Software prices are rising faster than IT budgets. Now what?

Gartner sees SaaS increases of 10% to 20% against IT budget growth of 2.8%, and Flexera puts wasted cloud spend at 29%. The gap gets closed contract by contract.

Software is getting more expensive faster than IT budgets are growing, and the gap won't close on its own. Gartner told CIO that several large vendors raised SaaS prices by 10% to 20% in 2025, against IT budget growth of 2.8%. Some vendors owned by private equity firms raised prices by as much as 900%.

Why is this happening now?

Vendors are repricing for AI features, moving customers to higher bundles, and cutting discounts that were standard a few years ago. Private equity ownership of software companies adds pressure: Gartner tied the sharpest increases to PE-owned vendors, which are under the same growth math as every other portfolio company.

Cloud has its own version of the problem. Flexera's 2026 State of the Cloud Report puts wasted cloud spend at 29%, the first increase in five years, and links it to the growth of AI workloads. Managing cloud spend is a top challenge for 85% of the organizations Flexera surveyed.

Where does the gap get closed?

At the contract, one renewal at a time. In our experience the same handful of moves does most of the work:

• A renewal calendar with notice dates, owners and usage, twelve months ahead. Most overpayment starts with a renewal nobody saw coming. See why software auto-renewal is a business model.
• Usage data before the conversation. Seats paid for but not used are the easiest saving to defend.
• A price cap on the next renewal, written so it holds. We covered the wording in SaaS renewal price increase caps.
• Cloud commitments sized to real use, reviewed every quarter. See how to stop overpaying for cloud.

What should the CFO own?

The calendar and the baseline. IT owns the tools and the relationship with the vendor. Finance should own the view of total third-party software and cloud spend, the renewal dates, and the rule that nothing above a set value renews without a review.

Where to start

For one quote on your desk, a Second Opinion gives a written answer in five business days. To check what you're already paying against what the contracts say, run a Contract Leakage Scan. To keep renewals reviewed year-round, see the Renewal Desk and our software, cloud and vendors practice.

Sources: CIO, SaaS price hikes put CIOs' budgets in a bind, December 2025, Flexera, 2026 State of the Cloud Report press release, March 2026.