It is no surprise that companies are making the switch to SaaS. It can save on upfront costs, decrease infrastructure, speed of implementation.
SaaS is now the gold standard for businesses, from old-school accounting firms to bleeding-edge artificial intelligence startups, and from small family-owned shops to large multinational corporations. The usage of and demand for SaaS products has grown dramatically over the years, and we see this trend continuing in 2023 and beyond.
Let’s get started.
Key SaaS Statistics 2023 – MY Choice
- The SaaS market is valued at $208 Billion in 2023
- The SaaS market has tripled its size in the last five years.
- The global SaaS industry revenue is expected to reach $720.44 Billion by 2028.
- 38% of companies that offer SaaS solutions don’t rely on a monthly subscription to generate their revenue.
- Microsoft is the #1 SaaS provider on the market.
- The total market value of the top ten SaaS companies is over $1 trillion.
- The US is the leading country in SaaS industry development.
- More than 10,000 private SaaS companies are founded.
SaaS Adoption Statistics 2023
- 38% of companies state that 100% of their operational processes are running on SaaS platforms.
- The SaaS industry experiences an 18% annual growth.
- Software-as-a-Service (SaaS) has quickly become an attractive alternative to on-premises deployment.
- 60% of companies now report adopting at least some SaaS, and investment remains high.
- 38% of companies run almost entirely on SaaS.
- 70% of CIOs claim that agility and scalability are two of the top motivators for using SaaS applications.
- 86% of organizations stated that they plan to move all their apps to SaaS after 2023
- 99% of companies will be using one or more SaaS solutions by the end of 2023.
- It’s estimated that by 2025, 85% of business apps will be SaaS-based.
- By 2026, public cloud spending is predicted to exceed 45% of all enterprise IT spending.
- Marketing and sales remain the highest expenses of SaaS companies, amounting to 50% or more of their revenues.
- More traditional enterprises have about 8% SaaS-based solutions in their workplace systems. On average, they use 39 SaaS software.
- SaaS adoption in the healthcare industry grows at a rate of 20% per year.
- SaaS-powered organizations use around 212 apps, with 93% of their work software in the cloud.
SaaS Churn Statistics 2023
- < $1million:
- Net Retention: 99%. Net Churn: 1%.
- Gross Retention: 95%. Gross Churn:5%
- $1million – $5million:
- Net Retention: 97%. Net Churn: 3%
- Gross Retention: 90.5%. Gross Churn: 9.5%
- $5million – $10million:
- Net Retention: 97%. Net Churn: 3%
- Gross Retention: 90%. Gross Churn:10%
- $10million -$20million:
- Net Retention: 99%. Net Churn: 1%
- Gross Retention: 89%. Gross Churn: 11%
- Net Retention: 96%. Net Churn: 4%
- Gross Retention: 87%. Gross Churn: 13%
- The overall average churn rate for all SaaS businesses is around 4.79% and a “good” churn rate is considered 3% or less.
- B2C SaaS companies experienced a slightly higher churn (5.06%) while B2B SaaS companies experienced a lower average churn rate of 4.67%.
- 65% of sites experienced decreases in their overall churn rate compared to the previous year.
- businesses should strive to maintain an average SaaS churn rate between 3 and 8%.
- a median annual revenue churn rate of 13.2% and a logo churn rate of 21%.
- Subscription service Recurly reports an average monthly churn rate of 5.6%.
- Media and entertainment services recorded monthly churn of roughly 5.2%.
- Healthcare subscription services came in a little higher at around 7.5%.
- Education services and consumer goods saw identical monthly churn rates of around 9.6%.
- Subscription boxes were the highest of the bunch, with monthly churn of 10.54%.
- companies with an ARPU of more than $500 see significantly less revenue churn, with a range of roughly 2-6% and a median closer to 3-4%.
- Longer contracts reduce churn rate. Companies with a higher percentage of customers on annual (or longer) contracts tend to experience lower churn rates and higher lifetime value than companies that primarily offer monthly contracts.
- Funded companies have higher churn rates. venture-funded companies experience notably higher churn than those that didn’t take on funding.
- 15% of payment failures from credit cards are recovered every month which results in higher churn.
- the top SaaS companies have a Dollar Retention Rate of 100% and a negative monthly churn rate.
- Around 12% of monthly credit cards for average customers will fail.
- sold SaaS contracts lasting two years or more were more likely to report less annual churn rate.
- If a SaaS company’s net revenue churn is above 2% each month, it indicates a fault within the company that needs to be fixed.
