SaaS Inflation is Real – Here are 4 Things You Can Do to Lower Your Costs

SaaS inflation is the gradual increase in monthly costs for thinks like Netflix, Hulu, and Spotify. Here's what you can do to combat SaaS inflation to keep your costs down.

Times are tough and it doesn’t look like the economy will be getting better anytime soon.

While you can easily attribute the day-to-day struggles to rising housing costs and skyrocketing grocery bills, those aren’t the only things eating at your paycheck.

Every month, you pay for digital services that you may or may not actually use. Think Spotify, Netflix, and Zoom. Now, thanks to inflation, prices are going up in the subscription economy, too.

Most Americans are unaware of how much they spend on digital licenses. According to one report, the average American spends $133 a month on subscriptions or $1,596 per year.

While that might not seem like a lot, if you’re not fully using a tool you’re paying for you’re throwing money away.

Below are some strategies for lowering your recurring subscription costs. This can help you save money while also ensuring you’re getting access to the tools you need at a fair market rate.

Strategy #1: Pay annually instead of by the month.

A month ago I did a self-audit. I was shocked to realize I had more than a dozen pay-per-month subscription plans. One by one I had bought into premium memberships without realizing the aggregate cost. Over time, every $10-$20 licensing fee added up to hundreds of dollars each month.

Here are just a few of the subscriptions I’ve been paying for:

• Music streaming from Spotify

• Calendar setting with Calendly

• Email with Google Workspace

• Maintaining an email list with ConvertKit

• Cloud storage from Apple

• Premium design features with Canva

• Screen video recording with Loom

• A digital subscription to the Wall Street Journal

• Zoom

All of these services do – or did – have a purpose. While the cost of each subscription individually might not seem like a lot, when you have several of them, it adds up. At one point, I spent more on monthly subscriptions than I did on my car payment. Ouch!

By taking inventory of all the tools I used, I calculated the total annual cost of all my subscriptions. I started looking for opportunities to save money by switching to annual billing.

Paying annually instead of monthly can be a good way to save money on software platforms you use regularly. 

Let’s look at Calendly as an example. I currently have an individual license for Calendly and pay $12.79 per month. 

When you go into the billing center on your Calendly account, you’re alerted to an opportunity to save $24 if you switch to annual billing.

A lot of software platforms do this. In exchange for paying for 12 months’ worth of service upfront, they’ll offer you an annual license to use their platform at a lower rate. 

If you want to cut down on your recurring subscription costs, this is the easiest thing you can do. Switch to annual billing whenever it’s an option to take advantage of a lower average monthly cost.

Strategy #2: Fake cancel to negotiate a lower rate.

Late last year I moved to a new city. The process of moving in and of itself is hard but moving to a new place where you have to establish an entirely new social network is even harder. 

Someone recommended that I use Meetup to find events to go to so I could meet people. In a few short weeks I not only used the app to do just that, but I myself became the host of a Meetup group.

To be able to host a group on Meetup, you have to upgrade to a Meetup Pro membership. This cost me around $35 a month.

At first, I liked the idea of managing my own group but eventually, I came to the realization that I had bitten off more than I could chew. There were already similar groups like mine in town and frankly, I didn’t have the time to keep hosting events. I hung onto my membership for a few months before deciding to shut the group down.

When I decided it was time to pull the plug, I emailed a customer service representative to cancel my membership. The representative responded by offering me a 50% discount to entice me to continue using the platform.

I’m going to be honest, I never knew you could do this with software companies. Growing up I had seen my mom use this tactic with the cable company. It never dawned on me that I could take the same approach with my software subscriptions.

Try it out and see if it works. Sometimes companies will have an automation that’s part of the cancellation process that offers a discount if you don’t cancel. Other times, like with Meetup, you might need to work with a service representative.

Worst case scenario they don’t offer you any savings and you have to resubscribe. Best case scenario you get to keep your subscriptions but at a steep discount.

Strategy #3: Refer your friends to use apps you love.

I’m a huge fan of Readwise. It’s basically an app that helps you read smarter. You can take notes using its companion Reader app, pull from a variety of types of media, and sync everything in Notion.

