The “SaaS Crash” Story Misses the Real Risk: Budget Reallocation
If you have felt a change in how customers buy software, you are not imagining it. Sales are taking longer to close, renewals are being questioned, and buyers are asking harder questions about what a product actually does for them. Many founders see this as a sign that companies are simply stopping their software spending. More often, the reality is reallocation.
Budgets are being pulled away from "nice-to-have" tools and concentrated into a few top priorities. Every product that isn't considered essential is being forced to prove its value or face the chopping block.
Why the Conversation is Changing
Recent industry analysis points to this same shift. Experts at SaaStr suggest that the current pressure isn't just about AI replacing software; it’s about a shift in where companies pay attention. As businesses move more of their budget toward AI, they are making harder trade-offs elsewhere, cutting back on the number of "seats" (user licenses) they pay for and dropping extra add-ons.
The All-In Podcast recently debated if the traditional software model is in trouble. Their conclusion was that buyers are no longer interested in just "buying tools." They are concentrating their money on products that deliver a clear result and are easy to manage. For founders, this means renewals are harder to win, and customers want proof of value much earlier in the relationship.
What Customers Are Actually Doing
Businesses are currently "cleaning house" by reducing the number of different vendors they work with. Bain & Company reports that customers are now practicing "seat discipline"—instead of buying a license for every employee, they are only paying for the people who actually use the tool. This makes any product that isn't "mission-critical" a high risk for being cut.
At the same time, AI has become a mandatory priority. Gartner estimates that companies spent nearly $1.5 trillion on AI in 2025. When that much money moves into a new category, existing expenses have to work twice as hard to stay in the budget. Finance departments are looking for any excuse to cut costs that don't show a clear return.
Founders Should Plan for Three Shifts
1) Renewals are now a "Business Case"
A renewal is no longer a casual "keep the tool we like" decision. It is now treated as a new expense that must be justified to keep. Your “champion” inside the company can no longer just say your product "helps with productivity"— they need proof points to keep it.
Founder Action: Pick one specific task your product makes better and describe the benefit in one measurable sentence. Instead of saying "it saves time," say "it turns a three-hour reporting process into a one-hour process." If the benefit isn't easy to measure, the customer will have a hard time defending the cost.
2) Growth from "More Users" is less reliable
Charging "per user" works well when companies are hiring. It works poorly when companies are looking to cut unused licenses. Bain notes that buyers are becoming much more disciplined about where they expand their software use.
Founder Action: Look at your last few renewals. If customers complained about the price, check if the real issue was that they weren't using all the seats they paid for. Focus on making sure your customers actually adopt the tool before you try to sell them more licenses.
3) Buyers and investors want to see stability
Even if you aren't looking for investors right now, the market's mood still affects you. McKinsey reports that very few software companies currently meet the standard for both high growth and healthy profit. Because of this, buyers are more careful about choosing vendors they know will be around for the long haul.
Founder Action: Be ready to show a simple set of numbers that prove your customers stay with you and that your business can grow without spending more than it makes.
How Peak Technology Partners Fits
In this environment, many companies are not "broken." Instead, they are being judged by much stricter standards. Whether you are raising money or selling your company, your success depends on how well you can prove your value.
Peak Technology Partners advises founder-led software companies on selling their business or raising capital. We help founders do three things:
Tell a Value Story: We translate what your company does into a clear, qualitative and quantitative story that compels buyers and helps pass a buyer's scrutiny.
Creates a Market: We create a robust, competitive dynamic with multiple buyers to create leverage, maximize valuation, optimize terms, while maximizing both speed and certainty of a successful transaction.
Manage the Process: We run a disciplined process to keep your information private while creating the competition needed to get the best deal.
Bottom Line
The risk isn't that companies will stop buying software entirely. The risk is more that they will consolidate their spending on a few "must-have" tools. Bain’s research and Gartner’s AI forecasts show that budgets are moving fast.
To stay on the right side of the line, founders must focus on delivering value quickly and making sure that value is easy for a customer to defend to their boss.