Statistic Info

art 1 of the survey results focuses on growth rates, go-to-market trends and cost structure. A new highlight in this year’s survey is data on balancing growth and profitability in SaaS companies, commonly known as The Rule of 40%.

You can find Part 2 results here. Part 2 compares application delivery methods, covers more on operational costs, and offers data on gross margins, contract terms, churn rates, capital requirements and accounting methods.

We’ve also created the forEntrepreneurs 2016 SaaS Infographic. The infographic pulls together major takeaways from the SaaS Survey and ties in advice and insights on key metrics.

As expected, many of the fastest growing companies are among the smallest. Eliminating them brings median growth rates down ~10 percentage points. Median growth rates are consistent with last year’s results. However, this year’s respondent pool was more evenly distributed.

Survey results indicate that companies in the $7.5MM-$15MM range are among the fastest growers. The median growth in this range is much greater than the median of companies half their size. Interestingly, there was a similar bump-up last year, but for companies between $5MM-$7.5MM.

Forentrepreneurs

More SaaS + Software Stats

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

More Growth Strategy Stats

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

Growing faster has twice as much impact on share price as improving margins

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

Our experiences with SaaS startups indicate that they usually start with a couple of lead generation programs such as Pay Per Click Google Ad-words, radio ads, etc

After $10M in ARR, the median growth rate slows to just under 50%

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years