2023 Private B2B SaaS Company Growth Rate Benchmarks - SaaS Capital (2024)

FAQs

2023 Private B2B SaaS Company Growth Rate Benchmarks - SaaS Capital? ›

The median growth rate for public SaaS companies as of March 2023 is 22%.

The median growth rate for public SaaS companies as of March 2023 is 22%.

Benchmarking B2B SaaS growth rates

The Index reveals useful comparatives—while overall expansion settled around 14%, sectors like Cybersecurity tech maintained 37% annual growth, with the Southeast region leading at 21% over 8 quarters.

Across all SaaS companies, the 2023 median net retention is 102%, which is unchanged from 2022. Median gross retention is 91%, also unchanged from the previous year's survey.

The Rule of 40 is a principle that states a software company's combined revenue growth rate and profit margin should equal or exceed 40%. SaaS companies above 40% are generating profit at a rate that's sustainable, whereas companies below 40% may face cash flow or liquidity issues.

According to a study by Bessemer Venture Partners, the average monthly growth rate for successful SaaS startups is 7-8%. This means that a company's revenue is increasing by 7-8% each month.

By the beginning of 2023, the median revenue multiple declined to 6.7x. It has since rebounded to around 7.8x Revenue at the end of the first half of 2023.

The market for B2B products and services is expected to rebound in 2024, with many economists forecasting the U.S. gross domestic product (GDP) to grow between 1.6% and 2%.

B2B SaaS conversion rate benchmarks: Website visitor to lead conversion rate benchmark: 7%, according to Capterra. Gainsight's 2022 report shows free trials involving PQLs had 2.8X more conversion than freemium. The average freemium conversion rate ranges from 1% – 10%.

Customer Lifetime Value (LTV) is the total amount of money a customer spends on your business while they're your customer. Customer Acquisition Cost (CAC) measures how much it costs you to acquire a new customer. LTV should be at least 3 times the CAC for running a financially healthy SaaS business.

What is the benchmark for SaaS renewal rate? ›

A healthy customer renewal rate is considered above 90% for successful SaaS companies. Although the exact number might vary depending on your industry, pricing, and product. Your Net Revenue Retention rate (NRR) should be higher than 100% if you aim to be a successful SaaS company.

The 80/20 Rule and Software Development

80% of the effort produce 20% of the results. 80% of the customers produce 20% of the revenue. 80% of a web application's features produce 20% of the application's usage (meaning 80% of users only care about 20% of an application's features)

The 10x rule in SaaS (Software as a Service) pricing strategy emphasizes that customers should receive a minimum of 10 times the value of the product in return on their investment. This rule guides SaaS companies in setting prices that align with the value delivered to customers.

The Rule of 40 states that, at scale, the combined value of revenue growth rate and profit margin should exceed 40% for healthy SaaS companies. The Rule of 40 – popularized by Brad Feld – states that an SaaS company's revenue growth rate plus profit margin should be equal to or exceed 40%.

In 2023, the software as a service (SaaS) market is estimated to be worth approximately 197 billion U.S. dollars and estimated to reach 232 billion U.S. dollars by 2024. SaaS applications are run in the cloud and usually accessible through desktops and mobile applications, as well as through a web interface.