How much money do SaaS companies spend on marketing?

How much money do SaaS companies spend on marketing?

According to OpenView’s 2017 Benchmarks report, on average, companies spend 30-35\% of their ARR on sales and marketing before they reach $2 million in revenue. The number peaks at 45\% around this benchmark. However, it then drops to 40\% where it stays for the life of the company.

How much do SaaS companies spend on customer service?

SaaS Spending by Company Funding The chart below shows median spend benchmarks, as a percent of ARR, for equity-backed companies and bootstrapped companies with at least $1 million in ARR.

How much should a startup spend on marketing?

The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales and your net profit margin – after all expenses – is in the 10 percent to 12 percent range.

What percentage of revenue should be spent on marketing SaaS?

SaaS companies are always under extreme pressure to grow recurring revenues. The company’s goal is to pay itself back for the cost of acquisition, and before churn catches up. Its prediction is a safe estimate of marketing and sales spend should be anywhere from 10 – 40 percent of your annual recurring revenue (ARR).

How much should you spend on ads?

How Much to Spend on Marketing Based on Expert Suggestions. Marketing experts and agencies often recommend that small businesses spend anywhere from 7-8 percent of their gross revenue on marketing. And, according to a study, small businesses tend to follow this rule, spending around 3-5 percent.

Why is SaaS so attractive?

So what is it that makes SaaS so attractive to VCs? First and foremost, SaaS businesses provide predictable, recurring revenue. SaaS startups can take on as many subscribers as they want with more or less the same fixed costs, potentially creating huge revenue.