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This is because they have to invest heavily upfront to acquire the customer, but recover the profits from that investment over a long period of time. The faster the business decides to grow, the worse the losses become. Many investors/board members have a problem understanding this, and want to hit the brakes at precisely the moment when they should be hitting the accelerator.

In many SaaS businesses, this also translates into a cash flow problem, as they may only be able to get the customer to pay them month by month.

For Entrepreneurs.com

More SaaS + Software Stats

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

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

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

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

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

Growing faster has twice as much impact on share price as improving margins

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

More than 1/2 of SAAS companies increased their spending on customer retention last year

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

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

More Growth Strategy Stats

A 1% increase in pricing strategy yields an average 11% increase in profit

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

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

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

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

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%

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

Companies with longer contracts (2+ years) reported the lowest annual unit churn

In 2017, Foxconn Technology Group achieved revenue of 158.15 billion U.S. dollars.

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing