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

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.

SaaS & Tech Growth Strategy Articles

• Defining Your Brand Voice
  Have you defined your brand voice? Andy shares his thoughts on why it’s important for you to define your brand voice in your marketing.
• What The Smart Home Means For Marketing
  This is the reality that we are on the cusp of...
• Maximizing Revenue with Effective SaaS Sales Strategies
  Maximizing Revenue with Effective SaaS Sales StrategiesSaaS sales strategies have evolved significantly over the past few years, with the industry seeing a compound annual growth rate (CAGR) of 18% from 2020 to 2027, according to a report by Allied Market Research. This growth has resulted in a highly competitive market, where differentiation and customer retention […]
• Create a Tangible Strategic Vision
  When it comes to creating a strategic vision for your business, a few elements likely pop into mind, such as a mission, your values or your core beliefs. While all of these factors are important, business owners can forget one very important one – making your business tangible. Look up the definition of this word […]
• Organization Structure Planning
  In this Insivia insight, Andy points out how important organization structure planning is to your long term goals. Unless you are a sole proprietor working alone, you team will be a vital part of your growth and success. Incorporating them into your plan will not only help them see how all of the pieces fit […]
• Personas and The “Broken Telephone” Game
  We've all played the telephone game.
• Evaluating Your Software Brand Positioning Through SWOT Analysis
  It's Strategic Planning month here at Insivia, so we're continuing our conversation about planning for next year.
• An Applied Innovation Model
  Innovation and creativity are becoming increasingly valuable as the need for unique solutions to business problems becomes more salient. Cognitive psychologist Scott Barry Kaufman argues that the creative process can be viewed in four stages: 1. Preparation – identify the problem and perform research 2. Incubation – passive, unconscious period where innovation “percolates” 3. Illumination […]
• 13 Strategies to Boost SaaS User Retention and Renewals
  Improving your retention rate can mean the difference between growing your company and running it into the ground. Read specific strategies you can use to improve your SaaS retention rate.

SaaS + Software Stats

• Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013
• 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
• The statistic shows the worldwide IT spending on enterprise software from 2009 to 2020.
• Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added
• The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost
• The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013
• 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
• SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence
• Internet Sales strategies have a significantly lower CAC of just $0.42

SaaS & Tech Growth Strategy Stats

• 26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher.
• Is your SaaS business viable?
• 73% of organizations indicated nearly all their apps will be SaaS by 2021
• 47% of millennials want to work at diverse companies, according to a recent study.
• In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%
• It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue
• SaaS companies in the $7.5MM-$15MM range are among the fastest growers
• Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing
• Companies with longer contracts (2+ years) reported the lowest annual unit churn