50+ SaaS Statistics Every Founder Should Know in 2024
SaaS Growth and Trends
Aug 7, 2023
Software-as-a-Service (SaaS) isn’t going anywhere soon. If anything, organizations are using more SaaS applications to work efficiently and drive growth in their business.
To help you stay on top of of the SaaS market and its innovations as a SaaS Founder, we’ve compiled a list of 60+ key SaaS statistics you should know to build more impactful products.
SaaS market: general statistics
The number of cloud-based SaaS tools grows every day. Also in the next coming years, experts predict nothing but market growth.
The SaaS industry is the largest cloud segment worldwide, estimated to generate $197 billion in end-user spending in 2023. (Gartner)
In terms of market capitalization, the global SaaS market is projected to reach a $208.1 billion valuation, up 17.5% compared to 2022. (Statista)
From 2022 to 2028, the SaaS market size is expected to grow at a compound annual growth rate (CAGR) of 18.5%. (The Insights Partners)
Currently, there are over 30,000 SaaS companies worldwide. With a recent boom in AI applications, the number of SaaS apps is expected to grow as high as 175,000 by 2024. (Ascendix)
The US leads the pack, accounting for a whopping 56% of all SaaS companies. Other notably growing markets are United Kingdom, Canada, Germany, France and India. (Ascendix)
Since August 2023, Adobe is the largest SaaS company on the US stock exchange (by market cap), followed closely by Salesforce. (Mike Sonders)
SaaS growth statistics
Although the SaaS market is growing at a steady rate, the last 3 years have been turbulent. After the boom of remote work during the pandemic - leading to massive success stories for Zoom, Slack, and other virtual communication software - the economic recession hit hard.
Impact of economic recession on SaaS industry
The aftermath of COVID-19 and the Russian war on Ukraine have had a massive impact on the economy. 2022 was a year of economic recession, and for the SaaS industry, it meant budget cuts, lay-off rounds and funding freezes. The effects are still lingering in 2023.
The number of new unicorns in tech hit a 6-year low in Q1'23, with a 90% drop from Q1’22. (CB insights)
In 2022, SaaS valuations plummeted. SaaS companies needed to more than double their ARR to keep the same valuation they received in 2021. (OpenView partners)
SaaS growth was slower than ever in 2022, with top quartile of SaaS businesses only growing 62.1% in 2022, compared to 78.9% in 2021. (Chartmogul)
SaaS companies are collectively cutting spend, regardless of their runway. In 2022, they reduced cash burn with 17 to 26% on average. (OpenView partners)
65% of SaaS organizations did not hit their company targets in H1 2022. (RevOps Co-op)
51% of SaaS companies experienced more churn in 2022. More than half saw churn rates go up with more than 10%. (Everstage)
SaaS businesses are focusing on revenue expansion, rather than new business. Expansion ARR now makes up 32.3% of total revenue growth versus 28.8% in 2020. (Chartmogul)
After a rough 2022, things seem to have taken a turn for the better. Year-over-year new ARR growth is ticking up again to a median of 9% in Q1’23, compared to 4% in Q4’22. (Chartmogul)
SaaS funding
VC capital and SaaS funding rounds saw a dip in 2022, continuing on in 2023. Although the climate is rough, SaaS founders are keeping a positive attitude.
Over $30 billion in VC investment went into early-stage SaaS startups in 2022. (Dealroom)
In a study of 750 SaaS startups, the amount of capital raised in 2022 dropped 50% compared to 2021, leaving a staggering amount of $2 billion on the table. (TechCrunch)
In 2023, late-stage startups still feel the lingering effects of inflation and recession on fundraising. Q2 investments are down 33% compared to Q1 in 2023. (Forbes)
Capital investments have decreased worldwide: 2023 funding is down 49% (US and China) to 52% (Europe) compared to 2021. (Atomico)
Despite a difficult VC climate, 33% of European SaaS CEOs are planning to raise. (Sifted)
Source: The State of European Tech
SaaS adoption statistics
In an era where efficiency is king - and convenience queen - organizations are flocking to easy-to-use, cloud-based SaaS tools to help them get the job done. Product adoption is growing, but with more and more SaaS applications to choose from, apps that don’t deliver value will be orphaned.
In 2023, organizations use 130 SaaS products on average, up 18% compared to 2022. (Bettercloud)
With so many SaaS platforms in their stack, a lot of them remain untouched. On average, enterprises have 4.3 orphaned apps and 7.6 duplicate apps. (Chief Martec)
75% of CIOs says they use cloud applications for business agility and faster implementation. (Workday)
In 2023, the most popularly purchased SaaS applications are customer relationship management (CRM), cybersecurity and project management tools. (Vendr)
Publicly traded SaaS companies have around 36,000 customers on average, mounting up to 85,000 users for those selling into the small business segment. (SaaStr)
SaaS spend and budget statistics
Organizations are setting aside growing budgets for software to support their workflows. Let’s look at how customers are spending money on SaaS, and vice versa, how SaaS companies spend their money to build products their costumers need.
On average, organizations spend $2,623 per employee per year on SaaS. (Insivia)
Only 36% of traditional companies allocate budget to SaaS solutions and operations, while 44% of transitioning organizations set aside a budget for SaaS. (Finances Online)
For high-growth SaaS companies, marketing and sales are one of the biggest expenses, spending up to 50% or more of their revenue. (McKinsey)
On average, SaaS companies spend 24% of their revenue on their cost of goods sold. This could be anything from hosting, DevOps, or professional services. (SaaS Capital)
Generally, bootstrapped companies tend to spend less than equity-backed companies. As a result, equity-backed companies are growing faster with a 41% average increase in ARR annually (vs 33% for bootstrapped companies. However, they often operate at a loss more often. (SaaS Capital)
SaaS pricing statistics
High inflation has caused SaaS businesses to rethink their business models. In 2022 and 2023, SaaS companies are collectively raising prices and exploring new pricing models to deal with economic recession.
SaaS providers experiment with pricing models to drive product-led growth. For example, freemium SaaS tools convert 25% more customers without the need for sales than free trials. (Copy Noise)
59% of SaaS companies use add-on features, like reporting and analytics, to drive expansion revenue. (Luzmo)
Inflation has jacked up SaaS prices: a study of 100 SaaS companies showed that 11% of software tools got more expensive. On average, prices went up 69%. (Capiche)
According to another study, respondents who raised pricing during times of inflation increased their revenue by 20% to 33% more than companies that didn’t raise prices. (FastSpring)
Ineffective pricing causes frustration for SaaS users. For example, 21% of cloud-based SaaS were called out on G2 about certain features, like analytics reports, being locked away behind higher pricing tiers. (Luzmo)
The pay-per-use trend is here to stay: 74% of SaaS businesses are expected to offer some form of usage-based pricing as part of their business model in 2023. (Chargebee)
SaaS user experience statistics
If a piece of software is too difficult to use, product users will move on to the next alternative. Especially in SaaS industries where competition is fierce, products with a stellar user experience are setting themselves apart.
84% of SMBs have at least some difficulty using new cloud applications. (AppDirect)
88% say they wouldn’t return to a website after having a bad user experience. The same holds true for SaaS apps. (The UX school)
Clunky user experience is one of the most common complaints of software users. In a recent study about SaaS analytics, 74% of tools got negative G2 reviews about their user interface. (Luzmo)
54% of users want to see content that is personalized to their interests. SaaS products can jump on this need by personalizing their app features, content, or analytics dashboards to different user profiles. (Adobe)
Every $1 spent on UX design will generate $100 in return. (Forrester)
With product users who are always on the go, 45% of users expect content to display correctly across different devices. (Adobe)
Popular SaaS trends in 2023
Artificial intelligence has been front and center in 2023. SaaS companies are setting up initiatives to add AI functionality to their products en masse. Below, we’ve listed some key stats on the newest product innovation trends in SaaS.
Artificial intelligence
In 2023, the demand for AI-powered tools keeps increasing. In Q1, businesses bought 4% more AI features than in Q4 2022. (Vendr)
35% of all AI/ML funding went into generative AI in Europe, setting a record high in 2023. (Atomico)
In 2022, a whopping $104 billion equity investment went into AI applications, with $5 billion specifically for generative AI. (McKinsey)
Employees who use AI at work are 90% more likely to report higher levels of productivity than those who don’t. (Slack)
More and more SaaS and web apps are integrating generative AI with their apps. As of August 2023, there are more than 800 ChatGPT plugins available. (Kristi Hines)
Data and analytics
By 2025, 50% of the world’s data will be stored in the cloud. (Cybersecurity Ventures)
Data-driven companies are 23x more likely to attract new customers (McKinsey)
SaaS product users want more reporting and better insights in their favorite software tools. 20% of productivity software reviews on G2 - like marketing, project management, or accounting software - are about analytics dashboards. (Luzmo)
In a study of 140 popular software tools, 94% show analytics dashboards on their website to attract new customers. (Luzmo)
SaaS security
Security (66%) and compliance (60%) are the top challenges of using public cloud services for enterprise IT executives. (Logic Monitor)
65% of all SaaS apps are unsanctioned: employees buy and use them without approval from IT. As a result, 57% of IT professionals are making strides to regain control over their company’s SaaS apps. (Bettercloud)
36% of DevOps engineers are adopting advanced security practices (DevSecOps) to improve security, quality, and resilience of their software solutions (StrongDM)
Organizations that use security AI and automation extensively could save as much as $1.76 million compared to organizations that don’t. (IBM)
Most popular cloud services
Every good SaaS app starts with a solid cloud infrastructure. Scalability is key when you’re growing your platform from hundreds to thousands of users quickly. So, on which cloud platform are most apps running today?
AWS has the largest market share of cloud infrastructure services with 33%.
With 23% market share, Microsoft Azure follows as the second-largest cloud provider.
Google Cloud Platform accounts for 10% of the cloud computing market share.
Combined together, tech giants Amazon, Microsoft and Google account for 66% of the cloud market at the start of 2023. (AAG)
Growing your SaaS business in 2023
Now that you’re equipped with new market intelligence, it’s time to start thinking about your next big move. Whether it’s experimenting with your SaaS business model, or adding innovative features like generative AI or embedded analytics. When done well, any of these strategies will move the needle for your company metrics.
Has customer-facing reporting been on your roadmap for a while, but never had the time to get it done? Now is a good time to get started. With Luzmo, SaaS companies have added interactive dashboards to their apps in days, not months.
.webp)
