How do Top-Performing SaaS Companies Spend Their Money?

How SaaS companies spend their money varies based on their specific product, size, and market. However, a detailed analysis from our survey of over 700 private SaaS businesses reveals noteworthy patterns among top-performing businesses that all SaaS company leaders should be cognizant of.

<p>www.saas-capital.com SAAS SPENDING PAGE 1 HOW DO TOP-PERFORMING SAAS COMPANIES SPEND THEIR MONEY? How SaaS companies spend their money varies based on their specific product, size, and market. However, a detailed analysis from our survey of over 700 private SaaS businesses reveals noteworthy patterns among top-performing businesses that all SaaS company leaders should be cognizant of. We used our survey data to compare the spending patterns of top-performing growth+profitability1 companies to the spending patterns of bottom- performing businesses. To the right is a graph showing the difference in spending by category between the top quartile companies and the bottom quartile companies. Top-performing SaaS companies are finding ways to spend significantly less on direct cost of goods sold (hosting, support, consulting, third party software), and are also spending less on overhead relative to their peers. They are reinvesting those dollars into the areas that more directly touch the customer and drive revenue: sales, marketing, customer success, and product. Many times, the product itself dictates CoGS and is difficult to change. That said, those businesses that have lower direct costs appear to be able to re- direct those dollars into efficient growth. Breaking the top and bottom performers down based on the size of their revenue (ARR) reveals additional insights. SaaS businesses below $10 million in ARR (the bottom two groups) mirrored the general trends we observed for all SaaS businesses regardless of size – top performers have lower overhead and CoGS and spend more on sales and marketing. Looking across all revenue sizes yields additional insights: 1. As top performers scale, they invest more and more in customer success relative to their less successful peers. These companies appear to recognize the increasing importance of reten