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SaaS Statistics What Small Businesses Spend on SaaS Subscriptions

SaaS Statistics and Trends for 2024

SaaS is one of the top industries in the world due to its significant impact on business operations. Read our SaaS statistics guide to understand its influence and learn a lot more about the industry.

Samuel OkoruwaSamuel ChapmanIgor Kurtz

Written by Samuel Okoruwa (Writer)

Reviewed by Samuel Chapman (Editor)

Facts checked by Igor Kurtz (Fact-checking editor)

Last Updated: 2024-03-18T18:50:46+00:00

All our content is written fully by humans; we do not publish AI writing. Learn more here.

Key Takeaways: 10 Key SaaS Statistics
  1. The global Software as a Service market size is projected to grow from $273.55 billion in 2023 to $908.21 billion by 2030, at a compounded annual growth rate (CAGR) of 18.7%.22
  2. The global enterprise software market is expected to be worth $610.09 billion by 2032.1
  3. The most valuable SaaS companies by market cap are Adobe, Salesforce and Intuit.13
  4. The average number of SaaS apps used by each department grew by 27% to an average of 87 apps in 2023.3
  5. IT and security departments saw the largest percentage growth in the number of SaaS apps at 33%.3
  6. Spending on SaaS products grew more than tenfold between 2010 and 2020.6
  7. SaaS apps make up 70% of business apps.2
  8. SaaS portfolios grew 32% between 2021 and 2023.3
  9. In 2020, North America accounted for 57.5% of the global SaaS market.7 By 2022, this value had decreased to 46%, which is still significant despite the decrease.1
  10. In a 2023 survey by Bessemer Venture Partners, 82% of companies stated that they currently have AI-driven features in their products, while 18% reported they had none.16

Despite its young age, Software as a Service (SaaS) has become one of the most popular software delivery models in the world. In this article, we will explore some of the best SaaS statistics, covering various current and future SaaS trends that businesses should watch in 2024. 

In the early 2000s, SaaS platforms first emerged as siloed, rigid and monofunctional applications. Since then, they have grown significantly. Cloud-based SaaS platforms now make it possible to deliver interoperable and modular applications that work across various business operations, including financials, human resources, procurement, marketing, sales and more. 

We’ve compiled the best SaaS stats from the most credible sources on the web to help you understand the impact of this fast-evolving technology on the world at large. 

What Is Software as a Service?

Software as a Service (SaaS) is a cloud-based service delivery model where the cloud provider licenses a software on a subscription basis over the internet. In this model, the software vendor may host the software on the remote servers of a third-party cloud provider or, as seen in larger companies like Amazon, the cloud provider might also be the software vendor. 

SaaS is one of the three main cloud computing models, alongside Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). It provides benefits such as reduced overhead, improved collaboration, enhanced security and high scalability. However, it’s not without its drawbacks, which include loss of control over a majority of the tech stack, software integration problems, wasted spending and redundant apps and tools. 

Global SaaS Market Statistics

The global SaaS market has grown dramatically over the last few years due to the COVID-19 pandemic and a significant increase in SaaS venture capital deals. Here are some statistics that capture the extent of this growth.

1. The United States Is Home to a Majority of Global SaaS Companies

According to a report by Precedence Research, the U.S. is home to nearly 56.67% of the world’s SaaS businesses.1

2. The Growth of the Global SaaS Market Is Exponential

The global Software as a Service market size is projected to grow from $273.55 billion in 2023 to $908.21 billion by 2030, at a CAGR of 18.7%.22

3. SaaS Venture Capital (VC) Deals and Investment Increased Significantly in 2021 

According to Precedence Research, Venture Capital (VC) deals and investment in the U.S. were valued at $38 billion in 2020. In 2021, U.S. SaaS VC investment involved 4,459 deals that accounted for $94 billion.1

4. The COVID-19 Pandemic Boosted the SaaS Market 

The majority of SaaS companies increased their spending during the pandemic. In a survey by Precedence Research, 30.4% of companies reported that they had seen a SaaS expenditure increase ranging from 1% to 20%, while 22.5% reported that their SaaS expenditure remained the same and around 20.5% said that they had decreased their spending on SaaS by 10%.1

This can be attributed to the increased adoption of SaaS apps for remote work. For valuable insights about remote work, read our best remote work statistics and trends guide

SaaS is expected to keep growing exponentially in the upcoming years. 

