SaaS Capital Blog

2023 Revenue Per Employee Benchmarks for Private SaaS Companies


2023 Revenue Per Employee Benchmarks for Private SaaS Companies

A common metric by which SaaS companies track their performance is annual recurring revenue (ARR) per employee. This 2023 update explores the median ARR per employee broken down by company size and funding type, equity-backed or bootstrapped.

2023 Spending Benchmarks for Private B2B SaaS Companies

How much do SaaS companies spend on customer support or marketing? In day-to-day SaaS company operations, questions like the above are common. So, we asked survey takers what percentage of revenue is spent on cost of goods sold, customer support/success, selling costs, marketing costs, research & development, and general and administrative. This post summarizes the benchmarking data.

What is a Good Retention Rate for a Private SaaS Company in 2023?

As we have noted for many years, revenue retention is one of the most important metrics for ensuring medium- to long-term business health due to its compounding effect on growth. The relationship of new sale bookings to revenue retention is the SaaS version of “offense wins games, defense wins championships.” Here, we summarize the findings relating to retention in our 2023 survey of private SaaS companies.

Examining the Gap Between Gross Revenue Retention and Net Revenue Retention

It’s a rarely-discussed thing, but the Gross Revenue Retention - Net Revenue Retention gap can be a useful “sanity check” on a SaaS company’s metrics, and when it falls outside of the usual range, can give a hint to operators and investors as to when something might need tweaking.

What Should a SaaS Income Statement Look Like? (2023 Update)

A SaaS Profit & Loss (P&L) statement needs to be organized in order to be meaningful to both internal stakeholders and potential external partners, such as capital providers. As the SaaS business model has evolved, it is worth examining what an income statement should look like in 2023.

2023 Benchmarking Metrics for Bootstrapped SaaS Companies

SaaS Capital works with both VC-backed and bootstrapped SaaS companies and has seen the advantages of both approaches. However, one situation that is especially interesting is bootstrapped SaaS companies with $3M to $20M in Annualized Run Rate Revenue (ARR). Growing from a pre-revenue startup to $3M (scale-up phase) marks a significant shift and bootstrapping from $3M to $20M creates enormous value for owners. To help support bootstrappers during their scale-up, we wanted to focus on benchmarking metrics for scale-up stage bootstrapped SaaS companies.

What Should be Included in COGS for My SaaS Business? (2023 Update)

Surprisingly, GAAP does not clearly define what should be included in a SaaS company’s Cost of Sales (COS; a.k.a. Cost of Revenue, COR, but most commonly known by the traditional term Cost of Goods Sold, COGS) so each company is pretty much left to its own judgment on what should be included. Below is our considered opinion on what to include in COGS for a privately-held SaaS company.

Changing ACVs: The Hidden Control Lever of SaaS Company Value

Most early-stage SaaS companies (under $100M in revenue) tend to lock in on a typical Average Contract Value (ACV). And while it’s far more important to find a great product-market fit, and a repeatable sales motion, than it is to try and optimize for the highest contract value, the size and rate of change of your ACV does matter.

R&D Capitalization Changes - A Tax Trap for Your SaaS Company?

The 2023 tax season (filings for calendar year 2022) is the first time that companies are actually having to deal with 2017 changes to research and development capitalization accounting rules, also known as “Section 174” or R&D amortization rules. These rules were passed into law years ago with the “Tax Cuts and Jobs Act” (TCJA), with a future start date of tax year 2022.

2023 Private SaaS Company Valuations

Using data from SaaS Capital’s recently completed 12th annual SaaS benchmarking survey with the model from the white paper and the current SCI of 7.1, yields a predicted private SaaS company valuation multiple of 4.6x.