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SaaS Financial Benchmarks by Baremetrics

by Jerusha Songate. Last updated on December 13, 2023

For SaaS companies, success depends highly on using key metrics to track financial growth and enhance visibility into all the key performance indicators. 

Another major interest is comparing one’s growth and performance with other companies in similar SaaS niches. For every decision-maker in a SaaS company, understanding SaaS financial benchmarks makes a proper interpretation of your internal performance metrics.

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What are SaaS financial benchmarks?

A benchmark is any value or measurement against which you can compare the performance of something. When looking at our businesses, it’s great to have benchmarks for how other businesses are doing, so we can see if we’re performing higher or lower than the industry standard.

A SaaS financial benchmark refers to benchmarks that are specifically focused on average performance in the SaaS world. In particular, a SaaS financial benchmark is a benchmark about something financial, such as MRR, ARR or other financial metrics that are commonly used throughout the SaaS world.

Why use SaaS financial benchmarks?

At Baremetrics, we understand that SaaS companies need to consult SaaS financial benchmarks to discover, at a glance, what’s normal in the industry and what’s not. It’s the only way to stay competitive, successful, and relevant within any SaaS product niche. 

SaaS financial benchmarks provide the sort of clarity that gives companies greater visibility and analysis of their metrics. Baremetrics provides SaaS financial benchmarks in two categories. 

The first category, which you will readily find as Open Benchmarks, is only a tiny peek into the extensive financial benchmarks that Baremetrics has collected from over 800 businesses over the years. The full collection of benchmarks are accessible with a free trial for the Baremetrics Benchmarks feature in-app.

Open Benchmarks shows quick summaries for general cohort analysis, while a free trial can give you access to smart features that produce key metrics comparisons in accessible, plain language. With industry benchmarks, SaaS companies like yours can make effective decisions about strategic resource investments that result in solid revenue and soaring valuations.   

What are the SaaS financial benchmarks that you can get at Baremetrics?

It’s impossible to know the industry average unless you have similar information from hundreds of companies. Fortunately, Baremetrics collects financial data from hundreds of companies, and we publish that data in an anonymized and accessible way.

Below is a shortlist of 10 actionable financial benchmarks that Baremetrics provides; 

  1. Quick ratio: In SaaS, this metric compares the company’s new MRR with its MRR contraction rate.
  1. LTV: The customer lifetime value predicts the net profit a customer can contribute to a company over time. 
  1. User Churn: For SaaS services, it is the percentage of subscribers who terminate their subscription within a time interval.
  1. Monthly Recurring Revenue: This is the metric of all recurring revenue normalized into a monthly amount. It’s a metric usually used among subscription and SaaS companies.
  1. Revenue Churn: This is a measure of loss of recurring revenue when subscribers cancel their subscription or downgrade. 
  1. Revenue Growth: This measures the increase or decrease in a company’s sales over a period represented in percentage. 
  1. Revenue by plan price: This is the revenue based on different plans and pricing. 
  1. Free plans: This is the metric that tracks the number of businesses that use free plans for their SaaS services. 
  1. Pricing models: does it end with 0 or 9? This metric accounts for the benchmark pricing for different services and if it ends with 0 or 9. 
  1. Number of plans: This accounts for the average number of plans that are being used at SaaS companies. For example, a company might have 5 different plans; trial, intro, medium, expert and premium.

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How does Baremetrics get this data?

Baremetrics is a unique product that has access to the financial analysis being done by its customers. With each customer’s permission, Baremetrics collects, anonymizes, and publishes financial benchmarks using this data.

Typically, a SaaS company will undertake some internal cohort analysis to compute some of the metrics described earlier. However, the challenge is using your internal cohort analysis results for a cohort comparison, which yields actionable financial benchmarks that put your company’s internal cohort analysis results into perspective. 

The metrics published on Open Benchmarks show, in explicit detail, how your SaaS company currently compares with other companies during cohort analysis.

Here’s a quick breakdown of SaaS financial benchmarks for companies recording $25-$50 average revenue per user (ARPU):

Financial Metric

Financial Benchmark for companies with $25-$50 ARPU 

<p dir=" ltr" "="" style="text-align: center;" median="" monthly="" recurring="" revenue="" (mrr)="" p="" tdtdp="">$19,000
<p dir=" ltr" "="" style="text-align: center;" quick="" ratio="" p="" tdtdp="">1.2
<p dir=" ltr" "="" style="text-align: center;" lifetime="" value="" (ltv) ="" p="" tdtdp="">$506
<p dir=" ltr" "="" style="text-align: center;" user="" churn="" p="" tdtdp="">7.2%
<p dir=" ltr" "="" style="text-align: center;" revenue="" churn="" p="" tdtdp="">8.0%
<p dir=" ltr" "="" style="text-align: center;" revenue="" growth="" p="" tdtdp="">0.0%
<p dir=" ltr" "="" style="text-align: center;" pricing="" models="" (ending="" with="" a="" 9)="" p="" tdtdp="">9%
<p dir=" ltr" "="" style="text-align: center;" average="" number="" of="" plans="" p="" tdtdp="">9
<p dir=" ltr" "="" style="text-align: center;" free="" plans="" p="" tdtdp="">32%

If your SaaS company happens to have a customer ARPU that falls within the $25-$50 range, you can already tell if your numbers are right or if they need some more work. 

Take the LTV financial benchmark, for instance. It’s well-known that if your customer LTV exceeds the cost of customer acquisition (CAC), then that customer is profitable, and you can go ahead to acquire similar customers. 

However, it isn’t always enough to know that your customer is profitable within this specific cohort value when LTV is compared with the CAC; that’s only an internal performance metric. It’s still a good idea to weigh your internal financial metrics with those of other companies. With this comparison, you can be sure that your company numbers and values are up to the industry standard in addition to just being profitable. 

The paid Benchmarks and Smart Dashboards tools take a deeper dive into the insights that can be uncovered in your business’s finances. Together, these Baremetrics tools make your company’s financial analysis and growth easily trackable. 

More Perks of SaaS financial benchmarks by Baremetrics 

It isn’t news that your customers experience failed payments. As scandalous as this may sound, customers often want to keep paying for something but forget to because of something like a missed credit card transaction. 

Incredibly, Companies lose up to 10% on failing payments monthly. All you need to do to get that money out of your customer base is start prompting them when their credit card transactions don’t go through.

At Baremetrics, we’re constantly looking into why these failed payments occur. We even look into the specific card types that fail, and what benchmarks we can see about failed payments.

Failed payments are a financial metric that is overlooked, but with the correct information about its frequency and how similar companies are moving to stop it, it can become a thing of the past. 

Knowing SaaS financial benchmarks gives you an edge

With the SaaS financial benchmarks provided by Baremetrics, you can know precise details about the following data; 

  1. What is normal in my industry?
  2. What isn’t normal about my product?
  3. What do I prioritize?
  4. What metrics are the most important to look at?

Nothing gives a company an edge like knowing that their numbers are just right (or knowing what they must do to get their numbers just right). Everything else follows; goal-setting, pivots and iterations, agile development, and so much more. 

From glances at the industry benchmarks to in-depth cohort comparisons, the Baremetrics Benchmark feature provides your company with the vital signs it needs to grow and succeed. 

Look at more of what the Open Benchmarks say here, and start a free trial today!

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Jerusha Songate

Jerusha has a strong interest in SaaS and finding new business opportunities. She writes for Baremetrics as part of her passion for business journalism.