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David Skok has noted that there is a problem with using this formula, as you may have several expensive people in the team that should scale to handle a larger number of customers as you grow. In this case, your CAC will be too high. David suggested making a very simple adjustment to the Sales & Marketing expenses to take only a portion of those salaries and expenses in the early days. This will provide a better indication of how CAC will look in the future when you are at scale.

 

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More SaaS + Software Stats

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

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

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 very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

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

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

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

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

More Growth Strategy Stats

55% of SaaS companies rate Customer Retention as the key metric to measure

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

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

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

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

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%

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

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

In 2017, the global adoption rate for biotech soybean amounted to 77 percent.

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013