70 SaaS Statistics You Must Learn: 2021 Market Share & Data Analysis

A new version of this article, featuring the latest data and statistics, is available. Check out our report on SaaS Software Statistics for 2022.

SaaS has proven to be one of the best things that ever happened to computing, sending many businesses scrambling to get a hold of such systems. This has led to the popular SaaS market continuing its current growth streak. The sector is seen to reach a whopping $623 billion by the year 2023 at a compound annual growth rate of 18%. This is but one of the many SaaS statistics we’ve collated in this article. Clearly, SaaS currently represents the largest segment of the world market for public cloud services.

To shed more light on this niche market, we have compiled the latest data on market growth, adoption rates, and use cases. By the time you’re done with this reading, you will have a better understanding of not only how SaaS has been benefiting companies worldwide, but what it can do for your business.

SaaS has been benefiting businesses since its inception, helping companies attract and retain customers while boosting service. They have found tons of applications in different industries, specifically in the areas of marketing, sales, and customer service. This development has greatly contributed to the increase in the SaaS market size.

SaaS has also been experiencing growth in the B2B sector, making use of technologies such as machine learning and AI to improve automation further. There are likewise SaaS tools for small businesses that can help them compete with larger companies.

To keep up with the very purpose of SaaS, vendors have been designing their tools to blend well with different software environments through vast arrays of integrations and APIs. Read on to see more relevant SaaS market statistics.

SaaS Market Statistics

The global SaaS market continues to enjoy robust growth, with the sector seen to reach a total value of $623.3 billion by the year 2023, showing by far the most notable Saas growth statistics. Saas market research has also revealed that businesses and organizations’ push for increased agile and automated processes will fuel this growth.

More and more companies are adopting SaaS software with those in the retail and consumer goods sectors leading the pack. SaaS consumption, although a global activity, is highly concentrated in the Asia Pacific and North American markets. However, the lack of skilled staff and continued cyberattacks are seen to hamper SaaS growth. The following are SaaS industry statistics worth looking into.

General SaaS Market Statistics

• For 2018, SaaS vendors spent $63.1 billion on R&D, which equals 20% of all US-based enterprise R&D (OpenView, 2020).
• To date, the best SaaS IPO year was 2018, with 17 new public vendors collecting a total of $5.1 billion, which is twice higher than the next highest year (Battery, 2019).
• North America is the most mature SaaS market in terms of adoption (MarketsandMarkets, 2020).
• Since 2010, the average spend on SaaS applications per company had steadily risen year-over-year. In 2018, the average company spent $343,000 on SaaS, a 78% increase from the previous year (Blissfully, 2019).
• Salesforce is the leading SaaS company by capitalization worldwide as of June 2019 with a market cap of 117.8 billion U.S (GP Bullhound, 2019)
• North America and Asia Pacific SaaS markets will post the highest growth rate (MarketsandMarkets, 2020).

Saas Growth Rate Statistics

• For 2019 to 2023, the global SaaS market is predicted to be worth $60.36 billion, registering a 9% CAGR within the four-year period (Technavio, 2019).
• The unique number of SaaS apps in usage per company was up by about 30% year over year, with companies averaging 137 in 2019 vs. 2018 (Blissfully, 2019).
• Increased automation and agility are seen to fuel the SaaS market’s growth (MarketsandMarkets, 2020).
• In 2018, the global SaaS workload grew to 206 million and is predicted to reach 380 million by 2021 (Statista, 2018).
• Meanwhile, in 2020, the public cloud market reached a whopping $1 trillion by the end of 2020, which is higher than the initially predicted $500 billion. (Bessemer Venture Partners, 2020)
• The global cloud computing market size is expected to grow from $371.4 billion in 2020 to $832.1 billion by 2025 (MarketsandMarkets, 2020).
• There were only 500 marketing tools in 2007. By 2017, there are more than 8,500 (ProfitWell, 2020).
• The corporate mobile SaaS market is predicted to reach $7.4 billion by 2021 (Strategy Analytics, 2016)
• Retail and consumer goods are seen to register the highest growth rate (MarketsandMarkets, 2020).
• There are 15,529 SaaS companies in the world as of June 2020 (Cardconnect, 2020).
• Cyber attacks and lack of skilled workers could hamper the sector’s growth (MarketsandMarkets, 2020).

SaaS Churn Statistics

Knowing churn rates—the discontinuation of service subscriptions within a period of time—is important to any business. All companies with subscription-based services are subject to churn, and SaaS businesses are no exception.

There are a variety of reasons for churn—a customer finding a new vendor, running out of budget, or becoming unsatisfied with a company’s customer service. Here, we provide you with key statistics on SaaS churn rates and how they affect corporate revenues.

