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SaaS Company Spending Benchmarks

November 21, 2016

We recently published an analysis of SaaS company departmental spending segmented by revenue level, growth rate and annual contract value (ACV).

Among the interesting results, we found that high ACV products (annual contract value over $150,000) have higher cost of goods than lower priced products, and that medium ACV products ($5,000 to $150,000) appear to be the most expensive overall to deliver and support.

Small, self-service products require virtually no direct human support, and they also tend to be simpler applications with fewer modules, integrations, and a more limited feature set. Lower support and engineering costs make sense. For high ACV products, a high level of support is assumed, and the product is more complex, but at over $150,000/year in revenue per customer, these additional costs scale favorably compared to the revenue. A $150,000/year SaaS application will be, on average, more expensive to maintain and support, but not 10 times more expensive when compared to the $15,000/year application.

Whether because of, or causing, the high price of these products, SaaS companies in this group do appear to spend relatively more on infrastructure than the other groups, likely for reasons of security, reliability and redundancy, as well as because of complexity and third party data and applications.

For the full observations and analysis, get the report here.

Rob Belcher

Managing Director, SaaS Capital

SaaS Capital® pioneered alternative lending to SaaS. Since 2007 we have spoken to thousands of companies, reviewed hundreds of financials, and funded 80+ companies. We can make quick decisions. The typical time from first “hello” to funding is just 5 weeks. Learn more about our philosophy.

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