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2023 SaaS
Benchmarks Report

Knowledge is power. Businesses striving for efficient growth need trustworthy, unbiased data on SaaS benchmarks to gain perspective into their tech stack, see how it compares to their peers, and turn software procurement into a strategic advantage.
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This report is your compass to navigate the dynamic terrain of software buying and your key to staying ahead so you can make informed decisions in this ever-changing landscape.
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Tropic manages over $6B in spend across SaaS and other purchasing categories, primarily for companies in the technology, financial services, and healthcare industries. This report analyzed over 15,000 requests and 8,000 contracts to bring you the most up-to-date, comprehensive, and bias-free data in the market. We don’t receive any kickbacks from suppliers, so you can rest assured this report brings you only the most accurate, ethical data in the market.
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Curious how much companies spend on SaaS? How company size impacts spend? Where brands are spending more and cutting back? We’re looking back at 2023 to shed light on how businesses approached software buying to help shape your 2024 strategic planning.
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More importantly, we’re giving you a breakdown of SaaS benchmarks by business size, so you can compare your software budget against companies in similar growth stages and chart the course for your SaaS strategy as you scale.

Initial Startup Phase

1-100
employees

Late Stage Startup

101-250
employees

High Growth Stage

251-1000
employees

Early Enterprise Phase

1001+
employees

Average SaaS Spend by Employee Count

Average SaaS Spend by Business Size

3.5X

Average software spend grows 3.5x per stage until a company reaches early enterprise.

Tropic Insights

  • Despite stated savings goals, midsize companies are still learning how to prioritize procurement best practices. In a strong spend management process, SaaS spend grows slower than headcount as efficiencies of scale are implemented.

  • The big shift from late stage startup to high growth is often explained by the need for investments in infrastructure.

  • Companies who embed ways to monitor infrastructure spend are more likely to avoid overspending in this category.

Average SaaS Spend per Full Time Employee

Average SaaS Spend per Full Time Employee

32%

Companies over 1,000 employees operate 32% more efficiently than smaller startups.

Tropic Insights

  • As companies grow, they operate more efficiently. If you’re
not seeing your average SaaS spend per employee decline with headcount growth, you’re missing out on volume discounts. Leverage your size and buying power to negotiate with your suppliers.

  • Plan for scale well before you need it by introducing rate tables into your biggest agreements, including ones where you plan to add diverse products over time, i.e. Salesforce. Negotiate these aggressively upfront, and when you introduce new products, you will accrue greater leverage later because of early planning now.

  • Invest in visibility early into your lifecycle and at a minimum, into all of your contracts and spend.

Average Number of SaaS Contracts

Average Number of Core SaaS ContractsAverage Number of Core SaaS Contracts

102

The average company had over 102 SaaS solutions in 2023.

Our data is based on contracts, so these numbers don’t include inexpensive, no-commitment tools. As a result, it may be lower than other reports. We recommend using this data as a benchmark against your contracted SaaS tools & core solutions.

How Category Spend Changes as Companies Grow

Software spend allocation shifts significantly early in a company’s lifecycle and levels out at 250 employees, remaining constant in later stages.

Tropic Insights

  • Younger companies are hyper focused on growth, which means a heavy investment in sales software – be aware of duplicative tools that start to show up in your tech stack.

  • Once a company reaches 100 employees, IT Infrastructure moves into the #1 spot. After you reach 250 employees, expect to spend the largest portion of your software budget on IT infrastructure.

  • Companies should leverage infrastructure optimization providers, industry experts, and resellers to keep IT infrastructure costs down.

  • Try to determine the ROI and criticality of your software tools so you can eliminate low priority, low impact spend.

Category Spend Distribution

The most popular SaaS categories purchased in 2023 were IT Infrastructure, Security, Operations, and Sales.

The other categories make up the following portion of SaaS spend:

  • 9.73%
    HR
  • 8.55%
    Marketing
  • 7.77%
    Finance
  • 7.25%
    Analytics
  • 6.2%
    Devops
  • 5.48%
    Collaboration
  • 3.33%
    Design & Development
  • 3.2%
    Customer Service
  • 1.57%
    IT Management
  • 1.24%
    Reseller
  • 0.98%
    Other

Category Insights: Popular Tools

These were the most popular tools businesses purchased or renewed within each category:

Category Insights: Popular Tools

This data is an aggregate view of all customers purchases and is not broken down by business size.

Negotiation Trends

Major negotiation themes that emerged in 2023

Rationalizing and rightsizing contracts wherever possible

“We saw suppliers struggling with higher churn and more competition in new deals and renewals as the economy created an influx of flat renewals and reductions due to RIFs. Many organizations brought in competition to avoid uplifts as leaders were more willing to switch solutions to drive savings.”

John Kinzel

Senior Commercial Executive, Tropic

Increased collaboration across the business due to tightened budgets

“There’s more involvement from leadership to push suppliers for fair pricing. With increased contract visibility, leaders became more engaged in purchasing decisions.”

Max Winkler

Commercial Executive, Tropic

Bias towards shorter term contracts to deal with uncertainty

“Last year, companies felt the pain of paying for contracts that were no longer needed. Now, there’s a major bias towards shorter term contracts to increase flexibility and limit contractual risk...even if it means giving up discounts associated with longer term deals.”

Michael Shields

Head of Procurement Strategy, Tropic

A Look at 2024

2023 was the year of rightsizing tech stacks as companies felt the fatigue of complex software portfolios. Although it has been tough financially, companies are still purchasing and renewing SaaS tools to keep the business running.

What will procurement trends look like in 2024?

Businesses will continue to be hyper focused on efficiency, which means spending smarter. As SaaS prices climb, brands will likely spend more, but trade disparate point solutions for enterprise contracts. Suppliers will catalyze this trend, continuing to raise prices while improving and building new functionality to justify cost increases.

For this reason, companies must shift gears from foundational procurement into “intelligent procurement.” Intelligent procurement is where to turn when negotiation is not enough. It is marked by a graduation into advanced supplier strategies, a better understanding of the competitive landscape and where rationalization is possible, and you will know you have it when your contract owners are asking you for advice on how to reduce costs.

To succeed in 2024, prioritize an intelligent procurement practice. See how much you could be saving by running a free savings assessment with Tropic.

CEO and Co-founder

Methodology

Tropic’s 2023 SaaS Benchmarks Report is based on aggregated, proprietary data from Tropic users. We analyzed over 8,000 contracts and over 15,000 requests across both net new purchases and renewals.

Suppliers are categorized by their primary goods or services offered. Although they may fit into multiple categories, this report simplifies the data to reflect the main category.

To avoid bias towards multi-year contracts, all contract values have been annualized.

Sample sizes for the 1-100 and 1,001+ company size cohorts are small and therefore could lead to volatile findings. Tropic users tend to fall in the 100-1,000 cohort, and companies over 2,000 employees often have custom deals and complex tech stacks, so this report mostly represents companies in the 1-1,000+ range.

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