The Real Cost of SaaS for UK Startups

88% of SaaS used by UK startups is paid in a foreign currency. We ran the numbers to find out how much it really costs.
The Real Cost of SaaS for UK Startups

According to our data, 88% of the cloud software used by UK startups is paid for in a currency other than GBP, most often USD. Most of the time a when startup pays for a SaaS subscription, they’re paying hidden charges for foreign currency transactions.

FX fees are usually hidden inside product terms and conditions. They’re usually not listed separately on statements and, instead, embedded in the exchange rate charged to you when you pay for something in a foreign currency.

For most startups, cloud software is a startup’s second largest expense after payroll. It’s also a cost that grows as you grow - more people in the business and more teams means paying for more seats and, usually, subscribing to more tools. And so we set about understanding how much UK startups were paying in hidden FX fees.

Methodology

We wanted to see the impact that hidden foreign currency fees had on a typical seed-stage UK startup that spends $10,000 per month on cloud software. We then went digging through the arcane terms and conditions of each financial institution to decipher what they would really charge for a USD SaaS payment and calculated how this would impact a startup’s burn rate.

Results

The exchange rate that they all used was the daily wholesale rate set by Mastercard or Visa, plus a foreign exchange fee expressed as a percentage of the transaction. Some also added a flat per transaction fee for each foreign currency card payment.

Cledara’s mission is to help companies discover, buy, manage and cancel their SaaS in a scalable way. Focusing deeply on that problem allows us to build the best possible solution for companies that are looking to manage their cloud software. One of the key things that we realised early on was that most SaaS was paid in USD and therefore hiding extra foreign currency fees would hurt our customers. Therefore we decided to charge no foreign currency fee or mark up on cloud software.

So if you’re using a product that is charging you hidden foreign currency fees, why not let us know and see if we can help!

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