The Software as a Service (SaaS) market continues to dominate the software landscape. Understanding SaaS spending statistics is crucial for IT leaders, procurement teams, and business strategists—especially as we head into 2025. The data paints a compelling picture of adoption scale, spending growth, and optimization challenges.
Overall Market Size and Spending Growth
The global SaaS market is projected to reach major milestones in the coming years. Forecasts suggest that it could reach $300 billion by 2025, with over 20% annual growth, or $295 billion with a 19.4% compound annual growth rate (CAGR). Other sources predict growth from $317.55 billion in 2024 to $1.23 trillion by 2032, at a CAGR of 18.4%. Another estimate places the market at $793.1 billion by 2029.
Spending continues to rise. In 2024, average SaaS spending increased by 9.3% YoY—the first increase in three years. Global SaaS spending is expected to reach $299 billion in 2025, up from $250.8 billion in 2024 (+19.2%).
Spending Per Company and Per Employee
On average, companies spend significant amounts on SaaS. Organizations now spend about $49 million annually, up from $45 million in 2023.
Per employee, SaaS spending also rises. The average organization spends $4,830 per employee, a 21.9% YoY increase and 4.8% above the $4,600 figure in 2023. In U.S. organizations, this is even higher—$8,700 per employee in 2024, up from $7,900 in 2023.
Company size significantly impacts spending and app usage. Small companies (1–500 employees) spend ~$11.5 million on SaaS and use 152 apps, while large enterprises (10,000+ employees) spend ~$284 million and use 660 apps.
Internal Spending Distribution
There’s a shift in who controls SaaS budgets. Business units now account for 70% of SaaS spending and 50.5% of app purchases, up from 69% and 48% in 2023. IT departments managed only 26% of SaaS spending in 2024—down from the previous year. Other reports place IT at 26.1% of spending and 15.9% of app usage in 2024.
Interestingly, individual employees are responsible for 34% of apps by volume, though they account for just 4% of overall spending. This decentralization reduces IT visibility, complicating spending control.
Regional Spending Patterns
Geographically, SaaS markets vary. The U.S. remains the largest, with revenue projected to exceed $225 billion by 2025. U.S. SaaS spending per employee is $8,700 in 2024.
The European market is growing too, projected to reach €16.3 billion by 2025. Germany leads here, expected to grow from €6.85 billion in 2022 to €16.3 billion by 2025.
India shows the highest SaaS growth rate globally—forecasted to hit $9.22 billion by 2029 with a 25% CAGR, and possibly $50 billion ARR by 2030.
Wasted Licenses and Unused Spend
A significant portion of SaaS spending is wasted on unused licenses. Some data shows only 47–49% of licenses are used, leaving 51–53% unused. This costs organizations an average of $21 million annually. That figure rose 7% YoY—and up to 14.2% by other estimates. On average, companies lose $135,000 on unused licenses.
Renewals vs. New Purchases
Most SaaS spending goes toward renewing existing subscriptions. A staggering 85% is allocated to renewals, while just 15% funds new apps. Companies handle ~247 renewals annually—nearly one per working day.
AI’s Impact on SaaS Spending
AI is reshaping SaaS—and affecting budgets. Spending on AI-native tools surged 75.2% YoY. The AI-as-a-Service market is projected to grow at 37.1% CAGR. By 2025, 50% of SaaS companies will integrate AI into their platforms. Yet, 39% cite AI implementation costs as a major challenge. AI adoption may also increase vendor lock-in, raising long-term SaaS costs.
Private B2B SaaS Benchmarks
Studies of private B2B SaaS companies provide useful benchmarks. Bootstrapped firms spend 95% of ARR, while VC-backed firms spend 107%. VC-backed companies spend significantly more on:
- Sales: +89%
- G&A: +80%
- Marketing: +100%
- R&D: +71%
- Support: +14%
Median spend as % of ARR:
- Sales: 13% (up from 10.5%)
- Marketing: 8%
- Customer Success: 8% (down from 8.5%)
- Hosting: 5%
- DevOps: 4%
- R&D: 22% (up from 18%)
- G&A: 14% (up from 11%)
Faster-growing companies spend ~20% more on sales and 40% more on marketing.
Startup and Operational Costs (Community Insights)
Initial SaaS costs vary widely. Many owners report monthly costs as low as $5–10 using serverless or PaaS platforms. Examples:
- AWS: <$5/mo for small loads
- DigitalOcean + Mailgun: ~$40/mo
- 150 users on AWS: €200/mo
Larger systems (with enterprise clients or compliance) can cost:
- £750/mo for 100 enterprise clients
- $3–4K/mo base cost (due to compliance, regional hosting, etc.)
These costs should scale with revenue. High upfront costs without users often signal poor architecture. Serverless, PaaS, and optimized VPS can keep costs low until paying users arrive.
SaaS Spending Challenges
Growing costs and decentralized purchases pose several issues:
- Lack of visibility: Business unit and individual purchases obscure spend tracking.
- Shadow IT: 85% of SaaS apps and 91% of AI tools are unmanaged, creating risk.
- License waste: A large share of licenses goes unused.
- Integration complexity: With 275 apps (some firms hit 371), integration becomes operationally challenging.
- Unpredictable billing: Usage-based and AI-powered pricing creates surprise expenses.
Conclusion
SaaS spending is significant and growing—driven by market expansion, AI adoption, and purchasing decentralization. While SaaS offers flexibility and innovation, it introduces challenges in visibility, control, and optimization. Most spending goes toward renewals, and unused licenses waste millions. SaaS spend management—through audits, license optimization, contract negotiation, and dedicated platforms—is becoming critical. Startup costs can be low with proper architecture, scaling efficiently with business growth.
