10 Best practices for making better SaaS renewal decisions

Your company is facing a host of software renewals, and you need to prevent IT overspending. What are the important SaaS renewal best practices you should follow? How can you ensure that you’re making good decisions with limited resources? 

This is easier said than done. According to the 2025 BetterCloud State of SaaS report, when asked about their formal buying and renewal process, 85% say they have one, but only 30% say it’s effective.

How can you improve it? The secret: a formal, documented SaaS renewal process that follows best practices.

That’s what we’ll dig into today. We’ll talk about common renewal challenges, how a formal, standardized renewal process with some key SaaS renewal best practices ensures you never overprovision or overpay again.

Common SaaS renewal pitfalls 

There are some common challenges that every organization faces at renewal time. Without a documented renewal policy and some kind of automation or tool to aid it, you’re certain to be plagued by:

• Lack of visibility into the SaaS stack: IT and procurement teams often don’t have a clear picture of all current SaaS subscriptions. Without visibility, auto-renewals are more common, leaving unused licenses or overlapping apps rolling over one more time.

• Contract sprawl: As organizations add SaaS vendors to app sprawl, contracts are rarely kept together in one place. At renewal or cancellation time, you’ll have to hunt to find the contract to manually review terms and conditions.

• Poor understanding of app and license usage: Many organizations don’t track how often tools get used or the value they contribute. Therefore, it’s hard to make good decisions.

• Automatic renewals: Many contracts unfortunately contain clauses that require notice of termination or change by a given date, or else it automatically renews with existing prices, quantities, and terms. Most vendors are not forgiving if you miss this crucial deadline and the existing contract extends robbing you of the opportunity to cancel, renegotiate prices or reduce license count.

• No price benchmarking data: Teams renew at the same or higher prices without checking current market pricing. This leads to overpaying, especially for business-critical apps or long-term contracts.

• No updated security and compliance reviews: Renewals continue without reevaluating a vendor’s current security, privacy and compliance certifications. This can lead to potential data exposure or other risks like inability to meet regulatory requirements.

Of course, even with automation or a spend management tool, there’s still challenges to navigate like:

• Complex terms and conditions: Buried in a maze of fine print and confusing legalese, you’ll find the important information around key renewal or cancellation dates and term definitions that vary from one vendor to the next. 

• Lack of formal and documented SaaS renewal process: Without a unified renewal process that spells out app owners, roles, business goal alignment (e.g., return on investment), and deadlines, renewals don’t get examined as closely as they should while software that adds significant value may get canceled.

SaaS renewal success stems from following a formal process

Documenting your SaaS renewal process is crucial to maintaining an optimized SaaS stack that stays on budget, remains in compliance, and most importantly, aligns value to business goals.

By establishing a formal, documented process, all stakeholders must follow a structured framework to proactively manage renewals for each SaaS app. This approach, a series of SaaS renewal best practices, supports more effective planning. It includes:

1. Involving cross-functional stakeholders 90-120 days prior to renewal
2. Evaluating the business value of the current subscription
3. Forecasting budgets
4. Reviewing compliance, security, and risk factors
5. Adjusting license counts based on usage
6. Negotiating with incumbent early 
7. Assessing vendor alternatives
8. Weighing the vendor renewal or change decision
9. Optimizing spend using price benchmarking and multi-year contract benefits
10. Managing renewals with an all-in-one SaaS management platform with strong spend management capabilities

It also gives SaaS renewal teams the necessary time to decide without being rushed into a quick and potentially wrong decision. 

Teams have time to research market pricing, compare vendors, and determine potential switching costs, including important aspects like migration, deployment, and training. Should the organization decide to stay with an existing vendor, teams also get the time to re-negotiate pricing, terms, and conditions. 

Ultimately, following a standard SaaS renewal process ensures better alignment between the SaaS portfolio and the organization’s evolving business goals.

SaaS renewal best practices

The big difference between the initial buying process and a software renewal is that you have a body of experience and data from which to draw new conclusions. You know if the software helped the organization meet its goals, and how much value it delivered for the price you paid.

