Summed up quite simply by the old adage “knowledge is power”, the value of information has been reinforced time and time again.

with this in mind, let’s take a journey into the wonderful world of SaaS stats and benchmarks!

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18.
Source: ForEntrepreneurs
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.
Source: Mckinsey
Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50.
Source: Mckinsey
The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year.
Source: Tomasz Tunguz
It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR.
Source: HubSpot
Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)
Source: Openview
After $10M in ARR, the median growth rate slows to just under 50%.
Source: Openview
At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR.
Source: Openview
Businesses selling into the enterprises generate most of their ARR through field sales (>50%), with some inside and channel sales; self-service accounts for a very small percentage of enterprise sales.
Source: Openview
It's 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue.
Source: ForEntrepreneurs
It's 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue.
Source: ForEntrepreneurs
Publicly-traded SaaS companies have an average
Revenue Per Employee of $200,000.
Source: Tomasz Tunguz
The fastest growing SaaS companies have an average Quick Ratio of 3.9: generating $3.9 in revenue for every $1 lost to revenue churn.
Source: Insight Squared
The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost.
Source: Tomasz Tunguz
55% of SaaS companies rate Customer Retention as the key metric to measure.
Source: Totango
SaaS companies in the $7.5MM-$15MM range are among the fastest growers
Source: ForEntrepreneurs
High-growth companies offer a return to shareholders 5 times greater than medium-growth companies.
Source: Mckinsey
High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.
Source: Mckinsey
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.
Source: InsightSquared
Revenue per employee has been steadily increasing in SaaS companies. It serves as a great measuring stick to understand the increasing or decreasing efficiency of the business
Source: Tomasz Tunguz
Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale.
Source: InsightSquared
Nearly 70% of companies >$50M ARR plan to be cash-flow breakeven in 2018.
Source: Openview
When the numerator of your quick ratio is growing that means your revenue is growing. It’s very important important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn.
Source: InsightSquared

Best-in-class SaaS companies achieve 5-7% annual revenue churn - equivalent to a loss of $1 out of every $200 each month.
Source: Sixteen Ventures
The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%.
Source: ForEntrepreneurs
In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%.
Source: Chaotic Flow
As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn.
Source: ForEntrepreneurs
Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts.
Source: ForEntrepreneurs
A SaaS business that doubles revenue every year for 5 years, but has a relatively poor expected customer life of 3 years, would still exhibit very good gross revenue retention rates at least through its first 6 years until the percentage of older customers begins to outweigh the percentage of new ones.
Source: SaaS Capital
A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses.
Source: SaaS Capital
The gap between net and gross retention grows larger as SaaS businesses get bigger, and cross-selling, up-selling and price increases almost completely offset the loss of revenue from weaker underlying retention.
Source: SaaS Capital
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.
Source: Tomasz Tunguz
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
Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts.
Source: Mckinsey
Only as businesses mature and reach scale, do their underlying retention rates become better known. It is very possible that larger companies are doing better work on customer success and retention than it appears, but the benefits are more than offset due to the natural aging of their customer base.
Source: SaaS Capital
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.
Source: InsightSquared
For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time.
Source: SaaS Capital
The sustained improvement in retention associated with a Customer Success leader (6 percentage points) will improve total revenue, growth, and profitability leading to an expected 74% increase in enterprise value in 5 years.
Source: SaaS Capital

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less.
Source: ForEntrepreneurs
While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution.
Source: ForEntrepreneurs
Analyzed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes.
Source: ForEntrepreneurs
Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing.
Source: ForEntrepreneurs
The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions.
Source: ForEntrepreneurs
Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales.
Source: Tomasz Tunguz
On average, SaaS sales efficiency is about 0.7.
Source: Openview
Startups report a CAC payback of 9-12 months on average; however, this is overly optimistic – 12-18 months is more common when factoring in gross margins and fully loaded acquisition costs.
Source: Openview
Best-in-class companies have a CAC payback of 6-12 months with rare exceptions of <6 months.
Source: Openview
SaaS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence
Source: Tomasz Tunguz
51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution.
Source: ForEntrepreneurs
In contrast, only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases.
Source: ForEntrepreneurs
High-growth SaaS companies generate 40% more leads, per month, than their slower growing counterparts.
Source: Insight Squareds
However, those same high-growth companies generate 60% fewer sales opportunities than low-growth companies.
Source: Insight Squared
To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14.
Source: ForEntrepreneurs
In contrast, Internet Sales strategies have a significantly lower CAC of just $0.42.
Source: ForEntrepreneurs
SaaS companies that are focused mainly on enterprise sales have higher levels of professional services. Attach rates for Enterprise and SMB leveled out at 18% and 12% in 2016 and stayed consistent into 2017.
Source: ForEntrepreneurs
Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015.
Source: ForEntrepreneurs

The average SaaS company spends just 6 hours determining their pricing strategy.
Source: PriceIntelligently
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.
Source: ForEntrepreneurs
44% of SaaS companies offer a free trial.
Source: Totango
41% of free trial-offering SaaS companies use a
30-day trial.
Source: Totango
18% offer a 14-day free trial
Source: Tomasz Tunguz
Nearly 50% of companies have gross margins between 70% and 89%.
Source: Openview
Best-in-class software companies have subscription gross margins above 80%.
Source: Openview
17% of SaaS companies use a freemium pricing model.
Source: Totango
41% list their pricing on their website.
Source: Totango
46% have "per user" pricing strategies.
Source: Totango
Gross margin should always include all costs associated with implementing and delivering product, including headcount costs associated with customer success and support.
Source: Openview
Infrastructure software companies and those with usage-based pricing are the most likely to see net retention rates of 115% and higher.
Source: Openview

SaaS IPOs have more than doubled over the last 12 years.
Source: Tomasz Tunguz
All types of investment have grown, year-over-year, with the biggest growth during the seed stage of financing.
Source: Tomasz Tunguz
When venture capitalists participate in seed rounds, the average round size is 3x larger.
Source: Tomasz Tunguz
80% of venture capital investments take place in the enterprise.
Source: Tomasz Tunguz
27% of these companies were able to raise Series A investment with $0 in MRR - relying on networks and previous ventures to provide their credibility.
Source: Totango
Average round size has been increasing by 11% per year.
Source: Tomasz Tunguz
For SaaS companies valued at over $1billion, the median amount of financing raised is $206million.
Source: Tomasz Tunguz

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%.
Source: RJMetrics
The best SaaS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8.
Source: ForEntrepreneurs
The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers.
Source: RJMetrics
More than 1/2 of SaaS companies increased their spending on customer retention in 2016, with those numbers increasing more in 2017.
Source: Totango
Founders often make good CEOs – more than half of Series-D or later companies still have a founder leading the executive team.
Source: Openview
SaaS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer.
Source: ForEntrepreneurs
Companies with longer contracts (2+ years) reported the lowest annual unit churn.
Source: ForEntrepreneurs
While a slight improvement from 71% in 2017, 63% of SaaS startups still have no female Board members. Only 13% of companies surveyed have full parity between gender within their leadership teams, 8% at the Board-level (which is double 2017).
Source: Openview
And there you have it.
We hope you found this roundup insightful and illuminating!
Churn is a term used to indicate the point where a client either downgrades to a less expensive tier or stops using your service all together.