SaaS purchasing platform Vertice reports that enterprises are overpaying between an average of 20%-30% for collaboration tools. Credit: iStock As popularity of project collaboration software grows along with other software-as-a-service products, a research report from SaaS purchasing platform Vertice shows that more than 90% of enterprises are overpaying for these tools. The project collaboration software market is estimated to reach a value of $27.40 billion by the end of 2022, from $21.69 billion in 2021, according to a report from Grand View Research, which links the growth to factors such as the evolution of the workplace and the rising need to incorporate effective means of team collaboration across different geographies in an enterprise due to the pandemic. Another survey, conducted by market research firm Gartner, showed that there was a 44% increase in the use of SaaS-based project collaboration tools between 2019 and 2021. This increase in usage of these collaboration tools have led more than 80% of vendors to increase their price listing by 10% every year since 2019, the Vertice report showed. Lack of pricing transparency is a challenge A lack of transparency in pricing seem to be the biggest challenge for enterprises when buying project collaboration software, resulting in overpayment for these tools, according to the Vertice report. A meagre 14% of software vendors selling project collaboration software list prices on their website or through third parties, the report showed. The nondisclosure of pricing poses a significant challenge for enterprises as they are not able to compare pricing across a variety of vendors, the company said in its report, adding that most project collaboration vendors require a consultation with their sales teams before they quote a price. Lack of pricing transparency also plagues the broader SaaS category as well. Only 45% of vendors list pricing online, while 55% of vendors obscure pricing from potential customers, a separate report from OpenView Venture Partners showed. Is long-term commitment the answer? Considering long-term commitment or multiyear contracts could be the only solution that an enterprise might have when looking to seek discounts while buying project collaboration tools, Vertice said. Currently, 89% of project collaboration vendors offer discounts based on term length, the report showed. In addition, the autorenewal clauses of software contracts also contributes to price increases, Vertice said, noting that 91% of vendors have autorenewal clauses stipulated in their contracts and nearly 72% of project collaboration vendors have clauses that allow them to change their pricing at any given time. “It’s typical for vendors to automate the cost increases that are passed onto customers,” the company said in a statement. Related content news Red Hat seeks to shrink IT skills gap with Lightspeed gen AI Building on the success of Ansible Lightspeed, Red Hat will extend generative AI capabilities across its platforms, including Red Hat OpenShift and Red Hat Enterprise Linux. By Thor Olavsrud May 07, 2024 5 mins Red Hat Generative AI IT Skills feature CDOs’ biggest problem? Getting colleagues to understand their role Chief data officers face several challenges, including new demands from AI, but they must also sell the value of their jobs to coworkers unsure what CDOs do. By Grant Gross May 07, 2024 7 mins Chief Data Officer Data Governance Business IT Alignment interview SAP forecasts clarity in the cloud After customers and user groups that adopted S/4HANA early accused SAP of bait-and-switch tactics, CIO editor-in-chief in Germany Martin Bayer recently sat with Christian Klein, CEO of the multinational software company, to clear the air on cloud rea By Martin Bayer May 07, 2024 5 mins SAP Generative AI Cloud Architecture opinion Rethinking ‘Big Data’ — and the rift between business and data ops As an era, ‘Big Data’ may be over, but its underlying value (and tensions) live on, even as organizations seek to make the leap to an AI future. By Thornton May May 07, 2024 5 mins Big Data Business IT Alignment Data Management PODCASTS VIDEOS RESOURCES EVENTS SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe