Quote Info

A great way to understand any business model is to answer the following simple question:

Can I make more profit from my customers than it costs me to acquire them?

This is effectively a study of the unit economics of each customer. To answer the question, we need two metrics:

  • LTV – the Lifetime Value of a typical customer
  • CAC – the Cost to Acquire a  typical Customer

(For more on how to calculate LTV and CAC, click here.)

Entrepreneurs are usually overoptimistic about how much it costs to acquire a customer. This probably comes from a belief that customers will be so excited about what they have built, that they will beat a path to their doors to buy the product. The reality is often very different!

For Entrepreneurs.com

More SaaS + Software Stats

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

High-growth companies generate 60% fewer sales opportunities than low-growth companies

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

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013

80% of venture capital investments take place in the enterprise

Internet Sales strategies have a significantly lower CAC of just $0.42

More Growth Strategy Stats

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”

Improve Your Pricing Schedule And Turn More Profit

Sony’s PlayStation brand had accumulated approximately 38.57 million fans on the social network

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

If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales