SaaS Benchmarking – Annual Contract Value (ACV)

SaaS Benchmarking – Annual Contract Value (ACV)

This post provides SaaS entrepreneurs, Business Managers and Investors with the top 75 best practice benchmarks for your SaaS and Software business. Within this chapter we are covering Benchmarks to calculate the Annual Contract Value.

The Annual Contract Value (ACV) is the average value of a service contract paid for 12 months. It is a good indication to understand Average ACV in different industries and for different solutions.

The ACV can depend on various factors

  • Focus on new business or upsell business
  • Company Growth (faster growing companies tend to have a higher share of upsell business)
  • Sales Model (the ACV of an Inside Sales Model is lower than the ACV of a Field Sales Model)
  • Pricing of Service Plans
  • Contract Length (if companies sell on monthly basis, they measure Monthly Recurring Revenues (MRR) instead ACV – typically this can be compared if MRR are multiplied by 12)




Average Revenues per Customer for Selected Public SaaS Companies

Vevaa earns $780k revenue per customer, much more than other companies
FINANCIAL METRICSCONTRACT VALUEREVENUESARR

 

Median Annual Contract Size (ACV) per Customer

Median annual contract size (subscription component only) at about $21K per year
FINANCIAL METRICSCONTRACT VALUEACV

 

Share of Upsell Business by Growth Rate

Fastest growing companies (>75% YoY revenue growth) have higher share of Upsell Business
EXPANSION (UPGRADE)FINANCIAL METRICSGROWTHGROWTH RATEALL PROCESSESCUSTOMER LIFETIME VALUEEXPANSION (UP-/CROSS SELL)

 

Relative Deal Size and Bookings of Inside Sales Teams by Slow vs. Fast Growing Companies

Fast growing companies win larger deals (2.8x on average) than slow-growing companies
FINANCIAL METRICSSALES COMP & QUOTABOOKINGSGROWTHGROWTH RATECOMPANY PROFILECONTRACT & PRICINGCONTRACT SIZEALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALES

 

Relative Deal Size of Inside Sales Teams by Won vs. Lost Deals

Lost deals are 1.9 times larger than won deals on average
FINANCIAL METRICSSALES COMP & QUOTADEALS WONALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALES

 

MRR per Deal and Number of Closed Deals per Quarter by Sales Functions

FSR closes less deals but larger deals than ISR
FINANCIAL METRICSCONTRACT VALUEMRRALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

MRR Bookings by Company Growth Rate and by Source

Hyper Growth companies get most MRR bookings from new logos while Scale Model peers from renewals
FINANCIAL METRICSSALES COMP & QUOTABOOKINGSCONTRACT VALUEMRRGROWTHGROWTH RATE

 

Companies by Pricing Factors and by Contract Length

COMPANY PROFILECONTRACT & PRICINGCONTRACT LENGTHPRICING METRIC

 

Professional Services Metrics (Revenue, Billable Hours, Hourly Rate, Target Utilization)

54% SaaS companies offer Professional Service onboarding, earning 25% ACV from PS revenue
COMPANY PROFILESERVICE TYPEPROFESSIONAL SERVICES

 

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