Right Sizing SaaS Contracts With Real Usage Data
Why finance and procurement can't do this alone, and how involving the actual business users unlocks the savings that spreadsheets miss.
I spent years on the vendor side of enterprise software, and one thing I noticed repeatedly: the customers who successfully right-sized their contracts never did it purely from finance's side of the business. They always looped in the people actually using the tool. The ones who tried to right-size from spend data alone usually got it wrong in one direction or the other, cutting seats people quietly still needed, or missing seats nobody had touched in months.
Renewing blind vs renewing on confirmed usage
Same contract size every year
- Seat count carries over untouched
- Unused licences quietly accumulate
- The ask is a discount, which can be declined
Right-sized at renewal
- Underused seats identified before the deadline
- Team leads confirm what is still needed
- The ask is a fact the vendor has to price against
Why seat count and usage are two different numbers
I watched account after account confuse "how many seats we bought" with "how many seats we need." They're rarely the same number, and the gap comes from predictable places:
- A team over-buys ahead of a hire that gets delayed or falls through
- People change roles and stop using a tool without formally offboarding
- A department adopts a tool for a project, and keeps the seats after the project ends
- Nobody outside the direct team using the tool has visibility into whether it's still earning its seat count
Finance sees the invoice. IT sees the technical access list. Neither, on its own, reliably tells you who's actually getting value out of the tool day to day.
What real usage data actually looks like
Not login counts alone. A login doesn't tell you whether someone opened the tool for thirty seconds out of habit or genuinely used it to do their job. Useful usage data combines:
- Active login frequency over a meaningful window, not just the last week
- Feature or module usage, since a tool can show "active" logins while only a fraction of its paid capability gets touched
- Direct confirmation from the business team, not just system data, on whether the tool still matters to their workflow
That last point matters more than people expect. System data tells you what happened. A quick check with the team tells you whether it should keep happening.
The right-sizing process
- Pull actual usage data for the tool across the full user base, well before the renewal date, not the week of.
- Send a short usage confirmation to team leads: "Do these specific people still need this tool?" Not a company-wide survey, a direct question to whoever owns the relevant team.
- Reconcile the responses against the usage data. Where they disagree, in either direction, that's worth a closer look before you finalize numbers.
- Bring the reconciled number, not the original seat count, into the renewal conversation.
Why this changes the negotiation, not just the invoice
A renewal conversation that opens with "we're dropping from 150 to 94 seats based on confirmed usage" is a fundamentally different conversation than one that opens with "we'd like a discount." The first is a fact the vendor has to price against. The second is a request they can simply decline.