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

Statistic Info

The median annual contract size (subscription component only) for the group was $25K per year. These results are somewhat above the previous survey medians of $21K, $21K, $20K in 2015, 2014 and 2013, respectively.

The median average contract length is 1.3 years. The median billing term is seven months in advance. These results are very comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing one month over 2015 to seven months.

More SaaS + Software Stats

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

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

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

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

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

Software and online services are in a period of dizzying growth

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

How to Reduce Churn

Customer Segmentation analysis will help point out which are your most profitable segments

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

More Growth Strategy Stats

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

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

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

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8

Women in western countries use the internet 17 percent more than their male counterparts

In 2020, China is expected to generate 55 billion U.S. dollars in the global medical technology market.

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

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.

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

The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month