Benchmarking
Last updated June 15, 2026
Definition
Benchmarking is the practice of comparing what an organization pays for a recurring cost against what comparable organizations pay for the same thing. The gap between the two is the overspend, and it is where the savings live.
A useful benchmark compares against organizations of similar size and profile, not a national average, because scale and usage change what a fair rate looks like. The comparison is run on the effective rate, the true all-in cost, rather than the headline rate, so it reflects what is genuinely being paid.
When a benchmark shows a business is paying above the market, the gap can usually be closed by renegotiating the existing agreement or correcting billing errors, without switching vendors; do i have to switch vendors to lower costs covers this in more detail.
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