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

Quote Info

Can I make more profit from my customers than it costs me to acquire them?

This is effectively a study of the unit economics of each customer. To answer the question, we need two metrics:

• LTV – the Lifetime Value of a typical customer
• CAC – the Cost to Acquire a  typical Customer

(For more on how to calculate LTV and CAC, click here.)

Entrepreneurs are usually overoptimistic about how much it costs to acquire a customer. This probably comes from a belief that customers will be so excited about what they have built, that they will beat a path to their doors to buy the product.

More SaaS + Software Stats

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

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

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

Improve Your Pricing Schedule And Turn More Profit

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

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

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

80% of venture capital investments take place in the enterprise

How Often Should The Pricing Committee Be Meeting And Making Changes?

More Growth Strategy Stats

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

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

High-growth companies generate 60% fewer sales opportunities than low-growth companies

In 2019, spending on IT services is expected to amount to 1,016 billion U.S. dollars worldwide

At Facebook, 15 percent of tech roles are staffed by women

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

How To Make Pricing A Constant Process In Your Organization

How Often Should The Pricing Committee Be Meeting And Making Changes?

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18