Statistic Info

One way of measuring the efficiency of a company’s revenue model is to benchmark revenue per employee. Google and Facebook, the two most efficient companies, generate $1M per revenue per employee per year.

Setting aside those exceptional cases and focusing instead on SaaS companies, the typical average revenue per employee is about $190k to $210k per year.

Tomasz Tonguz

More SaaS + Software Stats

Three uses for the SaaS Guidelines

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

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

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

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

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

More Growth Strategy Stats

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

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

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

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

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

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

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

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18