Your CRM Vendor Just Cut 7% of Its Staff. Now Check Your Renewal.

By Craig S. Cody, CPA, Certified Tax Coach.

Your software vendor's news is their business. Your renewal is yours.

On October 6, HubSpot announced it's laying off about 660 people, roughly 7% of its workforce. If your marketing or PR agency runs on HubSpot, the useful response isn't an opinion about the layoffs. It's to pull your contract, count the seats you pay for, count the people who actually use them, and decide what you're renewing before the renewal decides for you.

Then do the same thing for every other subscription your agency pays for. The CRM is just the one in the news this week.

Plenty of people will tell you what this means for the software industry. I'd rather take the CPA's seat on this one and look at your line item.

Many agencies I see are paying for 20% to 30% more licenses than they use. The agencies that review their subscriptions twice a year are the exception.

What Did HubSpot Actually Announce?

According to the company's letter to employees, as reported by Boston 25 News, HubSpot is cutting about 660 roles. CEO Yamini Rangan said the company is removing management layers to speed up decisions and concentrating its resources on its top priorities as more customers adopt AI.

She also said the cuts aren't about AI replacing workers and aren't a cost-cutting move.

Nothing in the announcement says anything about pricing. I'm not predicting a price change, and you shouldn't make a decision based on one. You don't need a price change to have a reason to look. The renewal is the reason.

Why Should an Agency Owner Care?

Because a renewal is a decision, and most agencies treat it like a bill.

Annual software contracts tend to renew on their own. The seat count you signed for two years ago rolls forward, whether or not the people in those seats still work for you, still log in, or ever needed a paid seat in the first place. Nobody decides to keep paying for them. It just happens.

Software is overhead. Drew McLellan and the Agency Management Institute put overhead at about 25% of AGI in their 55/25/20 benchmark, and AGI here means agency gross income, not the number on your personal return. Every seat nobody uses is overhead that buys you nothing.

A vendor making big changes is a good prompt. Not because something bad is coming, but because it reminds you that the contract exists and has a date on it.

"It's Deductible Anyway" Isn't a Reason to Keep Paying

Software subscriptions are a deductible business expense. That's true whether the seat gets used every day or never.

But a deduction isn't a refund. It saves you your tax rate on the dollar, not the dollar. Pay for seats nobody uses, deduct them, and you're still out most of what you spent.

The only version of that expense that helps your margin is the one you stop paying.

How Do You Audit Every Subscription Your Agency Pays For?

Start with the CRM, because it's usually the biggest single line. Then run the same process on everything else: project management, file storage, design tools, video, scheduling, social, the AI tools, the plug-ins. Set aside an afternoon and work through it in this order.

1. Build the list from the money, not from memory. Pull twelve months of your software expense account, every company credit card statement, expense reports, and anything billed through an app store or marketplace. Free trials that quietly turned into paid plans show up here and nowhere else.
2. Give every subscription an owner. One person who can say what it does and who uses it. A subscription nobody will claim is a subscription to cancel.
3. Write down the terms for each one. Annual cost, monthly or annual billing, renewal date, notice window, and seats paid for. The notice window is the date that matters. Miss it, and next year is already decided.
4. Count seats against people. For every tool billed per user, compare seats paid for with people who logged in during the last 90 days. Look hardest for the people who've left. A seat assigned to someone who left in March is still a seat you're paying for.
5. Match seats to jobs. Some people need to edit every day. Others only need to look. Many platforms price those two differently, so check whether each person needs a paid seat at all.
6. Find the overlaps. Two project management tools. Three places files are stored. Four AI tools that each do part of the same job. Pick one per job. I wrote about the real bill behind "free" AI labor separately, and AI subscriptions are where the count gets away from owners fastest.
7. Look past the seats. Tiers and add-ons get bought for one project and never used again. If nobody can name the feature you're paying for, that's your answer.
8. Decide, one line at a time. Keep, cut seats, downgrade, consolidate, or cancel. All five are fine. Renewing by default isn't a decision.

Then set it up so you don't have to do this from scratch again:

• Put every notice date on one calendar, about 90 days before each renewal, with a name next to it.
• Add seat removal to your offboarding checklist, for every tool, the day someone leaves.
• Decide who can add a new subscription. If anyone with a company card can start one, your list starts growing again the day you finish it. Name who approves new tools, and keep the list current when they do.
• Run the full review twice a year, and the seat check before each major renewal.

What About Prepaying the Renewal for the Deduction?

Agency owners ask me this every fall.

A one-year subscription you prepay can often be deducted in the year you pay it, under the IRS 12-month rule, as long as the benefit doesn't run past the earlier of 12 months after it starts or the end of the next tax year. The timing also depends on your accounting method, so it's a conversation to have with your CPA before you sign.

And it's never a reason to buy seats you don't need. Prepaying for software you don't use just moves the waste into an earlier year.

Who Is This Not For?

If you're a one-person shop with a handful of tools on one card, you probably already know what you pay for.

And if you already keep a subscription list with owners, renewal dates and seat counts, and you check it before every renewal, you're ahead of most agency owners. Keep doing it.

Frequently Asked Questions

Does HubSpot's layoff mean my price is going up?

Nobody outside HubSpot knows, and the announcement says nothing about pricing. Don't renew or cancel on a guess. Read your contract's renewal and price terms, and decide on your own usage.

How often should an agency audit its software subscriptions?

Run a full review of every subscription twice a year, and check seats against users about 90 days before each major renewal so you don't miss the notice window. Also remove seats whenever someone leaves, because a departed employee's seat keeps billing until somebody removes it.

How do I find every subscription my agency pays for?

Work from the money, not from memory. Pull twelve months of your software expense account, every company credit card statement, expense reports and any app store or marketplace billing. Then give each subscription an owner who can say what it does and who uses it.

Are software subscriptions tax deductible for an agency?

Yes. Software you use in the business is generally a deductible expense. But a deduction only saves you your tax rate on what you spend, so an unused seat still costs you most of its price.

Can I deduct a prepaid annual software subscription this year?

Often, yes. Under the IRS 12-month rule, a prepaid benefit that doesn't run past the earlier of 12 months after it starts or the end of the next tax year usually doesn't have to be capitalized. Your accounting method affects the timing, so confirm with your CPA before you prepay.

How much should a marketing agency spend on software?

There's no single number for software alone. AMI's 55/25/20 benchmark puts all overhead at about 25% of agency gross income, and software is one piece of that. The better question is whether every seat and subscription is earning its place.

Read the Contract Before It Renews Itself

Your vendor's reorganization is their story. The seats you pay for are yours.

Pull the list. Count the seats. Count the users. Then decide, one subscription at a time.

If you want a second set of eyes on what your overhead is actually costing you, start here:

Book a Free Tax Analysis

Nobody's looking out for your money but you. Let's go look together.

Craig S. Cody is a CPA, Certified Tax Coach, and retired NYPD Lieutenant. His firm works with more than 70 marketing and advertising agency owners every month, helping them keep more of what they make through proactive tax planning.

This article is general education, not advice for your specific situation. Confirm your own facts with your advisor before acting.