5. Enterprises Believe Zero-Touch Automation Is the Future of SaaSOps

SaaS operations (SaaSOps) refers to a set of practices implemented to ensure the efficient adoption, management and operation of various SaaS applications in an organization. Zero-touch automation can be used to streamline SaaSOps without human intervention.

A survey by BetterCloud found that 72% of enterprises regard zero-touch automation as “the future of SaaSOps” and 69% are on track to embrace zero-touch automation.2

6. The Global Enterprise Software Market Is Expected to Be Worth $610.09 Billion by 2032 

This figure is an increase from $201.05 billion in 2022.1 Precedence forecasts that the next 10 years will see the global enterprise software market expand at an average rate of 11.74% per year.1

SaaS Market Expected Growth 2022-2032 ($USD Billions)

7. The Cloud Segment of the Enterprise Software Market Is Expected to Experience High and Steady Growth from 2022 to 2032

This growth is anticipated to be at a high CAGR of 13.90% per year from 2023 to 2032.1

8. The Growth of the Cloud Industry Worldwide Is Expected to Boost the SaaS Market Significantly

The global cloud services market size is expected to grow at a CAGR of 17.32% from 2022 to 2030.1 This will boost the SaaS market significantly because SaaS applications rely on the underlying infrastructure of cloud services.

Statistics on SaaS Companies

Here are some of the most insightful statistics about SaaS organizations. 

9. The Most Valuable SaaS Companies Are Adobe, Salesforce and Intuit

The market cap for the top three SaaS companies are as follows13:

CompanyMarket Cap
1. Adobe Inc.$276.4 billion
2. Salesforce, Inc.$271.9 billion
3. Intuit Inc.$174.2 billion

10. Less Than a Quarter of SaaS Companies Met the Rule of 40 in 2022

The rule of 40 SaaS principle states that a software company’s combined revenue growth rate and profit margin should equal or exceed 40%. The rule of 40 has become a key metric investors use to identify companies with strong unit economics. According to the 2023 KeyBanc Capital Markets & Sapphire Ventures SaaS Survey, only 15% of SaaS companies met the rule of 40 in 2022.12

11. There May Be Over 72,000 SaaS Companies Worldwide 

According to Vainu, there are around 72,000 SaaS companies in the world. While there’s no definite number of SaaS companies, Vainu achieved a high level of accuracy using an AI-based algorithm with a high confidence threshold.14

12. SaaS Companies Are Quite Young 

Around 73% of all SaaS companies were founded after 2010. This is understandable, considering that the concept of Software as a Service has only recently gained widespread adoption and recognition (though it’s been around for decades).14

Date of SaaS Companies’ Founding

13. The Average SaaS Company Has a Small Staff 

Over 50% of SaaS companies employ less than 11 people, indicating that they’re early-stage startups.14 While early-stage startups make up the bulk of the SaaS landscape, not all of them succeed in the long run. Several factors contribute to business longevity, including company culture, operational effectiveness and capital structure. 

SaaS Companies By Number of Employees

Statistics on SaaS Apps

SaaS apps have become one of the most-used categories of apps in organizations worldwide. 

14. The Average Department Now Uses More SaaS Apps Than Ever

The average number of SaaS apps used by each department grew by 27% to an average of 87 SaaS apps in 2023.3

15. Engineering Teams Use the Most SaaS Apps

Engineering has remained the department with the most SaaS apps, increasing from 87 to 108 apps from 2022 to 2023.3

16. IT and Security Departments Saw the Largest Percentage Growth in the Number of SaaS Apps at 33%

This growth stems from the adoption of point solution tools and applications that facilitate an increase in Return on Investment (ROI) across business operations.3 Point solution tools are designed to address a specific business challenge. They appeal to IT departments because of their targeted problem-solving and integration with existing systems and workflows. 

SaaS Churn Statistics

Churn refers to the measure of customers a business has lost during a specific time period. It can be calculated in terms of actual usage or non-renewal rate (when the business operates on a subscription-based model). Churn is an essential SaaS metric that impacts revenue, customer lifetime value (CLV), profitability and customer satisfaction. 