Furthermore, if your company is managing your SaaS stack or all its software correctly, you’ll also know:

• What software or applications employees and departments log in and use
• How much employees take advantage of certain products or features
• Whether employees like the software tools they must use
• If SaaS tools meet return on investment expectations 
• How your software stack should evolve to meet changing company needs 

In sum, due to having different information at your disposal, you’ll have two different processes and, thus, different best practices for renewing SaaS tools.

1. Gather your renewal committee and scope your milestones

The first SaaS renewal best practice is to re-assemble your buying committee. About 90 to 120 days prior to contract end, communicate with your stakeholders from IT, finance, legal, and the business function, including current app owners. 

Together, do a thorough review of contract terms to understand auto-renewals, price escalation, and usage clauses. Know the key dates this vendor requires, make your renewal plan of what needs to happen by when.

2. Affirm or adjust your business, technical, and functional requirements

Revisit requirements and assess the need for change. For this SaaS renewal best practice, this means looking at the business and answering some critical questions, like:

• Have changing business goals reduced, or increased the need for this app? 
• Did the SaaS vendor meet SLAs, support, and other performance metrics?
• Are critical features or functions the same? Are there features you wish you had?
• Does the incumbent vendor still meet your business goals?
• Is there a positive return on investment (ROI) for this app? Did you meet business goals like revenue increases, cost savings, or productivity gains with this app?

3. Review compliance, security, and risk factors 

The third best SaaS renewal best practice requires you to review compliance and security to ensure continued data protection and alignment with regulations. 

You should assess your chosen software against relevant regulatory and security compliance frameworks, such as GDPR for data privacy, HIPAA for healthcare information, or ISO 27001 for information security.  

Then, of course, you’ll need to verify that the software still supports your regulatory and or industry requirements with current certifications and note their expiration dates.

4. Set your app budget and forecast how it changes over the next year 

Financial visibility enables better decisions and helps with SaaS cost control throughout the renewal period. For this SaaS renewal best practice, you should anticipate upcoming expenses by user and department to make sure this future renewal is consistent with broader financial goals. 

How much do you have to spend next year? How is it different from last year? And how will it change over the next two years?

5. Adjust license count based on review software usage, user sentiment, and satisfaction

Know if the SaaS app met usage expectations. To follow this SaaS renewal best practice, SaaS app owners, IT, and finance should consider license usage to understand if:

• Software license usage was in alignment with business goals and plans
• Employees like using the tool

Analyze utilization metrics to know how your actual usage compares license entitlement. Determine how you define “active users” and figure out if you’re paying for more licenses than you have active users.  If so, you could reduce the number of licenses in the next renewal.

Next, find out why users engage or don’t engage with a software tool. Easy, fast five-minute pulse surveys can help uncover apps that employees like or don’t like to use. 

Lastly, examine how active users engage with an app. Do they tend to use a feature or function a lot, while never touching others? If you’re not using these features, you may be able to migrate to a lower-priced product tier.

6.  Engage with the incumbent SaaS vendor 

Armed with all information, it’s time to see what the incumbent vendor can do for a better deal. It’s a SaaS renewal best practice to help you remind vendors to make them  aware you’ve done your homework.

Your vendor salesperson should know that you looked at license and feature usage data, estimated your required number of user seats, forecasted future spending, and have updated your financial, technical, and functional needs assessments.

It’s not going to be their final and best offer, but you’ll at least know where you stand initially as the renewal and negotiation process gets underway. With a good estimate of the incumbent’s price and flexibility with their terms and conditions, it’s time to move on to entertain the possibility of changing vendors. 

7. Consider whether a competitive tool may be a better fit

You may find like many organizations that you overbought or underbought when it comes to software functionality. 

Honestly assess your incumbent vendor. Has it met expectations for:

• Needed roadmap functions materializing 
• Responsiveness to your support needs
• Being reasonable to work with
• Price

If a software tool doesn’t deliver as hoped, now’s the time to consider switching.

Also, if other software products offer similar features and functions important to your team at better value, considering a change is smart business.

