SaaS Capital conducts a survey of individual, B2B SaaS company metrics in the first quarter of each year. Our tenth annual survey, completed in March 2021, saw more than than 1,500 SaaS companies respond. This post summarizes benchmarking data around the topic of spending. Survey takers were asked, " What pct of revenue is currently spent on the following? (Percentages should full less than 100 if your visitor is profitable, and more than 100 if it is non.)" Hither are the top-line results for companies with at least $1 million in annual recurring revenue (ARR).

What percentage of acquirement practice SaaS companies spend on sales?

  • The median per centum of almanac recurring revenue spent on selling costs is 18%, down 10% from the previous yr.

What percentage of revenue do SaaS companies spend on marketing?

  • The median per centum of annual recurring acquirement spent on marketing is 9%, downwardly 10% from the previous twelvemonth.

What percentage of revenue practice SaaS companies spend on customer back up and customer success?

  • The median percentage of annual recurring acquirement spent on customer support and customer success is xi%, upwardly 10% from the previous year.

What pct of revenue do SaaS companies spend on Cost of Goods Sold?

  • The median percentage of annual recurring revenue spent on Cost of Goods Sold (excluding Customer Support/Success) is 15%, unchanged from the previous year.

What percent of revenue practice SaaS companies spend on research and evolution?

  • The median percent of almanac recurring revenue spent on research and development is 25%, unchanged from the previous twelvemonth.

What percent of revenue do SaaS companies spend on general and administrative costs?

  • The median percent of annual recurring revenue spent on full general and administrative costs is 20%, up xviii% from the previous year.

SaaS Spending past Company Funding

Every bit discussed in 2021 Private SaaS Company Growth Rate Benchmarks, equity-backed funding is more often than not correlated with growth. It may not be a causal relationship, only there has been a historical relationship. On median, bootstrapped companies with at least $1 million in ARR report growing at 22% per twelvemonth, whereas companies that take raised venture capital with at least $1 1000000 in ARR are growing at 32% annually. The nautical chart below shows median spend benchmarks, as a percent of ARR, for disinterestedness-backed companies and bootstrapped companies with at least $1 1000000 in ARR.

SaaS Spending by Company Funding 2021

The obvious takeaway is that bootstrapped companies are spending less (and are profitable), while equity-backed companies are operating at a loss to back up a goal such as growth. The most dramatic differences include equity-backed companies spending approximately twoscore% more on marketing, R & D, and general and authoritative costs while spending 82% more on sales.

The increased spending by equity-backed companies on sales, marketing, and R&D is somewhat expected. The difference in full general and authoritative costs is noteworthy. One possible explanation for why equity-backed companies spend more is the need for a robust authoritative and finance team to support reporting requirements to investors, including regular lath meetings and audits.

Drilling downward on growth, we compare companies growing higher up the median growth vs. those growing below the median.

SaaS Spending by Growth Rates 2021

The divergence between higher growth bootstrapped companies and lower growth bootstrapped companies is subtle. Higher growth bootstrapped companies spend approximately 25% less on CoGS costs while spending approximately 50% more on marketing.

The reduced spend on CoGS is significant as it represents inherent and intrinsic "gratis" growth from higher gross margins. In other words, college gross margin companies naturally get "gratis" higher growth, or at least have "extra" cents per every dollar of revenue to spend elsewhere (i.east., sales, marketing, or R&D).

The departure between higher growth equity-backed companies and lower growth equity-backed companies is more pronounced.  Higher growth equity-backed companies spend approximately thirty% more on sales and approximately 55% as much on marketing vs. lower growth disinterestedness-backed companies. The higher growth equity-backed companies spend approximately 10% less on general and administrative costs.

SaaS Spending past ARR Levels

For benchmarking purposes, another metric by which to compare your business to your peers is past revenue scale.

SaaS Spending by Company Size 2021

The chart to a higher place breaks spending levels downwardly by company size. For example, a typical B2B visitor with $iii Meg to $5 One thousand thousand in ARR spends the following as a median percentage of ARR:

  • nineteen% on Full general and Administrative
  • 26% on Research and Development
  • 10% on Marketing Costs
  • xx% on Selling Costs
  • xi% on Customer Support/Success
  • 12% on Cost of Appurtenances Sold (excl. Support/Success)

The charts above plus additional information are available in the summary report below.

Spending Benchmarks for Private B2B SaaS Companies

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