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Year-old companies are turning down billion-dollar buyouts in the hopes of multibillions in a few months. But we have seen similar industry phases before, and they have often ended with growth and valuations fizzling out. The industry’s booms and busts make growth, an essential ingredient in value creation, difficult to understand. To date, little empirical work has been done on the importance of revenue growth for software and Internet-services companies or how to find new sources of growth when old ones run out.

Mckinsey

More SaaS + Software Stats

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

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

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

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

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

How To Make Pricing A Constant Process In Your Organization

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

SaaS IPOs have more than doubled over the last 12 years

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%)

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

More Growth Strategy Stats

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

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

Is your SaaS business viable?

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

Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

In 2018, the U.S. imported aerospace products worth about 53.98 billion U.S. dollars.

Companies with longer contracts (2+ years) reported the lowest annual unit churn

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

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