• The median annual revenue churn rate for SaaS businesses is 13.2% (ProfitWell, 2019).
• Companies churn through 30% of their apps yearly, suggesting the need for more flexibility in SaaS feature bundles. (Blissfully, 2020)
• The fastest-growing SaaS firms have an average Quick Ratio of 3.9 to 1. This enables them to generate $3.9 in revenue for each dollar lost to revenue churn (Insight Squared, 2016).
• 100% – The revenue retention rate of the very best SaaS companies (For Entrepreneurs, 2016).
• When it comes to churn rates based on company size, high growth companies exhibit a polarizing effect—with 39% experiencing low churn, but a 34% rate for high churn (Reply, 2019).
• SaaS companies with month-to-month contracts report lower churn rate (14%) compared to those with 1 to 1.5 years contract (15%) (Reply, 2019).
• By securing contracts that are 2.5 years or more, SaaS companies can lower the churn rate to 8.5% (Reply, 2019).
• SaaS companies that target small businesses should aim for a churn rate of between 3% to 4% monthly. The larger the businesses you target, the lower your churn rate has to be as the market is smaller (Baremetrics, 2017).

SaaS Pricing Strategy Statistics

Traditionally, SaaS pricing strategies vary from business to business. Many of these companies offer free trials and freemium software packages to attract clients. There are also B2B strategies that can be used to grow SaaS businesses.

With many businesses taking a beating from COVID-19, many Saas companies have also reexamined their pricing strategies and are willing to make changes in order to respond to the crisis.

• About 30% of all SaaS companies offered additional functionality. (OpenView, 2020)  
• 33% of mostly medium and large SaaS companies offered additional services. (OpenView, 2020)
• About 30% offered price cuts. (OpenView, 2020)
• 40% are thinking of using new pricing models once businesses recover from the crisis. (OpenView, 2020)
• 40% are also planning to offer buying incentives. (OpenView, 2020)
• In addition, more than 50,000 SaaS vendors offer over 30% discount to their customers, which adversely affects their revenues and customer perception of their brand (ProfitWell, 2020).
• 50% of SaaS companies still depend on user-based pricing (Cobloom, 2021).
• 44% of SaaS companies offer a free trial or demo (BlueTree, 2021)
• 30 days is the most common free trial period (Cobloom, 2019).

IT Budget and SaaS Adoption Amidst COVID-19

Due to the disruption caused by COVID-19, SaaS adoption and deployment of technologies have been going through the roof as more and more companies recognize the advantages that these platforms bring to the table. They have also changed the way businesses manage their processes. Data storage has also changed as all corporate information took a trip to the cloud, making them both secure but easily accessible to users for remote work. Many of these changes will become permanent and the need to enhance remote work capabilities will continue to influence tech adoption and purchases throughout 2021. 

• 76% of businesses plan on long-term IT changes as a result of COVID-19 disruptions (SWZD, 2021).
• 93% of CIOs are adopting or planning to adopt cloud SaaS (Deloitte, 2020).
• 64% of companies enabled remote work and more than half plan to retain their setup even after the pandemic; thus cloud and management service spendings are expected to rise in 2021 (SWZD, 2021).
• 54% of CIOs anticipate using cloud software for core SaaS apps within the next three years (Deloitte, 2020).
• 36% of companies see the reduction of burden on IT support as a key driver for the use of cloud-based solutions. (SWZD, 2021).
• 88% of companies utilize the cloud as of 2020. In addition, 25% of these companies aim to migrate all their business systems to the cloud by the end of 2021. (O’Reilly, 2020).
• For 70% of CIOs, agility and scalability remain as the top motivations for using cloud-based SaaS (Deloitte, 2020).
• In terms of IT budget, 80% of companies expect IT budgets to grow or stay steady over the next 12 months (SWZD, 2021).
• Even in these uncertain times, 56% of businesses are planning on updating outdated IT infrastructure, 45% will prioritize IT projects, and 39% will focus on addressing security concerns (SWZD, 2021). 
• Among the top drivers of overall cloud adoption are security and data protection (37%), data modernization (22%), and the cost and performance of IT operations (15%). (Deloitte, 2019) 
• A more recent research notes that companies leverage public cloud due to digital transformation (62%), IT agility (64%), AI/Machine Learning (66%), Mobility (59%), IoT (58%), and DevOps (57%). (Logic Monitor, 2020)
• Meanwhile, another study reported that other top motivators for the adoption of SaaS in companies include productivity increase and cost reduction (BetterCloud, 2020)

SaaS Sales and Marketing Statistics

Marketing, contrary to popular belief, is not a one-size-fits-all process. Companies market different products in different ways, and the same could be said of SaaS. Marketing something that undergoes constant changes and has really no physical attributes is both a challenging and daunting task. This is why SaaS companies make use of strategies such as handing out freebies. This is their way of proving their products’ worth and overall value to prospective clients. Likewise, there are SaaS lead generation best practices that businesses can adopt to grow their company. So how are SaaS businesses faring in the marketing area? Below are stats that reflect the current status of SaaS marketing.

