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Software has become a core operating expense for small businesses, from accounting and payroll to marketing and customer management. As reliance on digital tools grows, so does scrutiny of their cost.
New data from the Small Business Expo Research Desk (n=781) shows that 41% of small business owners report that software costs have increased over the past 12 months. While not universal, the finding highlights a meaningful shift in the cost structure of running a business in 2026.
The data suggests that software spending is becoming a more visible—and potentially more strategic—line item for small businesses.
Highlights
- Most interesting finding: 41% of small business owners report increased software costs in the past year.
- 34% report no increase, while 24% are unsure.
- 62% of businesses operate with 2 or fewer software subscriptions.
- Most businesses report stable profit margins despite cost increases.
- Sample size: n = 781.
Software Costs Are Rising for a Large Minority
The survey asked small business owners whether their software costs had increased over the past 12 months.
Software Cost Changes (n=781)
- Yes — 323 (41.4%)
- No — 269 (34.4%)
- Not sure — 189 (24.2%)
While 41% is not a majority, it represents a substantial portion of the market experiencing upward cost pressure.
At the same time, the nearly one-quarter of respondents who are unsure suggests that many businesses may lack full visibility into their software spending.
This aligns with broader industry observations. According to Gartner, global spending on public cloud services continues to grow year over year, increasing the likelihood that businesses will face rising subscription costs.¹
Most Businesses Maintain Lean Software Stacks
Despite rising costs, most small businesses are not heavily saturated with software tools.
Number of Paid Subscriptions (n=781)
- 0–2 — 487 (62.4%)
- 3–5 — 211 (27.0%)
- 6–10 — 60 (7.7%)
- 11+ — 23 (2.9%)
Nearly two-thirds of respondents report using two or fewer paid tools, indicating that most businesses operate relatively lean technology stacks.
This suggests that rising costs may not be driven solely by the number of tools, but potentially by:
- Subscription price increases
- Tier upgrades
- Add-on features
- Vendor pricing changes
Profit Margins Remain Largely Stable
One of the more notable findings is that rising software costs are not strongly associated with declining margins.
Profit Margins (n≈749)
- About the same — 418 (55.8%)
- Higher — 200 (26.7%)
- Lower — 131 (17.5%)
Even among businesses reporting increased software costs, most indicate that their margins have remained stable.
This suggests that many small businesses are:
- Absorbing costs
- Passing costs through pricing
- Offsetting expenses through efficiency or growth
According to Deloitte, many organizations increasingly treat software spending as an investment in productivity rather than a pure cost center.²
Cost Visibility May Matter More Than Cost Itself
A less obvious but important signal in the data is the role of cost awareness.
Businesses that reported being unsure whether their software costs increased were more likely to report declining margins than those who clearly identified cost changes.
This points to a broader issue:
Lack of visibility into software spending may pose a greater risk than rising costs alone.
As subscription-based tools accumulate over time, managing and tracking these expenses becomes increasingly complex—especially for smaller teams without dedicated financial oversight.
Strategic Implications for Small Businesses
The data suggests that software costs are becoming a more meaningful component of small business operations, even if they are not yet overwhelming.
For many businesses, the key challenge may not be the absolute level of software spending, but how well it is managed.
Areas of focus may include:
- Auditing unused or redundant tools
- Consolidating platforms
- Monitoring subscription renewals
- Aligning software spend with business outcomes
As digital infrastructure becomes more central to operations, software costs are likely to remain an important consideration in financial planning.
Final Takeaway
The finding that 41% of small business owners report rising software costs highlights a growing pressure point—but not necessarily a crisis.
Most businesses continue to operate with lean software stacks and stable margins. However, the data suggests that visibility and management of software spending may be just as important as the costs themselves.
In 2026, software is not just an expense—it is an operational backbone that requires active oversight.
Footnotes
- Gartner. Forecast: Public Cloud Services, Worldwide. https://www.gartner.com/en/newsroom/press-releases
- Deloitte. Tech Trends Report. https://www2.deloitte.com/us/en/insights/focus/tech-trends.html
Related: Small Business Investment Is Up—But Big Decisions Are Delayed