The annual Pacific Crest survey of SaaS companies is ready and published. It is an amazing piece of work. Comprehensive, actionable and very insightful, it is a must read for any SaaS entrepreneur. I highly recommend you take the 30 minutes to read it if you are in the business. Even if you are not and are interested in learning about how our personal and work lives will change with the new models of consumption and delivery of software, this is a good read.
A total of 300 companies participated, so this is a good sample size of the estimated 7000+ SaaS companies in the world.
Some highlights that I think you should definitely not miss if you are not going to read it.
- If you are in the US and fewer than 50 people or < $4 Million in annual recurring revenue, you are below average – so this report is skewed towards growing companies, not idea or prototype stage.
- If your company is growing revenues < 45% annually you are below average as well.
- If you expect to grow <36% next year, well, that’s below average
- If you are only hiring your own sales people and not using a marketplace such as Salesforce AppExchange or others, then you will grow significantly slower.
- If you are < $2.5 M in revenue, 63% of revenues are likely coming from other Very Small Businesses on average.
As your company “matures” in Average Contract Value (ACV) expect to have a mixture of “inside” – telesales and “outside” – field sales. The magic number seems to be $25K/year or $2K per month. Beyond that, it seems you will need a field channel.
More than $1K per year in ACV and “Internet” self-service sales, or friction free sales is rather over – or it drops from almost 50% to < 20%. You can still use the Internet for lead generation, but the viral – try, buy and grow is pretty much only try and use after $10K per month.