Where technology becomes a buyer's market

That 6x gap tells you who has leverage and who doesn't. SMBs can churn, downgrade, or walk away when prices climb. Larger orgs are locked into multi-year contracts, custom integrations, and seat counts that make pushback harder, and vendors price accordingly. Layer in the AI tax and new "intelligence" tiers that rolled out over the past ear and a 20% increase in average spend per company, isn’t surprising.

‍

What this means for you: For mid-market and enterprise buyers, this is the new baseline. If your software budget didn't grow 20% this year, you're either underinvesting or your vendors haven't gotten to you yet. Finance teams should plan accordingly.

One detail worth flagging: Hybrid SaaS+AI (legacy vendors retrofitting AI features) grew slowest in every segment, which tells you buyers are skeptical of tacked-on AI and willing to pay a premium for purpose-built solutions instead.

‍

What this means for you:

• Midmarket and enterprise: Your stack isn't shrinking, it's stacking. Be ready to defend every layer's presence at renewal, not just its price.
• SMB: You have real leverage on traditional SaaS. Bring substitution alternatives to renewals and be ready to walk.
• AI-Native tools: Expect minimal pricing flexibility. Negotiate price caps, usage guardrails, and contract length, not discount percentage.
• Hybrid SaaS+AI: Push on what you're actually paying for real AI capability versus legacy seats. Slow category growth means more flexibility than vendors let on.

Insights: Vendors know there continues to be a measurement gap between AI Features and their cost, but the expense of producing AI and the existential promise of what is almost possible, means these uplifts aren’t going anywhere.

‍

What this means for you: Before your next renewal, demand vendor-provided ROI evidence tied to your specific usage, not a case study, your data. If they can't produce it, that's your leverage. Start the conversation 6+ months early, request legacy pricing explicitly, and don't accept a premium you can't validate. Tropic's benchmarking data tells you what comparable companies are actually paying, so you know exactly what you're negotiating toward.

Insights: Two forces are driving the pressure on legacy vendors. Consumption-based AI pricing is competing directly for the same dollars that previously funded SaaS renewals. And with headcount growth stalled at many organizations, the seat-expansion model that powered SaaS revenue for a decade is running out of runway. Customers aren't just slowing expansion, they're actively cutting.

‍

This is phase one: expansion erosion. Phase two is gross retention, when buyers stop expanding and start replacing. The question facing every legacy SaaS vendor is whether they can build or acquire their way to an AI execution layer before that happens.

‍

What this means for you: Primarily SaaS vendors under pressure are more motivated to negotiate than they've been in years, come to the table with competitive alternatives and usage data. For AI-Native vendors, discounts are unlikely; focus on locking in price caps and uplift protection before your own consumption scales.

SMBs lost adoption on nearly every tool in the top 15. Midmarket is trading collaboration tools out for revenue and finance platforms, with Gong, NetSuite, and GitHub gaining while Zoom and Adobe lost share. Enterprise is more mixed: Microsoft, Snowflake, and Asana gained ground while Datadog dropped 4pp.

‍

What this means for you:

• SMB: Adoption is declining across nearly your entire top 15. Bring substitution alternatives to renewals and ask vendors directly about retention rates for companies your size.
• Midmarket: Collaboration tools are losing to bundled alternatives. If you're paying full price for Slack, Zoom, or Adobe, the consolidation argument is half made for you.
• Enterprise: Tools gaining share (Microsoft, Snowflake, Asana) won't budge on price. Negotiate caps, contract length, and seat commitments instead.
• Watch: Datadog's enterprise drop. If it holds next quarter, observability vendors will be more open to negotiation.

Consumption models themselves work. The problem is that the moment a marketing team hits its Clay credit limit mid-campaign, the CFO has two choices: approve more spend or stall the work. There's only one real answer, and it's not the one your annual budget assumed.

‍

What this means for you:

• You can't forecast tech spend with headcount anymore. FP&A, procurement, and engineering already figured this out with AWS, GCP, and Azure. Every functional area needs that same muscle now.
• Build cross-functional accountability before the stack outruns the plan. That means negotiated caps, tiered pricing structures, and real-time usage visibility from day one.
• When evaluating new vendors, ask directly: is this seats or consumption? If consumption, who owns visibility into usage, and what triggers a budget conversation?
• The companies building this muscle now will have a real cost and speed advantage. The ones who wait will spend a lot of board meetings explaining why they're over budget.

What drives variability? Generally, it's a combination of competitive pressure in the category, sales team discretion, contract term length, and how aggressively the vendor is pursuing market share. High-variability vendors are often ones facing meaningful competition or undergoing pricing model transitions.

‍

What this means for you: Understanding price variability can help exponentially when you're negotiating and helps you prioritize negotiation effort on high-variability suppliers. For low-variability suppliers like Figma and Articulate, don't burn cycles trying to move price. Focus instead on terms: payment timing, auto-renewal clauses, and user addition rates.

‍

Use variability data to set realistic internal expectations. Telling stakeholders "we should get 30% off Datadog" sets everyone up for disappointment.

What this means for you:

• Annual contracts are still the most common starting point, but 2-year asks seem to be increasing. Be ready for that conversation at renewal.
• If you do agree to a longer term, treat it as a concession worth trading for. Push for price caps, ramp pricing, or termination rights in exchange.
• Multi-year deals (25+ months) remain rare. If a vendor is pushing one, the burden is on them to justify what you get in return.

What this means for you:

• Primarily SaaS: Vendors are actively pushing for longer commitments. That's a defensive play to lock you in before AI alternatives mature. Trade the longer term for stronger pricing or termination rights.
• AI-Native: Short terms are the standard. Don't sign multi-year unless the discount is dramatic. Annual deals preserve your option to swap as the category evolves.
• Hybrid SaaS+AI: Contract length is steady, so there's no clear market signal either way. Negotiate based on individual vendor leverage rather than category trend.