- More than two-thirds of SaaS companies had an annual churn rate of 5% or more in a given year.
- Just one in 26 customers makes a complaint when they are unhappy.
- After a customer has a negative reaction, 58% of them wouldn’t bother going back to that company.
- customer churn can be reduced by 67% if companies succeed in solving customer issues during the first time interaction and successfully managing customer expectations.
- 66% of consumers had terminated their relationship with a company due to poor customer service. Keeping customers happy is key.
- Avoidable customer churn is costing U.S. businesses $136 billion a year.
- SaaS companies with mobile apps see a marked improvement in churn rate, up to 41.5% increase in customer retention.
- Channel sales have the highest rate of churn, at 17%.
- 85% of the total number of customers fail to respond to the run-of-the-mill dunning emails that remind them to update their card details. Continous follow-up even results to customer complaints.
- Yearly churn rate for SaaS businesses serving large organizations varies from 6-10%.
- Yearly churn rate for SaaS companies targeting SMBs is 58%.
- Companies that have larger contracts and earn more annually have less churn.
- The median annual churn rate of SaaS businesses that make less than $10 million annually is 20%.
- SaaS businesses with contracts lasting 2 years and more are more likely to report lower churn.
- The best SaaS companies have less churn and more revenue which allows them to grow faster.
- The revenue retention rate of the best SaaS companies is 100%.
- Medium SaaS companies lose 5% of revenue to churn annually.
- The fastest-growing SaaS companies have an average Quick Ratio of 3.9 to 1.
- Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month.
- The median monthly revenue churn for large SaaS companies is 0.75%, translating into an annual revenue churn rate of 10%.
- In contrast, the median churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%.
- 36% of SaaS businesses managed to reduce their revenue churn over the last 12-months.
- 30% saw an increase in annualised revenue churn, and the remaining 34% managed to keep their churn rates constant.
- 39% of the fastest growing SaaS companies were able to keep their yearly revenue churn below 5%.
- In contrast, only 30% of medium growth companies, and 29% percent of low growth companies, were able to maintain a revenue churn rate below 5%.
- 2016 median annual unit churn was 10% for SaaS companies and more than 2/3 has churn rates of 5% or higher.
- A Net Revenue Churn of above 2% per month indicates bad business and can drag the growth rates.
- A large Average Contract Value improves net-revenue churn.
- Companies with internet go-to-market strategies have a significant increase from 8% in their 2015 gross dollar churn.
- Fast-growing SaaS companies only lose around 3.2% of the revenue due to churn.
- The top SaaS companies maintain a monthly revenue churn at only 0.58% or roughly 7% annual revenue churn.
- Top SaaS business will have a Dollar Retention Rate of as much as 100% if with a negative churn rate.
- Best SaaS companies suffer a loss of only $1 out of every $200 monthly revenue with their 5-7% annual revenue churn rate.
SaaS Purchase and Usage Statistics 2023
- On average, companies spend $2,623 per employee per year on SaaS.
- On average, employees have 8.3 SaaS apps each.
- 70% of CIOs are attracted to cloud-based SaaS for its agility and scalability.
- The average midsized company has 32 different billing owners for its SaaS applications.
- Growth in spending is significantly faster for some departments than others shown by these 2-year growth rates.
- Of professionals across small & large organizations, 94% use cloud SaaS.
- 50% of US government organizations are now using the cloud.
- The average contract length is 1.3 years.
- Yearly and monthly are the most popular billing periods.
- Adapting SaaS is quite critical when we regard the use of SaaS, and therefore 73% of businesses arrange themselves to correct their present use of the cloud.
- By 2025, experts believe that the cloud will be the only source for 50% of enterprise software.
- Turning to the statistics about the SaaS pricing, it is seen that the SaaS spending increased to 50% in 2020 for each company.
- Flexera suggests that because of the COVID-19, more spending will be done on cloud usage than planned.
- It only takes around 7 hours to implement new software.
- 88% of survey respondents use cloud services in one form or another.
- Software engineers are the biggest users of cloud SaaS.
- Companies estimate that 70% of apps they use are SaaS-based.
- Companies that use SaaS can bring new capabilities to market faster.
SaaS Customer Statistics 2023
- SaaS Software saves a ton of time with a great value.
- 38% of companies surveyed reported that they were already running almost completely on SaaS technologies.
- In organizations operating almost entirely on SaaS apps, reported that they experienced higher employee engagement. 86% of end-users accredit SaaS for helping them succeed more than other desktop alternatives.
