If you are building a SaaS startup, you know exactly how well you are doing on your key metrics.
But then you wonder (and get asked), how well am I doing compared to other SaaS companies? And more importantly, if I knew the metrics of other SaaS companies, would I adjust my strategy?
Each year Pacific Crest, an investment banking firm that specializes in SaaS firms, conducts a survey of key operational and financial metrics.
The survey participants included 155 companies from around the world (but mostly from the U.S.). About a third (58) of the companies were small with under $2M in revenue.
David Skok, at his For Entrepreneurs blog, published the results of the 2013 Pacific Crest SaaS Survey. It’s a long post with fascinating detail. Here are eight graphs from the survey. See Skok’s article for the rest.
Revenue growth rates
How Fast Did / Will You Grow GAAP Revenues?
Though historical growth rates are at about 40%, the companies this year are more optimistic about their forecast. The median expectation for growth in the coming year is 47%.
If you exclude the smaller companies (
Size of customer contract
Median Annual Contract Size (ACV) per Customer
The median annual contract size was $20K per customer. So let’s say you charge a monthly fee of $49 per seat and have 35 seats at a customer, that customer would produce $20K in revenue per year.
Sales strategies
Median Growth Rate as a Function of Sales Strategy
If you look at the entire group of survey respondents, Internet Sales produces the highest growth rate (90%). But if you exclude the smaller companies (
Cost to acquire customers
CAC: How Much Do You Spend for $1 of New ACV from a New Customer? (Excludes companies with
The larger companies spend $0.92 for each dollar of new revenue from a customer. This amount is consistent with earlier survey years.
Cost of upsells and renewals
CAC on New Customers vs. Upsells vs. Renewals
It costs much less to produce revenue from upsells and renewals, only $0.17 and $0.14. A good reason to keep churn rates low!
Customer churn rates
Percentage churn of # of paid customers at year-end 2011 that were still customers at year-end 2012
Median customer churn rates were 9% (excluding companies
Gross margins
What is your gross profit margin on just subscription/SaaS revenues?
Median gross margins were around 76%. This was consistent across both large and small companies.
Freemium or “Try Before You Buy?”
Freemium / “Try Before You Buy”
Although about 25% of the companies use the Freemium model, it produces few leads that convert into revenue. Companies use the Try-Before-You-Buy model more successfully. About two thirds of them use this model and it produces more leads that produce revenue.
How can you use these numbers?
When you model a business and want rules of thumb for reference.
When you set internal goals.
When you make decisions about strategy.
When you talk about your progress and plans with an external party (customer, investor, or employee recruit).
Operational and Financial Benchmarks for SaaS Companies is a post from: Geonexus