17. The Median Gross Dollar Churn for Private SaaS Companies Is 14% 

Median gross dollar churn refers to the total monetary amount of revenue lost year-on-year due to customer cancellations or business setbacks.4 

18. The Annual Median Logo Churn for Private SaaS Companies Is 13%

Logo churn is another term for customer churn. Annual median logo churn describes how many customers are lost year-on-year due to customer cancellations.4

19. The Median Annual Non-Renewal Rate for Private SaaS Companies Is 10%

This implies that a large majority of customers do renew their subscriptions. It also indicates that the bulk of churn occurs through non-renewal, and outright cancellations are relatively rare.4 

20. SaaS Providers Should Aim to Keep Their Churn Rates Within a Specific Margin

According to Fullview, SaaS companies should try to keep their churn rates below 8%. Ideally, they should keep their monthly churn around 3% to promote sustainability.5 

SaaS Spending Statistics: The Cost of SaaS Solutions to Businesses

SaaS spending grew dramatically over the last decade. 

21. Spending on SaaS Products Grew More Than Tenfold Between 2010 and 2020

This growth, which expanded from $13 billion to $157 billion, can partly be attributed to the reliance of virtually every organization on SaaS products to streamline business operations. Research suggests that while part of the growth comes from price inflation, SaaS prices are inflating at a much faster pace than the overall economy.6

SaaS Spending By Year (inline with inflation vs real)

22. Cost Inflation of Existing SaaS Licenses Is a Significant Contributor to SaaS Spending Increases Between 2010 and 2020

In the last five years, approximately 74% of SaaS vendors have increased their listed prices, while most of the 26% that did not directly raise prices have eliminated discounts.6

23. SaaS Spending Increased 26% at the Onset of COVID-19 and Has Continued to Grow

When the coronavirus sprang up, companies turned their focus to remote working, leading to higher investment in SaaS products.6

24. The Average Organization Dedicates a Considerable Amount of Business Expenditure to SaaS

As of 2022, the annual company spending on SaaS per employee was $3,112. Technology companies spend more on software licenses than firms in any other category, averaging $4,552 per employee per year.6

SaaS Adoption Statistics

Here are some important statistics on SaaS adoption.

25. SaaS Apps Make Up the Bulk of Business Apps

In a 2020 survey conducted by BetterCloud, companies estimated that 70% of the apps they use are SaaS-based. They projected that 85% of the business apps they use will be SaaS-based by 2025.2

26. SaaS Portfolio Sizes Reached an All-Time High in 2023

SaaS portfolios grew 32% between 2021 and 2023.3 Additionally, companies with fewer than 500 employees use around 253 apps; those with up to 2,000 employees use about 353 apps, and enterprises (over 10,000 employees) use a staggering 473 apps.18 

Number of Apps Used By Size of Business

27. Shadow IT Is a Growing Concern 

Shadow IT refers to the use of IT hardware or software that hasn’t been approved by the IT department. Over half (51%) of SaaS apps in an organization today are Shadow IT. This is partly due to teams adopting new software without IT’s knowledge in order to subvert procurement procedures.18 

SaaS Industry Statistics by Region

The Software as a Service market’s reach extends across North America, Europe, the Asia-Pacific (APAC), the Middle East, Africa and Latin America. 

28. North America Holds the Largest Share of the Global SaaS Market 

In 2020, North America accounted for 57.5% of the global SaaS market.7 As of 2022, this value had decreased to 46%, which is still significant, but no longer an outright majority share of the global SaaS market.1

SaaS Market Share by Region

29. The U.S. Has The Most SaaS Companies in North America 

Following the U.S. are Canada and Mexico. This massive growth in North America can be attributed to the high GDPs of its three largest countries, their attractive economic policies and the willingness of local markets to rapidly adopt new technology.1

30. Europe Holds the Second-Largest Share of the Global SaaS Market 

In 2022, Europe accounted for 30% of the global SaaS market share. The top players in the European SaaS market are Germany, France, the United Kingdom and Italy.1

31. Asia Holds the Third-Largest Share of the Global SaaS Market 

In 2022, Asia accounted for 20% of the global SaaS market share. The Asian SaaS market is segmented into India, Japan, South Korea, China and the rest of the APAC region. One primary factor contributing to the growth of the Asian-Pacific SaaS market is the continuous growth of small and medium-enterprises (SMEs).1

SaaS Onboarding Statistics 

A great onboarding experience sets the stage for customer-company relationships. Let’s see how SaaS applications fare in this aspect. 