- In the year 2017, the number of SaaS apps used by companies on average increased by 33% from the previous year. By the year 2020, 73% of organizations signified that almost all of their apps (80%+) will be SaaS.
- Salesforce, one of the largest SaaS organizations in the world, was ranked the number 1 best company to work for in the United States.
- 70% of active free trial users are likely to buy paid services after reaching out.
- On average, companies running entirely on SaaS use 34 apps, which is 2.1× more than the typical workplace.
- $1.6T lost every year in the US (estimated) as a result of poor customer service.
- $98B left on the table every year by companies who fail to provide ‘simple’ experiences.
- 64% find the customer experience (CX) more important than price when purchasing something.
- 76% of customers say they expect companies to understand their needs and expectations.
- 80% of customers say the experience a company provides is as important as its products and services.
- 67% of customers say their standard for good experiences is higher than they’ve ever been.
- 83% of Customer Success (CS) teams saw growth in team size last year.
- 50% of paying users log into their software only once or twice a month.
- 44% of companies offering software as a service offer free trials, with 41% of them using a 30 day trial period.
- Sales reps that contact active free trial users are 70% more likely to get them to buy the full product.
- 89% of companies prioritize acquiring new customers, 59% focus on renewing existing customers, and 46% place a high priority on selling add-ons and upgrades.
- The probability of trial customers becoming paying customers is 70% higher when salespeople contact those free trailers.
- By not requiring a credit card number for a free trial, you will generate twice as many customers.
- Our new infographic on customer acquisition for Saas businesses, outlines the most common activities, the most frequently measured KPIs, and the investment on retention.
- Compared to companies in other verticals, a software firm that is growing at 20% a year has a 92% likelihood of going out of business.
- SaaS companies need to maintain high growth rates in order to stay afloat. Zendesk’s dollar-based net expansion rate of 115% during the fourth quarter of 2016 is impressive, but other companies need to match or exceed this rate in order to compete.
- The growth of companies like Dropbox and Slack is astonishing. In just 15 months of operation, Dropbox reached over $1 billion in revenue. And in just 5.5 months after launch, Slack had a 63% paid seat growth.
- The 2 major reasons why customers switch to cloud-based solutions are flexibility and agility. SaaS trials are quite successful, with around 84% of new users signing up for services after a trial. More than 70% of SaaS trial users who receive calls from customer support or sales management, increase their engagement, proving that customer care is important for SaaS firms if they want higher revenues.
- Around ½ of the customers who sign up for subscription-based services use their accounts less than once a month. Around 14% of SaaS users use their services once a week, and only 17% of paying clients utilize their SaaS tools on a daily basis.
- SaaS companies find it cheaper to upsell existing clients instead of generating leads. Around 67% of customers are satisfied with SaaS quality standards, with the demand for it growing constantly. Around 76% of customers are happy with SaaS cloud services, with 64% ready to pay even more if guaranteed the same returns.
- In organizations running almost entirely on SaaS applications, employee engagement was far higher. 86% of end users said SaaS helps them succeed more than desktop alternatives.
- 73% of organizations indicated nearly all their apps will be SaaS by 2020.
- 38% of organizations surveyed reported they were running almost entirely on SaaS operations already.
- Salesforce, one of the world’s largest SaaS organizations, was ranked as the best place to work in the United States.
SaaS Regional Statistics 2023
- In 2022, there were approximately 17,000 software as a service (SaaS) companies in the United States. Together, they had around 59 billion customers worldwide. The United Kingdom takes the second place with 2,000 companies and 3 billion customers worldwide. SaaS is a software licensing model delivered via the cloud.
- Among the outstanding SaaS users, we encounter the United States of America since 80% of the top 100 SaaS companies settled in the USA.
- the US carries all before with over 8x more SaaS companies than the other countries.
- the US has 17.000 companies and 59 billion customers.
- The US is followed by the United Kingdom with 2.000 companies and 3 billion customers. The UK had a value of around €7.5 billion in 2020, which is forecast to double it by 2025.
- Canada, Germany, and France are the three follower countries with relatively high companies, revenues, and customer rates.
- By 2025, Germany is believed to have the largest and significant increase from €6.85 billion in 2020 to €16.3 billion among all SaaS companies.
- On the Asia continent, India stands out with 983 companies and 2 billion customers.
- Among the South American nations, Brazil gives utmost importance to SaaS as a startup model.
- 2 years ago, the SaaS market in Brazil was composed of Brazilian startups at 41.12%.
