How Much do FREE SaaS Apps Really Cost Your Business?

With more and more businesses reliant on a large number of SaaS apps, the challenge of managing these contracts is becoming more complex.

Overstretched procurement teams often focus on larger contract sizes and more strategically important vendors, leaving low value and free contracts largely un-managed.

But there are risks to this approach. Even low-cost and free SaaS apps could be costing your business. Here’s why:

Commercial v consumer subscriptions: Many SaaS apps offer a free version to consumers or single users. Often, the subscriptions prevent commercial use and put your business at risk if these apps are used. It’s simply not worth the time or the risk.

Hidden costs of SaaS apps: Individual employees and operational teams subscribe to SaaS tools that help them to perform their work, often without too much research, oversight or control. It’s not uncommon for these subscriptions to be expensed or mis-categorised and recharged to the business. Whilst these costs may be small, they present a hidden cost.

Freemium is not free: Many SaaS applications offer a free plan or a free trial to encourage adoption and usage. Costs only ramp up once users are reliant on the platform for their operations and the cost of ‘switching’ to a paid plan becomes compelling. Be aware of pending costs for upgrades.

Your Data in Other People’s Hands: Whilst Free may imply there’s no cost, you may risk your business data being monetised by SaaS vendors. That’s not to say, this will compromise your business, but it is essential to keep on top of what rights SaaS vendors have to use your data. And that is time consuming and complex.

Paying for un-used SaaS app licenses: Keeping on top of which employees have access to the software your business pays for is a continuous process. With new hires, job changes and leavers in constant motion, it’s a near full time job to ensure that you’re only paying for the licenses you need. Don’t be surprised if your SaaS vendor doesn’t automatically reduce the number of subscribers they charge for when your usage drops below a threshold.

Leavers License Risks: With more and more remote workers working flexible hours and an increasing number of part time employees, your business is at risk of paying for software that is used outside of your business requirements. Keeping control of your users and usage is an unforeseen cost to your business.


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