I love it so much, I became an affiliate partner with the company. But before I did that, I recommended the app to my friends. I referred so many people to use the platform that I ended up earning a year for free!

That means when my subscription comes up for renewal this fall I won’t pay a cent for it.

Friend referrals can help you offset the costs of your subscriptions. Companies, like Readwise, will incentivize you to share the platform with your network. In exchange, you can earn credits which can buy you time to use the platform for free. If you refer enough friends, you can zero out the expense entirely.

Not all companies offer this, especially larger tech platforms. But startups that are trying to gain momentum in the market, however, usually offer some sort of referral bonus. 

See if any of the apps you’re currently paying for offer this. If they do, get a referral link and start sharing the app with your friends. You can usually find it in your account settings and it should look something like this:

P.S. If you want to check out Readwise, you can sign up here. 

Strategy #4: Look for duplicative services and cancel redundancies.

I mentioned in the beginning that I did a self-audit to take inventory of all the tools I use. Have you done something similar for yourself?

Doing a self-audit helped me become more aware of how much I spend every month on my subscriptions. It also made me realize how much I was wasting on features I didn’t need or I could get for free.

Here’s an example. Google recently rolled out an appointment-setting feature in Google Calendar. Similar to Calendly, you can create appointment blocks and share a link for people who want to schedule time to meet with you.

I pay for both Calendly and a Google Workspace account. The only reason I still have Calendly is that it allows me to schedule and sell blocks of time. It basically puts a paywall on my calendar.

Practically speaking, I don’t actually need Calendly. Now that Google Workspace offers the same core feature, it’s duplicative. Google Workspace does the same thing at a much lower rate.

More likely than not, you have redundancies across your subscriptions. Maybe you pay for both Spotify and YouTube Premium or maybe you’re like me and have a professional Google account but also pay for external tools like Calendly or Zoom.

Chances are there’s something that you’re using that offers a core feature for free. Once you go through a self-audit, you might also discover that there’s a good free option on the market too.  

The best way to save on your annual software subscriptions is to just eliminate them. 

Take inventory of what features you use regularly. If you discover you really aren’t using a tool to its fullest potential or that there’s a cheaper alternative out there, ditch it. Your hard earned cash doesn’t need to keep funding catered lunches and on-site luxury gyms at popular Silicon Valley tech companies.

Just because everyone else is using Slack, doesn’t mean you need to or that you need to pay for it.

Final takeaway.

A decade ago you could pay for software outright. Things like QuickBooks or Adobe could be downloaded onto your desktop computer and used indefinitely. 

The economy has changed. Instead of buying a product or service, you now have to subscribe to use it. Even car manufacturers are getting in on the subscriber economy.

In the words of the World Economic Forum, you will own nothing and be happy.

While recurring monthly revenue is great for business, it’s bad for consumers like you and me. Many companies now take the gym approach, relying on us to get a membership for their product or service regardless of whether or not we use it. 

Eventually, we forget the money is even being drawn out of our bank accounts in the first place. When you do that you’re basically giving companies your hard-earned money for nothing in return. I for one am guilty as charged.

Thanks to inflation and the general direction the economy is taking, you might have noticed that subscription-based companies are increasing their prices. Spotify, Disney+, Hulu, – everything. 

Even Costco can’t be spared. They’ll be raising their annual membership price by $5 starting this September.

One company increasing their rates by a dollar or two isn’t that big of a deal and won’t ding your wallet too much. But when every other company does it too? Your bank account will start to take a real hit, especially if you aren’t even aware of all of your subscriptions in the first place.

If you haven’t done so already, perform a self-audit. Take inventory of the tools you use, why you use them, and how much they cost.

Get rid of things you don’t need and look for free or low-cost alternatives where they exist. If there’s a tool you absolutely love and can’t seem to get rid of, look for ways to save money. 

While it might not seem like a lot, it matters. Your job as a consumer in today’s inflationary world is to protect your purchasing power.  

Don’t spend more than you need to on digital tools and services that could be gone in a flash.

---

Did you find this post helpful? Hit the ♥️ at the bottom. Doing so will share this post with more readers.