- Just like the UK, China, India, and Brazil, SaaS industries are supposed to grow 2x from 2020 to 2025.
- To focus on a specific area in the USA, Silicon Valley is where two-thirds of the top 100 SaaS companies are located.
- California, Washington, New York, Massachusetts, and Utah are the first five top SaaS companies.
- China has been growing year over year, and it gained ¥53.8 billion in 2020. It is also expected to grow more and more.
- When it comes to SaaS companies, America is leading, with more than 15000 SaaS firms in the US.
- UK, Canada, USA, Germany, and France are the nations that are actively involved in the SaaS industry. Each nation has around one or two thousand SaaS firms.
- In Asia, India is the leading nation while in Latin America, Brazil leads in terms of SaaS startups.
- The industry in the UK, EU, and China may double over the next half-decade, with SaaS brands being the most popular type of new business in South America.
SaaS Category Statistics 2023
- The largest block of spend has actually become general and administrative solutions for IT, HR, finance, and business ops. and found that marketing and sales were actually at the bottom.
- Companies like Zoom and Microsoft Teams experienced massively high growth in 2020 since many offices moved their employees to work remotely.
- According to LinkedIn, 810 million members from 200 countries use LinkedIn today.
- 40% of IT spending takes place outside of the IT department.
- 83% of IT professionals said that employees stored company data on unsanctioned cloud services.
- 76% of IT professionals consider unsanctioned apps as a security risk.
- 80% of employees have admitted using SaaS apps at work without getting approval from IT.
- 33% of employees downloaded a personal application without IT approval, and 36% accessed work applications on a non-work device.
- 48% of employees use apps that are not distributed by IT. These apps include note-taking apps, project apps, and apps like WhatsApp and Dropbox regularly mentioned.
- As of June 2022, Adobe Inc. is the largest SaaS company in terms of market cap, followed by Salesforce, and Intuit.
- On G2, the top 3 rated SaaS apps for “Best Software Products 2022” are Gong, Chorus.ai, and Amplitude Analytics, respectively.
- In 2020, the top 15 SaaS companies had a $1.4 trillion market cap and $80 billion in revenue.
- Zoom’s market revenue has increased 5 times over the last 5 years. Zoom’s revenue was around 1 billion in the 2nd quarter of 2021. Zoom downloads crossed 400 million, putting it on top of all other apps downloaded. However, CISCO has experienced just 1% growth in the SaaS market in 2021.
- In the CRM space, Visma is a leader, making almost thrice as much revenue as other companies, reaching around 2.2 billion USD in 2021.
SaaS Content Marketing Statistics 2023
- 23% of SaaS blogs receive fewer than 500 visits per month.
- 25% link to relevant content on their sites as a means of converting readers.
- 42% of SaaS blogs use a “subscribe to the newsletter” button to convert visitors.
- 43% don’t know how to write content that resonates with their audience, and so on.
- 47% struggle with SEO content writing.
- 51% of marketers struggle to create content that generates the results they’re after.
- 73% of SaaS companies use gated content for their inbound marketing strategy.
- 83% of SaaS company blog traffic comes from organic search
- 89% of SaaS companies use content types besides blogs, like webinars (65%) and case studies (62%)
- 92% of marketers view content as a very important business asset.
- 94% of B2B SaaS brands leverage LinkedIn to distribute content
- A SaaS content marketing strategy typically includes stock images (65%) and named authors (87%).
- An average SaaS blog receives 1800 organic visitors per month.
- Around 20% of top-performing SaaS companies don’t have a CTA in any of their posts
- Content can deliver incredible growth opportunities for your SaaS.
- Educational content is 7x as likely to have a CTA than PR/news content
- Feature announcements (22%), tech walkthroughs (18%), and landing pages (15%) are the most popular types of SaaS content.
- Help articles, original research, and landing pages receive the most amount of backlinks on average.
- High-quality content marketing can generate an ROI of 448% or more for SaaS brands.
- In the first 3 years, public SaaS companies spend 80 to 120% of their revenue in marketing and sales.
- Long-form content should make up the bulk of SaaS content marketing efforts—top-performing content is 12% longer.
- only 15% of the world’s biggest SaaS brands don’t have a blog.
- only 32% of marketers report utilizing analytics for every article they publish .
- Optimizing old blog posts amounts to twice the number of SaaS leads.
- Publishing 2-4 times a week offers the highest inbound marketing returns.
- SaaS companies spend $342,000 to $1,080,000 per year (or more) on content marketing.
- SaaS companies that use educational blogs receive 14% more organic traffic than PR/news-focused blogs.
