Blog / cost control
How to audit your software subscriptions
Most growing companies pay for software nobody uses. Here is how I work through a subscription list, what is usually waste, and what to leave alone.
When someone asks me to look at their technology spending, the first thing I ask for is not the budget. It is the last three months of credit card and bank statements.
The budget is what somebody intended to spend. The statements are what actually left the account. In a company that has grown past about fifteen people, those two numbers are rarely the same, and the gap is almost never in the direction the owner expects.
Start with the statements, not the list
Nearly every business I look at has a list of software somewhere. A spreadsheet, a page in a wiki, a procurement folder. It is always out of date, because the list only contains the things somebody remembered to write down.
So pull the real statements instead: the company cards, the bank feed, and any PayPal or app-store billing attached to the business. Export three months and sort by merchant. If a line item appears monthly and you cannot immediately say what it does, that is your starting pile.
Expect surprises in two places. The first is expenses claimed personally, where a manager has put a subscription on their own card and billed it back, so it never appears as software at all. The second is anything billed annually, which will not show up in a three month window. For those, check the last twelve months for anything over a few hundred dollars.
Four questions per line
Once you have the real list, I go through each line with the same four questions. They sort the list faster than any formal review process.
Who actually uses it, and how many of them? Not how many seats you pay for. How many people logged in last month. Most tools will tell you if you ask the admin console.
Who owns the account? Specifically, whose email address is the billing and admin contact, and does that person still work there.
What breaks if it stops tomorrow? Some tools are inconvenient to lose. A few will take your invoicing, your payroll or your customer history with them.
When does it renew, and at what price? Write the date down. This is the one almost nobody has at hand, and it is the only question with a deadline attached.
Where the money usually hides
Per-seat creep is the big one. Someone leaves, their account stays active, and twelve months later you are paying for four people who are no longer with the company. On a $25 per seat tool that is a rounding error. Across six tools and three years of turnover it is real money.
Then there is duplication, which almost always comes from departments buying independently. Two file sharing services. A project tracker that sales uses and a different one operations uses, neither talking to the other. I am not precious about standardising everything, but paying twice for the same job is worth fixing.
The quiet price increase is the one that annoys me most. A tool gets bought at an introductory rate, the vendor restructures their plans, and the renewal lands 40% higher with the change buried in an email nobody opened. If you are not tracking the renewal date, you find out after the card is charged. I have written before about what to look at before a technology contract renews, and the short version is that your room to negotiate is all in the 45 days before the date, not after.
Usage-based lines deserve their own look. Storage, backup volume, API calls, email sends. These grow on their own without anyone deciding anything, which makes them the hardest to notice and the easiest to justify once you do.
I own a hosting company, so treat this next bit with the appropriate scepticism: hosting and domains are usually among the smaller lines on the statement, and rarely where the waste is. Domains are still worth checking, for who they are registered to rather than what they cost.
What not to cut
An audit creates momentum, and momentum is how businesses cancel the wrong things.
Leave the backups alone. Leave the password manager alone, especially if cancelling it means people go back to a shared document. Be careful with anything holding records you are required to keep, and with security tooling that is doing its job quietly enough that it looks like it is doing nothing.
If a line looks expensive relative to the number of people using it, the question is whether it is the right tool, not whether you can live without the function. Those two questions get mixed up constantly.
Fix the ownership problem while you are in there
The audit is the best chance you will get to clean up who holds what. Every account should bill to a company card and be administered by a company email address, ideally a shared one rather than an individual's. If the only admin on your domain registrar is a founder's personal Gmail, fix that this week. I have written separately about who should own your business accounts because it comes up in almost every engagement.
Make it a habit, not a project
Twice a year is plenty. Put the renewal dates you collected into a shared calendar with a reminder six weeks ahead, and put the review itself on the calendar too, once in the spring and once before you set next year's numbers. It pairs naturally with building an actual IT budget instead of approving invoices as they arrive.
A first pass usually takes a couple of hours and finds between 10 and 20 percent of the software spend going somewhere it should not. The second pass finds much less, which is the point.
If you would rather have someone outside the business go through it with you, that is the kind of work I do as a short assessment or on an ongoing basis as a fractional CTO. Fixed fee, hourly or retainer, whichever fits. Get in touch and tell me roughly how many people you have.