32. More Than a Quarter of SaaS Tools Offer a Free Account 

Of the 100 SaaS tools surveyed in a 2023 study by Userpilot, 41 said they offered a free account and over 74 offered a free trial.17

33. Less Than Half of SaaS Tools Offer In-App Guidance 

According to Userpilot, 36% of the tools tested didn’t have any in-app guidance. This means SaaS companies can easily stand out from the competition by providing a great onboarding experience.17

34. The Sign-Up Flow on Most SaaS Apps Is Friction-Based 

About 79% of apps tested by Userpilot provide a disjointed user experience during the sign-up phase. The issues include making users confirm their email address before they can access the app’s features and requiring them to sign up with their credit cards.17

SaaS Security Statistics

As SaaS continues to grow, security challenges mount as well. SaaS providers and users continue to take significant measures to protect their digital assets. 

35.  SaaS Security Incidents Are on the Rise

More than half (55%) of organizations reported in 2023 that they experienced a security challenge, such as ransomware, malware or data breaches, in the last two years — up 12% from the same survey in 2022.11

36. Shadow IT Is Leading to Security Issues

According to the 2022 G2 Software Buyer’s Report, employees at 55.6% of enterprise companies admit they use at least one piece of software without IT’s approval.10 Shadow IT grants unauthorized access to data, and anyone with such access can change sensitive data essential for daily company operations. For example, unauthorized changes to financial records can lead to fraud, identity theft and financial loss. 

37. Monitoring of SaaS Applications Could Be Better

According to Adaptive Shield’s survey, 58% of companies estimate that their security solutions only cover about half (50%) of their SaaS stack.11 This is a key contributor to the increase in SaaS security incidents. 

38. Investment in SaaS Security Is Increasing Significantly 

Adaptive Shield found that 71% of organizations have increased their investment in security tools for SaaS, while 68% have ramped up their investment in hiring and training staff on security.11

39. SaaS Security Posture Management (SSPM) Is on the Rise

SaaS Security Posture Management (SSPM) refers to a category of automated security tools that help to identify and track security threats in SaaS applications. The percentage of organizations using SSPM increased from 17% in 2022 to 44% in 2023. More organizations are embracing advanced SaaS security tools due to the increase in security incidents.11

How People & Businesses View SaaS

Here are some interesting insights from business leaders and CEOs about SaaS.

40. SaaS Business Leaders Worry About the Economy Despite Increasing Interest From Investors and Buyers

Amid an unstable economy characterized by inflation, layoffs, high interest rates and geopolitical instability, executives and founders are bracing for a recession. As a result, many believe the SaaS market didn’t improve between 2022 and 2023, leaving business leaders reluctant to market their products and services until the tides shift. 

However, this same group of business leaders reported more interest from investors and buyers in 2023 than the previous year. 

[CEOs] likely have formed their opinions by drawing insights from the public market news,” said Diamond Innabi, a principal at Software Equity Group (SEG). “Surprisingly, more than half of CEOs believe valuations have declined, whereas in actuality (and in SEG’s real-world experience), valuations have risen for companies with mission-critical offerings, high retention and profitable growth8.

41. SaaS Buyers and Investors Report High Demand but Low Supply of High-Quality SaaS Businesses

In contrast with the reports of business leaders that blame slow growth on the economy, buyers and investors believe the market will keep expanding but see a weak supply of high-quality businesses to do business with. Austin Hammer, another principal at SEG, concurs with the buyers and investors. 

“In line with SEG’s experiences, the buyer community is encountering equal or even heightened competition,” Hammer said. “This is likely a direct impact of the lack of supply of high-quality businesses in the market. SEG has seen a substantial increase in bids for our client’s companies this year compared to last, which directly reflects the competitive environment felt by the buyer community.”8

42. SaaS Buyers Now Prioritize Growth, Retention and Profitability When Considering Businesses to Work With

In previous years, growth at all costs — the rapid maximization of revenue and retention at the expense of other metrics like a strong product or customer base — was considered the key indicator of high-quality SaaS businesses. However, the indicators of a highly desirable SaaS profile evolved in 2023’s volatile economy. Buyers now value growth, retention and long-term profitability above other metrics.  

