Statistic Info

High-growth companies scale their teams very quickly. In fact, the companies in the sample set grew their teams by 56% annually over five years, which nets out to about 8.5x growth, from 204 employees to 1750 employees on the median.

Despite the massive growth of these organizations, the best companies are able to maintain or even accelerate their revenue per employee. In fact, increases in revenue per employee as a company scales is an incredibly positive sign of the health of the business. It indicates that the company is achieving economies of scale. Those economies of scale may exist as a consequence of a strong brand, monopoly-like characteristics within their market segment, improving sales efficiency, increases in contract size, better rates of customer upsells, etc. But in all cases, it’s a hallmark of a company whose economics are improving with time.

Tomasz Tonguz

More SaaS + Software Stats

How To Make Pricing A Constant Process In Your Organization

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%)

The median annual unit churn for SAAS companies was 10% in 2016

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

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

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

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 very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

The boom in the industry is creating more jobs for techies. Data reveals there were 627,000 unfilled positions in tech in April 2017

A 1% increase in pricing strategy yields an average 11% increase in profit

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

In 2018, the market size of information technology outsourcing amounted to 62 billion U.S. dollars.

The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling

Negative Churn and Expansion Revenue

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer