Hidden IT costs can really take a dent out of your profit margins (Deel), and the fact that they’re hidden means so many businesses go day-to-day without noticing there are expenses burning a hole in their pocket.
Small businesses should only really spend around 4% of revenue on IT, mid-sized companies should spend 3%, and big companies 2% (ITMagination). If you feel like you’re spending more than that, here are some of the most common hidden expenses and how to control them.
The Most Common Hidden IT Costs
To give you an idea, here are some of the most common hidden IT costs:
- Unused SaaS licences: Zylo states the average organisation wastes $19.8m per year on unused SaaS licences in 2026.
- Cloud waste: Flexera’s 2026 report estimates 29% of IaaS/PaaS cloud spend is wasted.
- Cloud storage fees: Wasabi’s 2026 Cloud Storage Index found 49% of organisations exceeded cloud storage budgets in 2025.
- SaaS price inflation: Gartner forecasts SaaS spending to reach $299bn in 2025, up from $250.8bn in 2024, a 19.2% increase.
- Shadow AI and security costs: IBM found the average data breach cost was $4.4m in 2025.
Most of the hidden expenses come from SaaS subscriptions, Cloud, and rising AI costs. But even down to a more basic level, domains, hosting, and small tools are overlooked costs and often increase with every renewal. Look for offers such as the Namecheap renewal promo code, or any renewal promo code for the tool you’re looking at, to save money.
How to Know if You’re Overspending on IT Expenses
IT expenses can feel reasonable until you compare your IT spend growth against your revenue growth. You might notice that your software, cloud, IT support, infrastructure, or AI costs are growing so much faster than your revenue, which might already be under pressure.
Really, you should try to track the unit economics of each IT expense and its ROI. You want to look at things like:
- Cost per customer.
- Cost per transaction.
- Cost per employee.
- Cost per AI query, if you’re using AI tools.
Or, a good strategy that works is to write down all your IT expenses and subscriptions, and ask your employees to say which ones they use a lot and don’t.
Look for red flags such as:
- Departments buying tools on business cards.
- No central contract register.
- Cloud bills rising without matching usage.
- Storage, egress, API, support, and backup fees increasing.
Controlling Hidden Tech Costs
There are so many tools and processes you can use/follow to control hidden tech costs.
Some of the most useful management platforms include:
- Zylo: A great option for SaaS spend visibility, renewals, and licence optimisation.
- Torii: An excellent tool for SaaS discovery and lifecycle automation.
- BetterCloud: Good for managing SaaS operations and access controls.
- Flexera One: This tool is better suited to larger firms needing SaaS, software asset management, and cloud visibility.
Flexera, Zylo, and BetterCloud were all recognised as Leaders in the 2025 Gartner SaaS Management Platforms Magic Quadrant.
You can also renegotiate SaaS contracts. If you ring a company and tell them you’re thinking about cancelling because the cost doesn’t match how much you use the tool, they’ll almost always give you a discount. Or, you can ask to switch to a usage-based pricing model.
Hidden IT costs are recurring. They increase annually, and it really does take a more controlled oversight of expenses to not let them get out of control, especially if you’re running multiple tools and subscriptions. We’ve given some great suggestions for how you can not let hidden costs impact your profit margin, but it’s a monthly effort from you to put our advice into practice.