“While we had anticipated that factors such as customer retention and strong product would be important to buyers,” said Innabi, “seeing nearly 50% of buyers consider profitability and cash flow important when assessing a company’s attractiveness was a reassuring validation of our real-world experiences. In 2023, we’ve witnessed the “growth at all costs” model fall out of favor quickly.”8

SaaS Business Model, Pricing Statistics & Facts

Pricing is one of the most essential drivers of revenue, yet the average SaaS startup fails to establish a solid pricing strategy. 

43. Few SaaS Companies Do Pricing Research

Just 6% of SaaS companies have directly asked their customers what they need from the product and what they’d be willing to pay for it. About 45% have conducted “cursory market research” on willingness to pay, and the remaining 48% haven’t researched prices at all.9

44. SaaS Companies Aren’t Testing Their Pricing Changes Either

Less than half (48%) of SaaS companies have run a pilot test for pricing changes before implementing them for all customers.9 

45. Few SaaS Companies Have Adopted Value-Based Pricing

In a value-based pricing model, companies set prices based on how much the customer values their product. Fewer than two in five companies (39%) use value-based pricing. The rest rely on using their discretion (27%), copying from competitors (24%) or taking a cost-plus approach (10%), which involves adding a fixed percentage to the product’s unit cost.9

Adoption of Value-Based Pricing by SaaS Companies

46. 77% of SaaS Companies Revisit Pricing At Least Once Per Year

Of the companies surveyed, 34% of them report changing their pricing about once per year, and 43% say they change it multiple times per year. Frequent pricing changes are more common in earlier-stage companies, though annual pricing changes are found at every growth stage.9

Miscellaneous SaaS Statistics

Here are a few more important SaaS statistics.

47. The Median Cloud-Based Company Has Raised At Least $100 Million

On average, series A rounds fall within the range of $10 million to $20 million, while series B rounds raise a mean $45 million.16

48. The Majority of SaaS Products Are Becoming AI-Enabled

In a 2023 survey by Bessemer Venture Partners, 82% of companies affirmed that they currently have AI-driven features in their products, while 18% did not.16

49. AI Is Already Dominating SaaS

Of the cloud companies surveyed, 86% expect to have an AI-enabled feature by the end of the year.16

50. San Francisco Is the Cloud Industry Epicenter in Terms of Headquarters and Hiring

More than half (52%) of cloud companies are located in California, and 21% of these companies have their headquarters in San Francisco.16

51. Cloud Companies Spend Their Funds Quickly

Although a majority of SaaS companies have raised at least $100 million since their founding, half of them have less than $50 million of that funding left. Only one-third of SaaS companies currently have at least $100 million in the bank.16

Final Thoughts

According to McKinsey & Company, the global SaaS market is currently worth about $3 trillion, and it’s estimated to surge to $10 trillion by 2030. This is because SaaS helps companies reduce overhead costs. In the SaaS model, third-party cloud-service providers manage some of the technical work, allowing companies to focus on core business operations.

Additionally, software is easy to scale, especially when built on elastic cloud infrastructure. With the continuous evolution of cloud computing and expert projections that span till the 2030s, it’s clear that the SaaS industry will keep growing to unprecedented levels. 

How can the insights from these statistics influence your business’ SaaS adoption strategy? What are the implications of these statistics on specific industries or sectors that utilize SaaS applications? How can SaaS applications evolve to streamline the user experience for SaaS users? Let us know in the comment section below, and as always, thanks for reading. 

Sources:

FAQ: 50+ SaaS Statistics

  • There may be over 72,000 SaaS companies worldwide.[14]

  • Four main SaaS metrics every company should care about are customer churn, revenue churn, customer lifetime value and customer acquisition cost.

  • The global Software as a Service (SaaS) market size is projected to grow from $273.55 billion in 2023 to $908.21 billion by 2030, at a CAGR of 18.7% during the forecast.[21]

  • The SaaS market is highly competitive, but not oversaturated. A market can’t be considered saturated while demand is still growing, and SaaS has a projected 13.90% CAGR through to 2032.[1]

  • According to a McKinsey & Company study, only 20% of SaaS companies make it past the first five years in business.[20]

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