Most UK SMEs overspend on software. Not through buying the wrong tools, but through unused seats, redundant subscriptions, and per-seat pricing that scales linearly while the value does not. Reducing software costs is a three-step process: audit what you have, eliminate what you do not use, and replace high-cost tools where building is cheaper than subscribing.
We help UK businesses cut their software spend by 30 to 50 percent without losing capability. The first step costs nothing and takes an afternoon. Start there.
How Much Software Spend Is Wasted?
The data is consistent across multiple sources. BetterCloud research found that the average company uses 110 SaaS applications and wastes roughly 30 percent of SaaS spend on unused or redundant tools. Productiv reports similar figures, with 35 percent of SaaS applications having low engagement. For a UK SME spending 60,000 per year on software subscriptions, that means 18,000 to 21,000 is wasted.
The waste comes from three sources:
- Unused seats: You pay for 50 seats, 32 people actually log in. The 18 unused seats are pure waste.
- Redundant tools: Two tools that do the same job. Often one was bought by one team and another by a different team, and nobody noticed the overlap.
- Forgotten subscriptions: Auto-renewing tools that nobody uses anymore. Someone signed up for a trial, it converted, and the card keeps getting charged.
How Do You Audit Your Software Spend?
The audit is the first and most impactful step. It costs nothing and typically reveals immediate savings.
- Pull 12 months of statements: Go through credit card and bank statements for the past year. Flag every recurring software charge.
- List every subscription: Create a spreadsheet with tool name, monthly or annual cost, number of paid seats, and payment method.
- Check actual usage: Log into each platform admin console. Compare paid seats to active users (people who logged in in the last 30 days).
- Identify redundancy: Look for tools that overlap. Two project management tools? Two CRMs? One is redundant.
- Calculate the waste: Sum the cost of unused seats, redundant tools, and forgotten subscriptions. This is your immediate saving.
Most businesses find 15 to 25 percent immediate savings from this audit alone, with zero operational impact. Our integration health check can help you structure this audit.
How Do You Eliminate Redundant Tools?
Once you know what you have, the next step is eliminating redundancy. This is harder than cancelling unused tools because it requires choosing which tool to keep and migrating users.
For each pair of redundant tools:
- Compare usage: Which tool has more active users? Which has more workflow embedded in it?
- Compare cost: Which is cheaper at your current and projected user count?
- Compare data portability: Can you export data from the tool you will drop? If not, that changes the calculation.
- Migrate and cancel: Move users and data to the kept tool, then cancel the dropped subscription.
This step typically saves another 10 to 15 percent. Combined with the audit, most UK SMEs can cut 25 to 35 percent of software spend without building anything new.
When Should You Replace SaaS with Custom Software?
After auditing and eliminating waste, the remaining spend is on tools you actually use. For high-cost tools with many users, replacing SaaS with custom software can save more.
The decision point is user count. For a SaaS platform costing 80 per seat per month:
- 20 users: 19,200 per year. SaaS is cheaper than building.
- 50 users: 48,000 per year. Custom software (60,000 build, 10,000 annual maintenance) pays back in under two years.
- 100 users: 96,000 per year. Custom software saves over 80,000 per year after payback.
Use our SaaS ROI calculator to find your crossover point. For a full framework, see our guide on custom software vs SaaS TCO.
What About SaaS Price Negotiation?
Before replacing SaaS with custom software, it is worth negotiating. Many vendors offer discounts that are not advertised:
- Annual payment: Paying yearly instead of monthly often saves 10 to 15 percent.
- Volume discounts: If you have 50 or more users, ask for a per-seat discount. Vendors expect this negotiation.
- Competitive quotes: Mentioning you are evaluating alternatives sometimes gets you better pricing.
- Feature-tier optimisation: Downgrade to a lower tier if you are not using premium features.
Negotiation can reduce SaaS costs by 10 to 20 percent without changing tools. But it does not change the fundamental issue: per-seat pricing scales linearly. If your team is growing, the cost will rise regardless of the discount.
What Is the Total Potential Saving?
For a UK SME spending 60,000 per year on software, the realistic savings stack up:
- Audit and cancel unused: 9,000 to 12,000 per year (15 to 20 percent)
- Eliminate redundant tools: 6,000 to 9,000 per year (10 to 15 percent)
- Negotiate remaining SaaS: 4,000 to 6,000 per year (10 percent of remaining)
- Replace high-cost SaaS with custom: 20,000 to 40,000 per year after payback
Combined, a business spending 60,000 per year can realistically get to 25,000 to 30,000 per year within two years, including the cost of building custom software. The first two steps (audit and eliminate) deliver savings immediately. The custom software investment pays back over 12 to 24 months.
Book a free discovery call to discuss your software cost reduction, or explore our services to see what we can build.