- the average number of SaaS applications being used by companies has doubled within two years between 2015-2017.
- The best blog posts receive 321 organic visits per month.
- The best SaaS posts are shared on social media 246 times.
SaaS Email Marketing Statistics 2023
- An estimated 376.4 billion emails will be sent each day by the year 2025.
- Email marketing strategies produce 2x greater returns than cold calling.
- 20% of retail, e-commerce, and consumer goods and services companies are personalizing emails based on gender, race, ethnicity.
- 35% of marketers send their customers 3-5 emails per week.
- 35% of people open a sales email based solely on the subject line.
- 4 out of 5 marketers said they’d rather give up social media than email marketing.
- 49% of companies now use at least some form of email automation.
- 64% of small businesses use email marketing to reach customers.
- 74% of Baby Boomers think email is the most personal channel to communicate with brands.
- 78% of marketers have seen an increase in email engagement over the last 12 months.
- 86% of professionals like using email for business communications.
- 89% of experienced marketers say that email is their main lead generation channel.
- 9% of individuals check their email inbox greater than five times a day.
- An average individual spends about 3.1 hours checking, reading, and replying to emails.
- Emails are 40x more effective than Twitter or Facebook for customer acquisition.
- Marketers who use segmented campaigns note as much as a 760% increase in revenue.
- More than 40% of marketers saw budget cuts to email since the pandemic.
- Nearly 1 in 5 email campaigns is not optimized for mobile devices.
- Most of the emails sent by SaaS firms are automatic, keeping users abreast regarding changes. Welcome emails are opened around 5 times more than other messages, which is why SaaS startups stress email marketing as a vital way to get leads and maintain relationships with existing clients.
- Only a quarter (24%) of sales emails are ever opened by prospects.
- Personalization upticks inside sales success. When emails have both the subject and message personalized, they have an impressive open rate of 5.9%.
SaaS Pricing Strategy Statistics 2023
- 17% use a freemium pricing model.
- 18% offer a 14-day free trial.
- 30 days is the most common free trial period.
- 38% of SaaS businesses charge based on usage while 50% charged based on users
- 31% of SaaS companies say they offer very few discounts.
- 33% of mostly medium and large SaaS companies offered additional services.
- 40% of SaaS companies are thinking of offering new pricing models when businesses recover.
- 41% list their pricing on their website.
- A 1% increase in pricing strategy yields an average 11% increase in profit.
- More than 50,000 SaaS vendors offer 30% off discounts or more to their customers.
- Nearly 30% of SaaS companies have offered additional functionality for their customers.
- The average SaaS company spends just 6 hours determining their pricing strategy.
- Two-in-five companies that alter their pricing report a 25% higher increase in ARR as a result.
SaaS Spending Statistics 2023
- 57% of European and US companies increased their SaaS spending last year.
- Companies are churning through more than 30% of their apps every year and SaaS waste is doubling year-over-year.
- Companies use free apps three times more than paid ones.
- Freemium SaaS tools convert 25% more customers without the need for sales than free trials.
- On average, there are 4,406 app-to-person connections for an average company.
- Only 36% of traditional companies allocate budget to SaaS solutions and operations, while 44% of transitioning organizations set aside a budget for SaaS
- SaaS spend over the past year for SMB companies has doubled 100%, for mid-sized companies it’s grown 66%, and for enterprise companies… it’s essentially been flat.
- SaaS spending is increasing faster than the use of unique apps.
- The overall spend per company on SaaS products is up by 50%.
- Total end-user spend on SaaS apps exceeds $172 billion USD in 2022, a near 450% increase since 2015.
SaaS Sales and Marketing Statistics 2023
- 11% of companies have SaaS contracts that are for three years or more.
- 13% of companies have month to month SaaS contracts.
- 18% of the top SaaS companies have their own podcasts.
- SaaS companies typically invest 80-120% of their revenue in the first 5 years for sales and marketing.
- 35-50% of sales go to the company that responds first.
- 36% of SaaS companies use their blogs to share educational content.
- 37% of high-growth businesses use inside sales as their main strategy. 27% use outside sales, 23% online sales, and 8% other channel sales.
- 48% of businesses report that their average contract length is one-year, while 13% report a monthly agreement. 11% of respondents said that their average contract length was three years or longer.
- 51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution.
- 52% of employees said that they would prefer a more flexible, “hybrid” virtual-working model post-pandemic. 37% wanted to return to previous sales models.