• Field sales dominate for companies with median deals of over $50,000, while inside sales strategies were the most popular among companies with $1,000-$25,000 median deal sizes (Reply, 2019).
• $1.32 is the median cost to acquire $1 of annual recurring revenue for a new customer. This can drop to as much as $0.71 through upselling with existing customers (Key, 2020).
• SaaS companies invest 80-120% of their revenue in marketing and sales in the first five years of existence (BlueTree, 2019).
• 48% of businesses have an average of a one-year contract, 13% were month-to-month, while 11% had at least three years or more (Key, 2020).
• The most common average annual contract value is $25,000-$50,000 (19.42%), followed by $1,000-$5,000 (15.53%), and $50,000-$100,000 (13.35%) (Reply, 2019).
• Worldwide, the biggest functional markets for cloud SaaS apps are CRM (31.6%), HCM (14.7%), and ERP (8.4%) (Apps Run the World, 2016).
• 16% of new ACV sales for average SaaS companies come from upsells and expansions (BlueTree, 2019). 
• Less than 20% of new revenue comes from existing customers in the form of expansions and up-sells (BlueTree, 2019). 

SaaS Usage Statistics

Being an inexpensive and maintenance-free alternative to on-premise systems, SaaS has been steadily growing in popularity among many businesses. Proof of this is the fact that most enterprises have their operations running on cloud-based systems and plan on increasing spend allocation in 2021. This high adoption rate does not come as a surprise as SaaS is known for its unparalleled accessibility and pricing flexibility. Here are some of the latest statistics that prove the tremendous increase in SaaS use.

• When it comes to cloud initiatives, 73% of businesses plan to optimize their existing use of the cloud (Flexera, 2020).
• The SaaS expenditure per company has increased to 50% in 2020. (Blissfully, 2020)
• Among enterprises, 30% reported significantly higher than planned spending on cloud usage due to COVID-19 (Flexera, 2020). 
• 93% of enterprises say they have a multi-cloud strategy (Flexera, 2020).
• 47% of respondents said they anticipate growth in the next 12 months for public cloud spending (Flexera, 2020).
• Moreover, experts predict that 50% of enterprise software will run solely on the cloud by 2025.(Bessemer Venture Partners, 2020)
• The biggest challenges in using public cloud for business are security (66%), compliance (60%), lack of staff training/experience (58%), privacy (57%), vendor lock-in (47%), and cost (40%). (Logic Monitor, 2020).

SaaS and Business Statistics

It is undeniable that SaaS has changed the global business landscape. For companies, cloud computing proved to be a boon, allowing them to harness the power of automation without breaking the bank. Some have claimed that these platforms made their organizations more successful compared to other types of systems, while others have decided to embrace the technology fully. Small players have likewise been adopting useful SaaS solutions, which likewise have been providing proactive customer service, one of its more popular applications. 

While COVID-19 certainly had a negative impact on different sectors of the world economy, its impact on SaaS businesses was not as bad based on feedback from companies.

• 34% reported a moderate negative impact on their business budget, while 27% reported a greater negative impact, and 39% reported either a small negative impact or even a positive impact (Open View, 2020).
• Currently, companies use an average of 80 applications for their operations. (BetterCloud, 2020)
• 73% of organizations indicated that nearly all their apps will be SaaS by 2021 (BMC, 2020) 
• 84% of new SaaS customers from free trials are unique website visitors (Invesp, 2018).
• 86% of organizations said that they expected at least 80% of their software needs to be met by SaaS after 2022 (BlueTree, 2021). 
• Active trial users contacted by sales reps are 70% more likely to buy paid service (Invesp, 2018). 
• 137 – average unique SaaS apps used by companies in 2020—a 30% increase from 2018 (Blissfully, 2020). 
• Some of the applications that companies run solely on the public cloud include websites (55%), email (54%), communication systems (26%), mobile services (23%), CRM (21%), and productivity apps (16%). (SpiceWorks, 2019)

How SaaS Users & Companies Can Benefit From Statistics

The statistics listed in this article are not only meant for users. These SaaS market data can also be beneficial to SaaS companies that wish to boost their bottom lines and experience growth. If you are running a SaaS startup, you can adopt the sales and marketing strategies mentioned above. Also, considering factors such as churn rates, product usage, and pricing strategies can greatly benefit your company.

For SaaS end users, these SaaS research reports can walk you through the benefits of adopting these platforms and their potential applications. You can also consider the useful features that these apps have to offer and see if they fit your organization. Finally, knowing how these products are priced can fill you in on how much you should invest in them.

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By James Anthony

A senior FinancesOnline writer on SaaS and B2B topics, James Anthony passion is keeping abreast of the industry’s cutting-edge practices (other than writing personal blog posts on why Firefly needs to be renewed). He has written extensively on these two subjects, being a firm believer in SaaS to PaaS migration and how this inevitable transition would impact economies of scale. With reviews and analyses spanning a breadth of topics from software to learning models, James is one of FinancesOnline’s most creative resources on and off the office.