Every founder dreams of the moment when growth becomes the problem. But along with any business growth, there’s a quieter curve growing in parallel: the IT bill. As the tech stack and usage grows, costs compound silently – with each new feature, integration, and experiment adding incremental spend. As a rule of thumb, this spend curve often grows faster than the revenue curve, all while going unnoticed.
That is exactly why the most expensive lesson fast-growing startups learn is this: scaling doesn’t kill startups. However, poor cost governance does.
Below, explore five critical lessons from seasoned founders that can preserve months of runway and prevent painful emergency downsizing later.
1) You might pay far more for SaaS than you should
SaaS pricing is intentionally opaque. Public price lists rarely reflect what customers actually pay. Besides, hidden costs are also not uncommon: including usage overages, per-seat minimums, feature-based add-ons, premium support, implementation fees, data storage charges, API limits, and more.
In most cases, businesses overpay for SaaS for one or all of the following reasons:
> Reason 1: Lack of pricing benchmarks. Since most SaaS pricing is quote-based, companies have no clear reference point for what a fair price looks like. Therefore, they might be forced to accept paying more than the market average.
> Reason 2: Hidden and underestimated extra costs. Many teams focus on the base subscription price while overlooking additional costs. Over time, these extras significantly inflate total spend.
> Reason 3: Inefficient or late-stage negotiations. Companies without proper vendor negotiation experience miss opportunities to secure discounts or to negotiate more flexible contracts efficiently.
By addressing these factors proactively, businesses can unlock significantly better pricing terms. This, in turn, will help cut unnecessary spending.
2) Scaling isn’t about spending more
A common mistake startups make is assuming that scaling requires higher burn: more tools, more infrastructure, more headcount, more complexity, and so on. While there’s some truth to it, spending ahead of value is rarely what drives sustainable growth.
The fastest-growing startups succeed at scaling not because they spend more. In reality, it comes down to smarter, ROI-driven spending. For example, instead of accepting SaaS costs as fixed, they negotiate vendor discounts and right-size licenses based on real usage. Or, instead of overlooking shadow IT, they audit SaaS usage regularly and ensure every tool is not only actively used but also value-driven.
To do this efficiently, spend management platforms can be highly useful. They can provide full visibility into software spend while helping teams uncover waste and optimize costs without slowing growth.
3) Usage-based cloud pricing compounds can spiral exponentially without proper controls
Cloud and infrastructure pricing models are intentionally frictionless at the beginning: you pay only for what you use. However, as soon as customer usage spikes, so does spend. The increase is often exponential, and going from $4k to $45k per month in under 90 days is not uncommon among fast-scaling startups.
At times, a single architectural decision can turn everything around: for instance, in the case of Milkie Way startup, a misconfiguration led to a $72,000 Google Cloud invoice overnight.
This problem often stems from not realizing that every new feature and integration becomes a financial decision, whether you consciously treat it as one or not.
To prevent falling into this trap, follow these principles:
- Build cloud cost models tied to customer usage;
- Create alerts and caps before scaling traffic;
- Review infrastructure costs after every major feature launch;
- Right-size resources regularly, with clear ownership assigned.
Another highly effective tactic for a stress-free cloud runway is to secure cloud credits. Most cloud providers (such as AWS, GCP, and Azure) offer substantial credits and incentive programs, especially for fast-growing or venture-backed startups.
When approached correctly, cloud credits can offset infrastructure spend for months. However, keep in mind that eligibility requirements vary by cloud provider, and each specific case requires eligibility research and a credit application process.
4) What feels like safety in over-provisioning often becomes a hidden cost
Over-provisioning feels safe because it reduces risk early on: whether that’s extra cloud capacity, more seats in SaaS tools, or premium plans “just in case.” But in both cloud infrastructure and SaaS platforms, unused capacity is still billed. Hence, when those decisions aren’t regularly revisited, perceived safety quietly turns into a long-term cost liability.
This form of excessive cloud and SaaS usage can manifest in many ways: oversized infrastructure and compute resources, premium services that are not yet needed, unused licenses that renew automatically, parallel tools solving the same problem, you name it.
Fortunately, several cloud cost control best practices can help mitigate these risks. This starts with shifting the mindset from static provisioning to usage-based scaling, designing both infrastructure and SaaS tooling to expand only when real demand exists.
5) Cost ownership can make or break your runway
In many fast-growing startups, cloud and SaaS costs sit in a gray zone of ownership. In cases like this, when no single department is fully accountable for SaaS management or spend optimization, the risks of overspend become extremely high. This way, with no one focused on challenging costs, they can escalate quickly and thus drastically impact cash flow.
High-performing teams, by contrast, make cost ownership explicit and treat spend optimization as a core operating discipline. They assign clear responsibilities for cloud and SaaS spend and ensure that technical and product decisions are evaluated through both operational and financial lenses. This way, costs are directly tied to usage and outcomes, and optimization happens proactively.
Final Thoughts
Scalability itself isn’t the enemy. The real risk lies in allowing costs to scale without visibility and ownership.
As these five lessons show, most financial damage comes from seemingly insignificant decisions that compound over time. With the right spend management tools in place, teams can spot waste early and optimize proactively.
About Author
Andrew Alex is a serial entrepreneur and the CEO of Spendbase, a Google-backed FinTech helping companies optimize SaaS and cloud costs. Fluent in tech trends and a TED evangelist, he regularly advises startups on cost efficiency, vendor negotiations, and scaling sustainably.
LinkedIn: https://www.linkedin.com/in/alexseyenko/
