How to audit your SaaS subscriptions and cut wasted software spend in 2026

Software prices are rising far faster than inflation, AI add-ons are priced per user and a third of licences go unused. A seven-step subscription audit for UK small businesses, with a worked example for a 40-person firm.

For business · 8 min read · 1,778 words

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Most small businesses now pay for software the way they pay for electricity: a monthly bill that quietly climbs, made up of dozens of line items nobody fully owns. Microsoft 365, the accounts package, the CRM, a video tool that overlaps with Teams, and the AI assistant somebody in sales put on the company card. Each made sense when it was bought. Together they are one of the fastest-growing costs in the business and one of the least examined.

It is a solvable problem. A structured audit, repeated each year, reliably finds licences that are unused, duplicated or over-specified. This article covers why the bill is rising, how vendors are moving from per-seat pricing to usage fees and AI add-ons, what the new UK subscription rules do and do not cover, and a seven-step method you can run yourself.

Why the software bill is growing faster than the business

List prices are rising sharply. Vertice, a procurement platform that tracks pricing across the software it manages, reports that its SaaS inflation measure reached 16.4% in June 2026, the highest monthly rate it has recorded, up from 13.2% in the first quarter (Vertice, 2026). That is vendor research from its own customer base, so treat the exact figure with care, but the direction matches what we see on client invoices at renewal.

The market is expanding too. Gartner forecasts worldwide software spending of about $1.44 trillion in 2026, up 15.1% on 2025, with generative AI driving "outsized gains in software" (Gartner, 2026a). And bills are harder to predict: in Zylo's 2026 SaaS Management Index, 78% of IT leaders reported unexpected charges tied to consumption-based or AI pricing, and 61% had cut projects because of unplanned cost increases (Zylo, 2026).

From per-seat licences to usage fees and AI add-ons

For twenty years the model was one user, one licence, one monthly price. Two further models are now layered on top.

AI priced per user, on top of the base licence. Microsoft's UK pricing page lists Microsoft 365 Copilot Business from £13.80 per user per month paid yearly (a promotional price from £16.10 at the time of writing), and bundles such as Business Standard with Copilot at £18.10 and Business Premium with Copilot at £24.60, all excluding VAT and all on auto-renewing annual terms (Microsoft, 2026). Enabling Copilot for everyone adds £165.60 per user per year before any base-licence increase.

AI bundled into the base price. Google took the opposite route. In January 2025 it stopped selling Gemini as a separate add-on and folded it into Workspace Business and Enterprise plans: a Business Standard customer who paid $32 per user per month with the add-on now pays $14, "only $2 more than they were paying for Workspace without Gemini" (Google, 2025). Cheaper for those who wanted the AI, a price rise for everyone who did not.

Usage and consumption pricing. Storage, email security, backup, call minutes and increasingly AI itself are metered rather than licensed per seat. Gartner argues that AI agents completing tasks across several systems "break the link between user growth and revenue growth" for vendors, and puts about $234 billion of enterprise application spend at risk from this shift by 2030 (Gartner, 2026b). Expect charges that no longer depend on a headcount you can count and cap.

How much is actually wasted

Zylo's index, built on more than 40 million licences and $75 billion of spend under management, finds organisations leave an average of 36% of SaaS licences unused, with median spend of $9,455 per employee per year (Zylo, 2026). Those are large, mostly US organisations, so the per-employee figure will be far above a typical UK firm's. More telling is that business units now control 81% of SaaS spend while IT directly manages 15%: the people signing up are not the people who see the total. In UK firms of 10 to 200 staff, our experience is that the proportion is if anything higher, because nobody has been asked to look.

What the new UK subscription rules do, and do not, cover

The Digital Markets, Competition and Consumers Act 2024 created a new subscription contracts regime. The Department for Business and Trade's April 2026 consultation response confirms it will require clear pre-contract information, reminders before a trial or long contract renews, two 14-day cooling-off periods (at sign-up and after a trial or 12-month-plus contract auto-renews), and a straightforward exit, so that "if a consumer can sign up online, they must be able to exit online". The government "anticipate[s] that the regime will commence in spring 2027" (Department for Business and Trade, 2026).

