Software inflation in 2023 has outpaced UK consumer inflation for the first time, hitting a high of 8.7%.
This data was reported by Vertice, the SaaS and cloud spend optimization platform, and significantly exceeds the UK’s Consumer Price Index (CPI) inflation, which is at 6.7%.
Vertice’s annual ‘SaaS Inflation Index’, analysing data from over 16,000 software vendors, revealed a widening ‘SaaS inflation gap’. This marks a shift from the previous year when CPI grew 18% faster than software inflation.
Currently, SaaS prices are rising 28% faster than consumer goods, showing no signs of slowing down. The surge’s notable impact is evident in the increased cost of a SaaS stack, which has risen by £87,000 on a base of £1,000,000 in just one year.
The research also highlighted the prevalence of ‘SaaS shrinkflation’, where vendors maintain prices but reduce functionality. This trend has impacted 28% of contracts among Vertice’s clients, reflecting a strategic move by vendors in challenging economic conditions.
Eldar Tuvey, CEO and Founder of Vertice, said, “While consumers face a cost of living crisis, businesses are facing their own cost of software crisis, with costs rising much faster than last year, as vendors look to grow their top lines in a challenging macroeconomic environment. The growing prevalence of SaaS shrinkflation makes software pricing more difficult to navigate than ever.”
This revelation underscores the urgent need for businesses to efficiently manage their software spending, especially in the face of global economic downturns, by seeking greater transparency and value in their SaaS investments.Click below to share this article