Software giants may use eco projects as a cover for price rises

If you’re using dedicated collaboration software or productivity software for your business, chances are you’ll be paying a third-party to supply it. A new Gartner analysis suggests that significant price increases could be on the way, citing eco projects as a key contributor.

Over the next 36 months, software as a service (SaaS) vendors are said to be planning a significant increase in their prices, by as much as 20%.

The Gartner document, titled “3 Reasons Why SaaS Vendors Are Raising Prices and What You Can Do About It” suggests sustainability regulations could be introduced worldwide, meaning that many vendors will need to tweak the way they work to remain compliant.

Software prices rising: energy prices

With a global focus on energy usage in a time where unit costs are higher than ever, companies are likely to become more reliant on reducing their carbon footprint, by using green data centres for example. While this could receive part of the blame for increased prices, green data centres are specifically designed to use less energy. Because they are more efficient, running costs should be lower (after a potential capital outlay, which may be reflected in any software price hikes). 

The solution? Gartner recommends chatting with your supplier to investigate its eco-credentials and to rule out greenwashing. It says that around two in five companies’ statements about sustainability were “exaggerated, false, or deceptive”, which could give you grounds to question the company’s pricing.

Software prices rising: labor costs

The past two years have been especially challenging, and a further turbulent period caused by Russia’s invasion of Ukraine has added further stress on global supply chains. The same source suggests that the invasion has reduced the worldwide tech talent pool by as much as 5%.

The solution? Gartner suggests looking into the company’s workforce, and better still, its use of automation. Check whether it’s committed to maximising efficiency, which could help reduce its labor costs.

Software prices rising: inflation

The third reason in the study places an emphasis on inflation, which is soaring globally. Unfortunately, there’s very little for bargaining here. That said, check the percentage of increase somewhat matches the percentage of inflation, or that it’s not drastically disproportionate.

If you’re committed to your current SaaS vendor, consider locking in for a longer time by renewing your contract early, rather than waiting for an auto-renewal price.

Via The Register (opens in new tab)