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Cutting software costs

What Is Shelfware and How Much Is It Costing You?

Shelfware is software you pay for but do not use. Learn the six forms of shelfware, how to measure it, what it typically costs and how to eliminate it.

By the MI Solutions SAM team11 min read2 exhibits

Shelfware is software you pay for but do not use. The name comes from the days of boxed software that sat on a shelf, unopened. Today it is invisible: a subscription seat assigned to someone who left, a premium module nobody switched on, a tool a project bought and forgot. It does not show up as a problem on any dashboard. It shows up only as money.

How big the problem is

$21MAverage annual spend on unused SaaS licenses in Zylo's customer baseZylo, 2025
+14.2%Year-over-year growth in that unused spendZylo, 2025
35%Organizations reporting that SaaS waste increased over the past yearFlexera, 2025
59%SAM teams actively tracking SaaS usageFlexera, 2025

The $21 million figure reflects Zylo's customer base, which skews toward large enterprises, but the pattern holds at every size: a meaningful share of every software budget pays for nothing. The more telling number is the last one. If four in ten SAM teams are not tracking SaaS usage, they cannot see shelfware in the category where it grows fastest.

Shelfware also compounds. A seat that is idle this year is renewed next year, usually at a higher price, and often with a few more seats added "for growth". Without a deliberate check, the waste is carried forward and inflated at every renewal.

The six forms of shelfware

01Idle seats

Licenses assigned to people who have not used the product for months. Usually the largest category.

02Unassigned licenses

Bought "for growth" and never given to anyone. Common after over-optimistic hiring plans.

03Leaver licenses

Still assigned to people who have left. A symptom of an offboarding process that stops at the identity provider.

04Unused modules

Paid add-ons and premium tiers that were never deployed or switched on.

05Forgotten subscriptions

Tools bought by a team or project, still renewing after the need ended.

06Duplicate tools

Two products doing the same job because different teams bought them. Not strictly unused, but half the spend is avoidable.

The mix varies by organization, but a typical first assessment in a mid-sized company looks something like this:

Exhibit 1
Idle and leaver seats make up most of the shelfware we findShare of identified shelfware value by type, illustrative mid-sized estate$612Kannual shelfwareidentifiedIdle seats41%Leaver licenses18%Unassigned licenses15%Unused modules and tiers14%Forgotten subscriptions12%Illustrative composite from first assessments; your mix will differ. Duplicate tools are sized separately in arationalization review.

How to measure it

You need two data points for each product: how many licenses you pay for, and when each one was last used.

  • Paid for: from the contract or the latest invoice. Not from the admin console, which shows what is assigned, not what is billed.
  • Last used: from the vendor's admin console or usage reports, your identity provider's sign-in logs, or device inventory for installed software.

Then choose a threshold for "unused", commonly 90 days for productivity tools and shorter for products used daily. Our guide to inactive user thresholds explains how to choose. Shelfware cost is simply:

(licenses paid for − licenses used within the threshold) × cost per license

Add forgotten subscriptions from expense and card data, which often reveal tools no one in IT knew about. See shadow IT.

What shelfware looks like across a portfolio

Shelfware is rarely spread evenly. A few products account for most of it, and they are not always the most expensive ones. Products bought on enterprise-wide terms for "everyone" tend to have the lowest utilization.

Exhibit 2
Utilization varies widely, and the gap is the opportunityLicenses paid for vs actively used (last 90 days), illustrative portfolioPaid forActively used01,0002,0003,000Design and whiteboard474800Project management8901,200E-signature120350BI and analytics260420Video conferencing2,3102,600Developer tools276300Illustrative. The right-hand point shows actively used licenses; the distance between the points is shelfware.
The biggest shelfware is rarely in the biggest contract. It is in the tools bought for everyone and used by a few.
Common pattern in first-time SAM assessments

How to remove it

Removing shelfware is mostly a matter of timing. Most subscriptions cannot be reduced mid-term, so the work is to know the number before the next renewal, true-down or billing anniversary.

  1. Now: reclaim

    Remove idle and leaver seats and return them to the pool. New joiners get recycled licenses instead of new purchases.

  2. 90–120 days before renewal: size

    Recalculate the active count, add a small buffer for known hiring, and decide the renewal quantity.

  3. Before the notice date: tell the vendor

    Send the reduction in writing before the notice period starts. See contract notice periods.

  4. At renewal: reset the baseline

    Sign for the right number, remove unused modules and tiers, and record the saving.

  5. Every quarter: keep it clean

    Re-run the inactive report so shelfware does not rebuild.

Specific actions for each type:

  • Idle and leaver seats: reclaim them and reduce the count at the next renewal or true-down opportunity. See license reclamation.
  • Unassigned licenses: reduce at renewal; keep only a small buffer for known hiring.
  • Unused modules: remove at renewal, or swap for something the business does use. See right-sizing.
  • Forgotten subscriptions: cancel before the next notice deadline, and route future purchases through an approval workflow.

Removing shelfware without upsetting anyone

Do
  • Tell users before you reclaim, and give them a simple way to ask for the license back.
  • Use a threshold that fits the product: 30 days for daily tools, 90 for occasional ones.
  • Exclude service accounts, shared mailboxes and licenses required by contract.
  • Reduce at the renewal, not mid-term, unless the contract allows it.
Avoid
  • Reclaiming licenses from executives or on-call teams without checking first.
  • Cutting the renewal count to today's usage with no buffer for hiring.
  • Treating "assigned" as "used". Assignment is not activity.
  • Letting the reclaim become a one-off project instead of a quarterly routine.

How MI One helps

Frequently asked questions

Is shelfware the same as overlicensing?

Overlicensing is the broader position of owning more than you use. Shelfware is the unused software itself.

Can we get a refund for shelfware?

Rarely mid-term. The savings usually come from reducing volume at renewal, true-down or the next billing period.

How often should we check for shelfware?

Quarterly for major per-user products, and always 90 to 120 days before a renewal.

What is a normal level of shelfware?

Some buffer is healthy, typically a few percent for hiring and onboarding. Anything above 10% of a product's seats is worth investigating, and above 20% usually means the renewal count is wrong.


Sources

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