- 66% of the internet sales-driven company’s CAC budget is allotted to marketing which shows how reliant they are on marketing.
- 71% of clients don’t want in-person meetings. They are open to doing business remotely.
- 72% of sales reps say that they spend too much energy on data entry.
- 80% of decision-makers within organizations have attended an event or taken an appointment based on a cold email.
- According to a case study, animated ads on Facebook receive 1.5x more clicks than static image ads.
- According to a recent study, 86% of consumers use social media when researching potential IT purchases.
- According to a recent study, YouTube is the top contributor to social traffic for 98% of the top 50 SaaS companies. Facebook (96%), LinkedIn (78%), and Twitter (72%) follow closely behind.
- 71% of consumers who had a positive experience with a brand on social media recommend it to their friends and family.
- 67% of online users have purchased a product or service after seeing an ad on social media.
- According to Upwork, 22% of the U.S workforce will work remotely by the year 2025.
- Active trial users that are contacted by a sales rep are 70% more likely to buy the paid service than those that aren’t.
- As a percentage of total SaaS spend at a company, marketing accounts for around 20%.
- By 2025, it is estimated that 80% of all B2B software and SaaS sales interactions will take place online.
- Companies that do not ask for credit card info when signing up users for a free trial generate 2x as many paying customers.
- Companies who are spending more for sales and marketing efforts grow faster compared to those who spend less.
- From 2022 to 2025, the Asia Pacific region is expected to grow at the highest rate.
- High-growth SaaS companies close deals that are 2.8x the average size of deals closed by low-growth companies.
- High-growth SaaS companies generate 40% more leads, per month, than their slower growing counterparts.
- 80% of B2B tech marketers expressed that writing skills are important. This was followed by content marketing skills (78%), digital media skills (77%), data analysis skills (77%), and email marketing skills (65%).
- only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases.
- Internet Sales strategies have a significantly lower CAC of just $0.42.
- Leads that speak with a sales representative on the phone are 70% more likely to become paying customers.
- Most sales organizations have a 60/40 split between field and inside sales roles.
- North America remains an important market for SaaS companies from other geographical areas.
- Remote workers make roughly 8.3% more than field workers with the same qualifications and job. They make 7.5% greater in general — not accounting for job title, location, or experience.
- SaaS companies are creating less technical jargon and more creative, thought-provoking content.
- The average rate of success for inside sales representatives is approximately 18%.
- The median startup spends approximately 92% of its first average contract value on the sale, which translates into a payback period of 11 months on the CAC (customer acquisition cost).
SaaS Growth Statistics 2023
- Since the year 2010, the average money spent per company on SaaS apps has increased on a yearly basis. The annual growth rate of the SaaS market is 18% currently.
- 56% treat “Existing Customer Renewals” as high priority.
- 86% of businesses that use SaaS significantly experience relatively higher employee engagement.
- A new report from the industry says that by 2023, public spending on SaaS products and cloud services will grow to over $500 billion.
- Companies with at least $15MM GAAP revenue in 2015 accounted for 26% who are using SaaS products and had over 40% revenue growth rate and EBITDA margin.
- Fast growing SaaS companies are those who are among the $7.5 MM- $15 MM range.
- High-growth companies are more likely to achieve the $1 billion mark in revenues than those who grow less than 20%.
- If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years.
- In the year 2007, there were only 500 apps for marketing. By the year 2017, the number of marketing apps grew to over 8,500.
- In the year 2018, the average cost of SaaS subscriptions per employee was $2,884, which is higher than the cost of buying a new laptop (an Apple MacBook Pro at $1,299).
- Investments in Indian SaaS companies increased to $4.5 billion in 2021, a 170% increase over 2020.
- It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue.
- Only 2% of UK businesses are not on the cloud.
- Private SaaS funding in Europe is seeing 3.2x year over year growth.
- traded SaaS companies have an average Revenue Per Employee of $200,000.
- SaaS companies use the increasing revenue per employee as a yardstick in measuring the efficiency of the business.
- SaaS organizations operate in over 100 countries.
- The increased revenue growth rate drives market-capitalization gain by at least twice than those companies with revenues of only less than $4 billion.
- The lack of skilled workers, as well as cyber-attacks, could hinder the growth of the SaaS sector.
- The SaaS industries in China, India, and Brazil are expected to grow by over 2x between 2020 and 2025.
- The UK follows the US with 2,000 SaaS companies and 3 billion customers worldwide.
- 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.
SaaS Statistics – General FAQ
How will Covid-19 change SaaS industry?
