SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

SaaS + Software
Quote in Growth Strategy

Quote Info

This is because they have to invest heavily upfront to acquire the customer, but recover the profits from that investment over a long period of time. The faster the business decides to grow, the worse the losses become. Many investors/board members have a problem understanding this, and want to hit the brakes at precisely the moment when they should be hitting the accelerator.

In many SaaS businesses, this also translates into a cash flow problem, as they may only be able to get the customer to pay them month by month.

For Entrepreneurs.com

More SaaS + Software Stats

54% treat upselling and add-on sales as high priority

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

Cloud-hosted applications have a 99% uptime

The 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%

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

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

55% of SaaS companies rate Customer Retention as the key metric to measure

When venture capitalists participate in seed rounds, the average round size is 3x larger

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

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

47% of millennials want to work at diverse companies, according to a recent study.

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

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

The statistic shows the worldwide IT spending on enterprise software from 2009 to 2020.

In 2018, the revenue of General Dynamics amounted to nearly 36.2 billion U.S. dollars.

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

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

How To Make Pricing A Constant Process In Your Organization

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

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

Looking for SaaS focused services?
SaaS Website Design
SaaS SEO Agency
SaaS PPC