The numbers behind it: around 155 million active UK subscriptions, roughly 5.8% unwanted, meaning an estimated 9.7 million unwanted contracts costing consumers about £1.6 billion a year (Department for Business and Trade, 2026), or about £14 a month each (Department for Business and Trade, 2024).

The catch is that the regime protects consumers; business-to-business software contracts are not covered. If your company signed a 36-month agreement with automatic renewal and a 90-day notice window, that is still the deal. A business's only protection is its diary.

A seven-step subscription audit

  1. Build the inventory from the money, not from memory. Export twelve months of card, direct-debit and supplier payments and filter for recurring amounts, including annual ones. Cross-check against the connected-apps list in the Microsoft 365 or Google admin console and the company password manager.
  2. Assign an owner to every line. One named person who can say what it is for and who uses it. No owner, cancellation list by default.
  3. Measure real usage. Admin consoles show last sign-in dates. A licence unused for 60 days is a candidate for removal; a leaver still holding a paid seat is an immediate one, and a security problem. This list is also your Cyber Essentials cloud-service scope; see our post on the April 2026 changes.
  4. Right-size the tier. Vendors sell the plan that fits the heaviest user. Move everyone else down, and give AI add-ons only to daily users.
  5. Remove duplicates. Two video tools, three note-taking apps. Pick one and migrate; the pain lasts weeks, the saving is permanent.
  6. Put every renewal date and notice period in a shared calendar with a reminder 60 days ahead. This is the most valuable step: it turns an automatic renewal into a decision.
  7. Negotiate before you renew. List prices are opening offers. Ask for last year's price, the annual-versus-monthly saving, and what happens when any promotion ends.

Worked example: a 40-person firm

Suppose a 40-person professional services firm runs the audit. The figures are hypothetical and show the shape of a typical result.

  • The inventory turns up 31 recurring software payments; the office manager thought there were about 15.
  • Applying Zylo's 36% unused-licence average (Zylo, 2026) to 40 Microsoft 365 seats suggests around 14 to check. Six belong to leavers and two to shared mailboxes that do not need a full licence.
  • Copilot was enabled for all 40 staff during a trial and left on. At £13.80 per user per month paid yearly (Microsoft, 2026) that is £6,624 a year before VAT. Twelve people use it daily; keeping those 12 costs £1,987.
  • Two subscriptions have no owner. Three duplicate functions already in Microsoft 365.
  • Four annual contracts renew within 90 days; two had already passed their notice window, so they roll for another year. That is why step six must become permanent.

None of this needs a specialist tool: an afternoon, an accounts export and admin access.

Common sources of waste

Table 1. Where software spend typically leaks in small and medium-sized businesses.
Source of wasteHow it happensWhat to do
Leaver licencesLogin removed, paid seat kept"Remove licence" on the leaver checklist
Over-tiered plansEveryone on the plan one power user neededCheapest tier with the features actually used
AI add-ons for allTrial enabled company-wide, never reviewedDaily users only; review quarterly
Duplicate toolsDepartments buy without checking what existsApproved-app list; one tool per function
Auto-renewalContracts roll silentlyRenewal calendar with 60-day reminders
Consumption overageStorage, minutes or AI credits billed above a quiet thresholdAlerts and hard caps in the vendor console
Card-paid shadow ITTools expensed outside IT's viewOne purchasing route for all software

Where subscription pricing goes next

Microsoft sells AI as a per-user uplift; Google folds it into a higher base price; both hold customers on auto-renewing annual terms. Behind them the industry is edging towards consumption, and Gartner expects AI agents to erode the seat-based model that has defined SaaS from the start (Gartner, 2026b). Expect more bundles that make it hard to buy one thing without another, more "credits" that are easy to consume and hard to forecast, and higher headline prices that are negotiable if you ask.

What this means for you

The answer is not to avoid these tools; used by the right people, some pay for themselves quickly. It is to buy them deliberately, measure whether they are used, and keep the renewal date in your diary rather than the vendor's. If you have never audited your software spend, run the seven steps this quarter; if you have, repeat the leaver check, the AI licence review and the renewal calendar. We do this as part of managed IT support, alongside licence management for Microsoft 365 and Google Workspace, and can run a one-off audit for a firm that wants to know what it is paying for. Get in touch with your latest accounts export.

Sources

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