8. Weigh costs and benefits of switching to a competitor

This is where revisiting your original SaaS purchasing shortlist might come in handy. Of course, there are pros and cons to switching. When considering changing, you should determine:

• Ease of setup
• Implementation methods and associated costs of each method (e.g., is a third-party service required, or can it be done with in-house IT or by the vendor?)
• User adoption and ability for users to learn a new SaaS app
• How long it takes to get a piece of software up and running, “time to value”

The cost and time involved with a change should be weighed against the weaknesses of the current SaaS tool.

9. Optimizing spend using data-driven pricing intelligence

Now you’ve done your “renewal homework,” followed earlier SaaS renewal best practices, and decided your course of action.

Regardless of whether you decide to change or keep with a current software tool, you need to negotiate a new deal. 

When making a purchase, information is power. Thus, your negotiations will go better if you know how much companies like yours:

• Pay for contracts
• Get discounts off list for contract lengths

Armed with data-driven pricing intelligence — benchmarks for pricing ranges and discounts – your negotiations will be smoother. You’ll also be confident that you’ve made a great SaaS renewal decision.

Pay attention to terms and conditions. To win the renewal, the vendor may allow you more latitude now than in previous years. For example, you may be able to contractually prevent auto renewals, or include the ability to downsize seat licenses in the event of organizational changes.

10. Manage SaaS renewals with a SaaS management platform

Another SaaS renewal best practice involves taking advantage of a SaaS management platform capable of detailed SaaS spend management.  This way, you can be positive that you’re getting the most out of your SaaS investments.

One reason is that it all but eliminates the possibility of renewing an app you already have or functionality that’s already somewhere in your stack. It helps by providing detailed usage information, so you know how much a tool is used and the features a user engages with most. You also can conduct quick employee sentiment surveys to know which tools users like best. 

And then there’s automated alerting that integrates with Slack or email. 90/60/30 days prior to key deadlines, you get an alert and never forget another renewal again.

Because you get complete visibility into all software already in use at your company, SMPs are now an essential part of the IT tech stack. This IT tool provides SaaS spend management functionality to improve IT efficiency and optimize resource use. In an easy-to-use dashboard, you can see insights around:

• Your entire SaaS stack
• Apps categorized and described by what they do
• SaaS license usage by department and employee to optimize license utilization
• Compliance certifications
• Key renewal or cancellation dates
• Optimization recommendations

By using an SMP, you’ll never buy another duplicate app, have the insights to make better renewal decisions, and bring discipline and control back to software budgets.

Use BetterCloud and BetterRenewal: usage and pricing insights for better SaaS renewal decisions

There’s one additional SaaS renewal best practice that would help IT, finance, and procurement make better SaaS buying decisions– it’s partnering with BetterCloud, a 2025 Gartner^® Magic Quadrant™ Leader for SaaS Management Platforms, and consistent G2 Grid winner across many SaaS management platform categories.

Our SaaS management platform tackles pain points related to managing the whole SaaS user lifecycle, which of course, includes managing users, securing files, ensuring compliance, and managing SaaS spending. 

And within the BetterCloud SaaS management platform, there’s BetterCloud Spend Optimization.  This module solves problems around uncovering Shadow IT, managing multitudes of unwieldy SaaS contracts and spending, optimizing license utilization and budgets, and understanding employee preferences around the software they must use in their jobs.

This module is a comprehensive suite of industry-leading functionality for:

• SaaS spend management
• Usage management
• License management
• Contracts management
• Vendor management

BetterCloud Spend Optimization has another feature that the renewal committee loves: BetterRenewal.

Our SaaS app database contains contracts for more than 70 market leading SaaS apps from buyers like you. Simply upload your contract and in real-time receive an automated comparison report. These benchmarking data reports provide pricing, contract terms, and other hard-to-find insights about today’s most common, market-leading SaaS tools.

By using these 10 best practices, together with BetterCloud Spend Optimization and BetterRenewal, you’ll be well-prepared to get the best deal possible with data-driven intelligence on products, pricing, and contracts to confidently negotiate all your SaaS renewals.

Can BetterCloud and BetterRenewal help your organization make better SaaS renewal decisions? Upload a contract, join a live demo, or reach out to sales now.