I doubt it will dramatically alter SaaS trends. It may slow them down. But the underlying forces of the world becoming more digital — which in some ways this pandemic is actually accelerating — and software becoming easier, faster, and cheaper to create still remain. and its long-term prospects for the decade ahead are still quite promising.
What is the Difference Between Churn Rate and Retention Rate?
Customer churn rate is the percentage of customers that sign up and then leave within a given amount of time. Whereas customer retention rate is the percentage of customers that sign up and stay with you.
How to Calculate Retention Rate (renewal rate) ?
To calculate retention rate you’ll just want to determine the percentage of people who keep their account for the given period of time you’re looking at.
What is a Good Retention Rate?
The average Monthly retention rate should be in the 92-97% range. The average annual retention rate should be in the 50-68% range.
What’s a Good Churn Rate?
The average monthly churn rate for a SaaS company is 3-8%, and the average annual churn rate is 32-50%.
However, early-stage businesses or SaaS companies that target SMBs commonly grapple with higher churn than the benchmarks mentioned above.
How to have a good Churn rate?
if you want to get a good churn rate and don’t lose out on revenue:
- make your product the very best it can be.
- Be consistent with asking for feedback from your customers.
- Survey your customers after a month of use and gauge how they feel, and then send another survey after a few months and see if the response is still as positive.
- Always be innovating by putting customer loyalty programs in place to try and retain loyal customers in the event that a shiny new competitor comes into the space.
What are the types of Churn rate?
There are two types of customer churn rates:
- voluntary churn – the number of people who unsubscribe for reasons of their own such as they are unhappy with the product or no longer need it.
- involuntary churn – the number of people who are unsubscribed due to things like payment failure.
How to cut down involuntary churn?
consider triggering automated payment reminders, payment decline notifications, and recovery emails to assist your team in keeping clients on board.
How to Calculate Churn Rate?
The simplest way to calculate your customer churn rate is to use the basic churn calculation of:
Number of customers who left / total number of customers x 100
why does churn rate for B2B is different form B2C?
This difference makes sense:
- B2B customers make more extensive price commitments than the average B2C consumer.
- B2B customers include multiple teams, approval chains, and decision-makers, so it’s not usually up to a single individual to cancel.
Why do average churn numbers vary so much?
Average churn numbers fall all over the map because:
- every company is different, and every market is different.
- Every industry has different factors that affect churn.
How longer contracts Cut down churn rate?
there are two reasons:
- Annual contracts gives new customer fewer chances to renew and fewer chances to churn.
- With an annual contract, there’s only one opportunity for a customer to churn out.
why Older companies experience less churn rate?
- As companies age, they get much better at understanding their customers’ needs and positioning their products and business model to meet those needs. Hence, those customers tend to stick with the company longer.
- There’s also an element of survivorship bias—companies that don’t figure out their high churn problems tend not to survive past a few years.
why do Funded companies have higher churn rates?
- Venture funding creates a false sense of security.
- Founders are much more likely to spend their way out of growth holes when they’re gambling with someone else’s money.
Why are smaller SaaS companies tend to have a lower retention rate?
This is due to a couple of factors:
- A large volume of monthly contracts
- Higher likelihood of cancellation or payment issues.
To improve your net revenue retention rate over time, plan to move up-market so you can capture high-value clients and reduce churn.
why do the larger SaaS companies have a lower churn rate than SMBs or startups?
- Large companies have had the time and resources to move up-market and attract more enterprise clients.
- Enterprise-level SaaS businesses typically have extended contracts that make it more difficult for clients to churn. If you do have lots of annual or multi-annual agreements, be sure that you are calculating the ATR (Available to Renew Churn) formula so you can zero in on what churn is happening from the pool that actually has the option to churn.
- The type of up-market and enterprise clients that larger companies attract are usually less concerned about pricing, so they will be less likely to churn because of budgetary concerns.
SaaS Statistics – Pricing FAQ
What is SaaS pricing?
SaaS pricing is a software pricing model where customers pay on a subscription basis for online software use. Target markets, revenue objectives, and the product’s or services’ marketing strategy influence prices.
What SaaS means?
Software as a service. It is a way of delivering applications over the Internet—as a service. Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex software and hardware management.
How do I price my b2b SaaS?
To calculate cost-based pricing for your SaaS company, simply calculate how much a product takes to develop and maintain, then add a small percentage mark-up to determine what you’ll charge.
For example, if your software costs $100 to design, with a 30% mark-up, you can sell this for $130 to receive a 30% profit.
