industry is doing great, estimated to have grown by 500% over the last 7 years. According to an analysis by Grand View Research, in 2022 the global SaaS market reached a value of $261.15 billion, and from 2023 to 2030, the average annual growth of this market will be 13.7%, meaning that by 2030 it will reach a value of $819.23 billion!

Meanwhile, there is an increasing caution among customers of these solutions. According to a 2023 Gartner report, over the next four years as much as 30% of IT service buyers will be looking for alternative providers during the subscription renewal period, while currently, this rate is only about 5%. This stems both from the emergence of new SaaS solutions on the market and the fact that more and more companies are deciding to reduce the use of some of them. Why?

Data from Gartner's 2023 report on SaaS solutions

Rising Costs of SaaS

The SaaS market is growing, and with it, subscription prices are increasing. When we think of SaaS tools, we often consider the low cost of a single subscription. The problem starts when the number of these subscriptions increases alongside the number of SaaS platforms used. According to data from Statista, companies worldwide use an average of 130 different SaaS applications. Furthermore, the same report indicates that companies are already paying an average of $80.44 per employee for access to SaaS type software, and this value is almost increasing month by month.

Initially, the low entry costs for SaaS solutions can seem attractive, but in the long term, on a large scale, subscriptions generate fixed expenses that can dynamically increase as your company grows, adds new users, or expands functionality. Moreover, you might find yourself trapped in subscriptions to multiple services, which lead to a significant increase in your monthly or yearly costs.

Don't guess, calculate it

It's worth analyzing whether each tool you use is genuinely needed and whether it is the best available solution on the market—both in terms of cost and feature scope. We do not question the validity of SaaS solutions. They are unquestionably a huge support across many dimensions.

However, being aware of the risks associated with using such tools on a large scale and being cautious in their selection can help you limit potential losses and sometimes even allow you to discover opportunities for new solutions that will bring you real profit.

Excessive Number of SaaS Tools and the Risk of Dependency

When analyzing the real costs of SaaS solutions, ask yourself: Have you considered how many times you've decided to purchase additional SaaS licenses without analyzing the actual needs of your organization against the size and capabilities of building an internal solution that would pay off, for example, after 1.5 years?

Unfortunately, many people repeat this mistake, and its effect is a saturation of tools, often with overlapping functionalities. Such excess can lead to disorganization, data conflicts, and inefficient use of your company's resources, which in turn translates into an increase in unnecessary costs.

Additionally, with too many tools, the risk of dependency on suppliers grows, which concerns not only technical aspects, such as service continuity, but primarily financial dependence.

Data from Statista statistics portal report

Paying for Features You Don't Need

Adopting a "one-size-fits-all" model in SaaS often leads to situations where you pay for a full package of features, of which you only use a small part. The inability to customize tools to the specific needs of your organization is one of the main limitations of this model, resulting in inefficient IT budget spending.

Although SaaS offers many benefits, its excessive and imprudent use can lead to a series of operational and financial problems. It is recommended to carefully analyze your actual needs and the capabilities of a given tool before deciding on a subscription, and to regularly review and optimize your SaaS portfolio to avoid excessive spending.

Alternatives to SaaS Solutions

Unfortunately, even such detailed analysis often does not guarantee savings at the level that alternative methods can provide. What are we talking about? About building your own software.

Of course, building your own software may not always be possible or cost-effective. There are many SaaS solutions where attempting to replace them would simply be too costly.

It is worth highlighting the fact that more and more companies are abandoning some SaaS solutions, opting instead to build their own internal tools for things like planning, communication, activity monitoring, optimization, or automation.

This is an attractive solution especially now, when technologies available on the market significantly accelerate the process of creating such software and completely reduce their costs.

Save on Building Your Own Software

In response to the limitations of the SaaS model, more and more organizations are turning to no-code and low-code platforms, which enable quick and cost-effective creation of customized software. These tools allow users without advanced programming skills to design applications using graphical user interfaces and drag-and-drop elements.

This enables organizations to quickly tailor applications to their unique needs, not only accelerating the development process but also significantly reducing costs associated with traditional programming.

Using no-code and low-code platforms allows for dynamic adaptation to changing business requirements and substantial savings compared to SaaS solutions or building your own software using traditional methods.

Comparison of approaches: no-code low-code vs. traditional development

It's important to remember that building applications or websites using no-code and low-code platforms still relies to some extent on SaaS model solutions. However, there are some significant differences that guarantee benefits.

First, the complexity of LCNC (low-code no-code) platforms makes complete independence from SaaS providers difficult, as building such solutions for an organization's own needs would be extremely costly and simply not cost-effective. Second, by using a single LCNC platform, we are able to build many tools that cover our diverse needs and ultimately free us from a significantly larger number of SaaS providers.

Check if No-Code is Right for You

If you're considering using no-code and low-code technologies, we confirm - you are on a very good path to optimizing your processes, reducing costs, and becoming independent from the IT market situation. LCNC platforms are an excellent solution.

However, to fully optimize the entire development process using LCNC platforms, one must have a good understanding of the tool market and know how to use them. Therefore, if you want to check if no-code and low-code is indeed a good solution for your company, schedule a FREE CONSULTATION with our CTO - Kamil Tarczyński. During such a consultation, you will learn:

  • whether no-code and low-code is really the best solution for your needs,
  • which LCNC platforms will be best for building your IT projects,
  • what to pay special attention to when planning the entire development process and developing skills within the organization.

Kamil Tarczynski is a pioneer of the no-code low-code industry, who leads a team of developers on a daily basis, combining the world of traditional programming with LCNC technology.  With the most up-to-date knowledge on the market, he enjoys sharing it in the Just No Code podcast and educating managers. Sign up for a consultation by clicking this banner:

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We also encourage you to read the article that will allow you to learn more about no-code and low-code technology for businesses, where we analyze all the pros and cons and point out elements that can have a key impact on the success of your company. Click the banner bellow:

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