Strategies for streamlining subscription management and optimizing spend

One of the most common pieces of advice you’ll see in personal finance articles when it comes to saving money is to audit your subscriptions. Maybe it’s a streaming service you don’t watch often enough, or a gym that you don’t really step foot in to justify the recurring costs. It’s one of the easiest ways to save money because if you don’t pay attention to it, those seemingly small payments can add up to a substantial amount over time.

The same applies to your startup. If you don’t keep a close eye on your subscriptions, you can spend a lot of money on tools you no longer use, unnecessary licenses, or duplicate subscriptions.

Here, we share some advice on ways to keep your subscription spend in check — and how to make sure you have the right controls in place for you and your team to ensure smarter spending at every stage of your company’s growth.

One of the first steps in making sure that you’ve got a strong handle on your company’s spending is taking stock of your current spending patterns. In most cases, you’ll have opted into an auto-renewal flow when you or someone on your team signed up for a new tool or product — and in most of those cases, the subscription will renew automatically at the end of the term if you don’t actively cancel it. This is a quick way to rack up ongoing payments that can go unnoticed easily — a trend showing 78% of IT leaders reportedly experience — payments that will eat into your cash flow over time.

Doing regular audits of your recurring payments and auto-renewals — quarterly if your company is young and cash flow is tight, or maybe once or twice a year if the company is more mature — helps ensure that no ongoing expenses are going unaccounted for or being kept unnecessarily. It’s also a chance to reset and assess whether all of the tools and subscriptions you’re currently paying for are ones your company truly needs, or if there are any you can do without.

During this audit, make sure to ask the department leads what tools their teams are actively using on a day-to-day basis, and to what extent they utilize the features that the subscription provides. Identify not just whether or not teams are using what they're paying for, but also that they're not paying for excess usage and licenses that they don't need. (It's not uncommon for a company to have a process in place to add new licenses for additional team members while failing to remove the seats of those who no longer use the tool or aren't with the company anymore.)

You don’t want recurring audits to create a drag on the company. To make it a seamless, repeatable process, track every subscription in one place.

Here’s what to capture:

If you run an audit of your subscriptions and find 40 unused seats at $12 per user per month, cutting them saves $5,760 per year. Run that same calculation across every tool in the table, and you'll know exactly what to prioritize first.

Now, how often you audit, and how much control you layer on top, should scale with your company’s stage and maturity:

And while actively auditing your company's subscriptions helps keep your expenses in check, it's just as important to get ahead of things by maintaining good procurement flows for new tools. Another way to ensure smarter spend is utilizing company cards with custom spend limits or merchant locks.

While most subscriptions or tools your team will use have set off-the-shelf pricing and packages, there's often room to negotiate better terms or package deals, whether that's related to pricing, renewals, account support, or feature access.

And this is especially true if you've been a loyal customer or have multiple licenses with a merchant, since those companies will likely be willing to work with you to ensure that you don't churn. As you approach any of these negotiations and seek more favorable terms, it helps to go into these conversations from the position that you're building a long-term relationship with this merchant or vendor — one that is mutually beneficial and has a lot of growth potential.

It’s important to time your negotiation with the merchant relative to when a potential renewal will begin, so any final agreement on price can take effect shortly. Reaching out 60 to 90 days before your renewal date, and always before the cancellation window in your contract closes, should give you enough time to discuss with the merchant.

Beyond price, you can ask for concessions that protect you as your needs change. These cost the vendor little and can save you a lot, such as:

• Mid-term downgrade rights, so you can reduce seats or tiers without waiting for renewal
• True-ups instead of pre-purchases, meaning you pay for seats when you actually add them rather than buying a block up front
• Prorated refunds for removed seats or early termination
• Price locks or capped increases at renewal
• A shorter term, or a pilot period, when you're trying a tool for the first time

Here are some ideas on how to word your email communications if this is your first time negotiating with a merchant:

1. Initial outreach (60 to 90 days out): “Hi [name], our [tool] subscription renews on [date]. We want to keep using [tool], but we're reviewing all vendor spend this quarter. Before renewal, can we discuss our plan and pricing? Happy to share how our usage has changed.”
2. Follow up and respond to the vendor’s offer: “Thanks for the proposal. We're currently using [X] of [Y] seats, and comparable tools we've evaluated price this at roughly [$Z] per user. To renew, we'd need [target price or concession, e.g., a 20% reduction or mid-term downgrade rights]. Where do you think we can land here?”
3. Renewal counter (close): “We're ready to renew this week if we can land on [final ask]. If that's not workable, we'll need to let the contract lapse and re-evaluate next quarter. Can you confirm by [date]?”