Is Netflix a SaaS?
Yes, Netflix is a SaaS company that sells software to observe permitted videos on demand. It follows a subscription-based model whereby the user selects a subscription plan and pays a stable sum of money to Netflix monthly or annually.
What is an example of a SaaS?
Examples of popular SaaS providers include: BigCommerce. Google Workspace, Salesforce. Dropbox.
How much do companies pay for SaaS?
An enterprise company has, on average, a $4,16M total SaaS spend in 2020. An enterprise company spends $2,047 on SaaS per employee in 2020.
How is SaaS price tested?
Choose Two Similar Products or Plans. Testing two different prices for the same product can get ugly. … Pick up Pricing Points for Testing. … Measure Revenue, Not Conversions. … Repeat and Test Two New Pricing Points, If Needed. … The Price with Maximum Revenue is the Answer.
Is Gmail a SaaS?
Yes, Gmail is a simple example of SaaS as an online email service.
Is Facebook a SaaS?
Yes. Facebook, Twitter, etc. are software-as-a-service, provided over the internet. But the definition / line for “SaaS” is applications whose business model is primarily a subscription fee for software.
Is AWS a SaaS?
Yes, AWS (Amazon Web Services) is a comprehensive, evolving cloud computing platform provided by Amazon that includes a mixture of infrastructure as a service (IaaS), platform as a service (PaaS) and packaged software as a service (SaaS) offerings.
What is freemium pricing?
Freemium pricing is a business strategy where a company offers their basic products or services to users at no cost and then charges a premium for supplemental or advanced features.
Is Google a SaaS?
Yes, Google Cloud has SaaS.
Is Airbnb a SaaS?
Yes, Airbnb is an American SaaS-based online marketplace company.
Is Zoom a SaaS company?
Yes, Zoom is a video communications company that affords its users video conferencing remotely using cloud-based computing. It is a Software as a Service (SaaS) that provides you with an easy and stress-free platform to hold online meetings, mobile collaboration as well as video conferencing.
Is Shopify a SaaS?
Yes, Shopify offers a full-service SaaS for ecommerce platform where you can create and host your ecommerce store, add multiple payment options, translate your store, handle shipping, and market your business, amongst other functions.
Is Spotify a SaaS?
Yes, Spotify is a common SaaS products, in which the product is then delivered to users over the internet on a subscription basis, giving users the flexibility to not have to worry about upfront installation purchases or ongoing maintenance costs.
Is Salesforce a SaaS?
Yes, Salesforce is the leading SaaS provider with its flagship CRM platform, available exclusively online, as well as its SaaS platforms for marketing, service, and the Internet of Things.
What’s the Rule of 40 in SaaS?
The Rule of 40—the principle that a software company’s combined growth rate and profit margin should exceed 40%—has gained momentum as a high-level gauge of performance for software businesses in recent years, especially in the realms of venture capital and growth equity.
How to make a pricing model?
5 Easy Steps to Creating the Right Pricing Strategy
- 1: Determine your business goals.
- 2: Conduct a thorough market pricing analysis.
- 3: Analyze your target audience.
- 4: Profile your competitive landscape.
- 5: Create a pricing strategy and execution plan.
How do SaaS companies make money?
As SaaS companies primarily earn revenue from subscription fees, the right pricing structure can maximize customer value and drive growth. Some companies adopt seat-based pricing while some adopt usage-based pricing.
Is Yahoo a SaaS?
Yes, Yahoo has relaunched its Saas e-commerce platform called Stores. SaaS stands for software as a service. It is a special licensing and delivery model for software in which it is licensed on a subscription basis and hosted centrally.
Is LinkedIn a SaaS?
Yes, LinkedIn is the second largest SaaS company in the world. Unlike most SaaS companies which are B2B, LinkedIn is a B2C2B company. LinkedIn attracts hundreds of millions of consumers to post resumes online and sells this data and access to its audience to advertisers and recruiters and salespeople.
Is Outlook a SaaS?
Yes, If you have used a web-based email service such as Outlook, Hotmail or Yahoo! Mail, then you have already used a form of SaaS. With these services, you log into your account over the Internet, often from a web browser.
Is Instagram a SaaS?
Instagram is an underrated social media platform for SaaS companies. Thus, it’s important to understand how to use Instagram marketing for growing a SaaS company and start getting business results.
Is Azure a SaaS?
Azure offers three main cloud computing platform services:
- SaaS – Software as a Service.
- IaaS – Infrastructure as a Service.
- PaaS – Platform as a Service.
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