Statistic Info

In the past, we have benchmarked the revenue per employee of large publicly traded SaaS companies and determined that the average is about $200k of revenue per person. But, that analysis examined revenue per employee that only one point in time.

High-growth companies scale their teams very quickly. In fact, the companies in the sample set grew their teams by 56% annually over five years, which nets out to about 8.5x growth, from 204 employees to 1750 employees on the median.

Despite the massive growth of these organizations, the best companies are able to maintain or even accelerate their revenue per employee. In fact, increases in revenue per employee as a company scales is an incredibly positive sign of the health of the business. It indicates that the company is achieving economies of scale. Those economies of scale may exist as a consequence of a strong brand, monopoly-like characteristics within their market segment, improving sales efficiency, increases in contract size, better rates of customer upsells, etc. But in all cases, it’s a hallmark of a company whose economics are improving with time.

Tomasz Tonguz

More SaaS + Software Stats

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

80% of venture capital investments take place in the enterprise

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

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

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

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At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

More Growth Strategy Stats

When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

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

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

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

Sony’s PlayStation brand had accumulated approximately 38.57 million fans on the social network

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Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.