You should also prioritize flexibility in your terms since the reality is that your company is probably changing quickly and your needs will change. Think about scalability and how your usage patterns might change over time. This will help ensure that the terms you're negotiating are well-aligned with your growth plans and business cycles.

Again, as your company grows, your needs will change — and as a startup, this is probably going to happen often and quickly. Subscriptions that you needed or that offered a lot of value when you were a 20-person company might not really have a purpose when you’ve scaled to 200+ employees. And conversely, if your team is still quite small, you might not need a super robust tool with all the bells and whistles that a more sophisticated company would benefit from more. In that case, the more advanced subscription might not necessarily warrant the extra cost.

If you’ve gone through your audit and found subscriptions that aren’t really serving your company’s purposes but that you don’t want to lose altogether, see if your terms allow an upgrade or downgrade before the end of your contract or payment cycle. If that option isn’t available for you right now, make a note of when you’ll be able to adjust your subscription to have it match up better with your company’s needs, and then revisit when the time comes.

In a lot of cases, you might also find that there’s a free version of the tool that has just enough to serve your company’s needs at any given time. If you’re considering a new tool, this is a good place to start, especially for tasks that don’t necessarily call for a lot of features. You might even find that the free version of a tool isn’t just good enough, but pretty robust.

A lot of software providers provide volume discounts. Those who charge a per-user model, for example, may lower the per-user price as you add more seats to your subscription package. It may also be worth looking at product bundles if you’re using a lot of different companies for various different things. There may be an opportunity to consolidate your services, which will not only be an opportunity to reduce subscription costs overall but can also help lead to cleaner accounting and spend management by streamlining your subscriptions and leaving you with fewer accounts to manage.

Some providers will also offer long-term discounts if you’re willing to commit for multiple years. This may be a great option if you know that your company’s needs are not going to significantly change during the terms of the contract.

As you do your subscription audit and go through some of the steps to renegotiate with a merchant or adjust your plan to your needs, you might find that you’re better off looking for an alternative to a subscription or tool in your current software stack. If a current subscription isn’t really matching up with your needs or budget, go back to the drawing board and explore the other options out there. You’ll have the advantage of going into exploratory conversations or demo calls with a clearer idea of what you need, so you’ll be well-equipped to assess all your choices and find the right match for your company.

Why and when should you switch from your current subscription?

Let’s say you uncover a subscription from your audit that isn’t working for you in terms of price or capability. You can negotiate the price with the merchant, downgrade the subscription, or replace it with a better provider.

Here’s how to think about the decision:

Lastly, you can optimize your subscription spend by being strategic with your payment methods – like opting to use a business card that provides perks or cashback that you can then reinvest into your business. For example, the IO credit card from Mercuryoffers unlimited 1.5% cashback on all spend, deposited automatically into your account when your balance is paid, so making this your go-to payment option for recurring expenses is an easy way to regularly earn cashback on subscriptions that you'll already be paying for every month. IO has no annual fee and no personal guarantee, and signing up doesn't involve a credit check, so your personal credit score isn't considered or affected. Your credit limit is based on your Mercury balances and linked external accounts, which means it grows with your company.

See how cash back can benefit you:

Take monthly card spend × 1.5% × 12. If you were to put $25,000 of monthly SaaS and vendor spend on the IO card, you would earn $4,500 back over a year, without changing anything about the tools you use.

Left unchecked, subscriptions can lead to preventable overspending. But if you take the time to create a system that ensures you’re investing in the right tools (and making the most of them), you can protect your company’s cash flow and free up time to focus on doing the work that’s important.