The Softletter SaaS Report


Special Promotional Offer

Purchase The Softletter SaaS Report and receive one copy of the just released The Softletter Company and Product Positioning Workbook for High-Technology and SaaS Entrepreneur: The Definitive Guide to Succeeding in Your Cloud Application Business.

A savings of $100 if purchased separately.


Published by: Softletter

Pages: 372

Edition: Sixth, updated August, 2018

Charts and tables: 700+

Format: Downloadable PDF only

Price: $599

The Softletter SaaS Report is the industry’s most comprehensive strategic benchmark resource for companies planning to grow and succeed in Software as a Service. Detailed analyses backed by over 700 tables and graphs provide unparalleled insight into the business dynamics driving SaaS and the programs and tactics you need to create and execute to ensure your company grows and expands in an increasingly competitive business environment.

First introduced in 2006, the latest edition of The Softletter SaaS Report contains almost 400 pages of invaluable data on SaaS. The Report is the benchmarks standard for technology providers who need to track best practices, develop actionable metrics, and build their firm’s revenues and operations. The information in the report is unique and provides insights and hard data available from no other industry source.

If your company is introducing a SaaS product, establishing a new SaaS business unit or division, or transitioning to the cloud, The Softletter SaaS Report is a required presence in your strategic business operations toolkit.

This report includes the most extensive benchmarking data available in the SaaS market today. Jeff Kaplan, Managing Director of THINKstrategies, Inc. and the SaaS Showplace


  • Revenue performance
  • Trial and freemium conversion rates
  • Churn and renewal rates
  • Adoption of multi-tenancy
  • Security standards
  • Uptime guarantees
  • Use of open source
  • Pricing models
  • Marketing and sales ratios
  • Discounting
  • SaaS channels

and much more.


  • The SaaS Report is the most cost effective source of key metrics and benchmarks on how and what makes SaaS tick. Without its invaluable metrics, you won’t be prepared to execute best practices
  • The SaaS Report provides hard data unavailable from any other resource. It will help you judge and improve the performance of your operations including R&D, sales, and marketing.
  • Softletter has been tracking the SaaS business model for longer than any other research firm, regardless of size. We released our first SaaS Report in October of 2006, years before any other firm. Softletter sponsored the industry’s first SaaS conference in 2007 (San Jose) and Softletter editor Merrill R. (Rick) Chapman is the author of SaaS Entrepreneur: The Definitive Guide to Succeeding in Your Cloud Application Business.

Two Invaluable Bonuses Included with Your Purchase

The Softletter Company and Product Positioning Workbook for High-Technology 

The Softletter Company and Product Positioning Workbook for High-Technology is the industry’s only comprehensive strategic resource for properly positioning your software or hardware product.  Positioning is one of marketing’s most familiar buzzwords, but despite all the attention given to the topic, few useful tools exist to ensure software companies successfully execute this vital task.The Softletter Company and Product Positioning Workbook for High-Technoloy

The Softletter Company and Product Positioning Workbook for High-Technology fills this void. It provides the most advanced and field-tested system for clearly, logically, and effectively positioning your products and your company. When you are done working through its easy-to-understand, yet detailed process, you’ll be able to create positioning statements and strategies for your product and company that tells sales prospects what your product does and why they should consider buying it.

Nothing like The Softletter Company and Product Positioning Workbook for High-Technology exists anywhere else. It’s backed up and based on Softletter Managing EditorRick Chapman’s extensive experience on the topic. He’s experienced first hand the havoc that poor positioning has wreaked on high-technology firms such as Microsoft, Workday, LivePerson, MicroPro and many, many others. His work consulting with companies on how to avoid catastrophes such as Windows 8 and Amazon’s FirePhone has saved firms millions.

Included with the Workbook are:

  • A detailed workflow and narrative that uses actual company examples to illustrate good and bad positioning
  • Twenty editable charts and tables.
  • Extensive editable Goals and Success checklists

If purchased separately, $49.99

Also Included:

SaaS Entrepreneur: The Definitive Guide to Succeeding in Your Cloud Application Business, Second Edition 

SaaS Entrepreneur, Second Edition: The Definitive Guide to Succeeding in Your Cloud Application Business is the most comprehensive guide you will find to understanding and succeeding in building SaaS (Software as a Service) businesses and services. Its case studies, operations analyses and timely data provide critical insights and information that will help you build and grow a successful new SaaS business. Its focus is on those areas of community and product management, sales, marketing, compensation, customer service, and operations and infrastructure where SaaS B2B companies sharply diverge from their on-premise counterparts.

The Second Edition incorporates updated key and critical numbers and benchmarks from Softletter’s SaaS Survey and reports, new information on Generation Z, developing for the portable workspace and transparent cloud, new case studies and much more.

SaaS Entrepreneur’s narratives and case studies are backed up by more than 650 Goals and Success checklists contained on The SaaS Entrepreneur Virtual DVD. These checklists are in Excel files and are color coded, indented, and commented for easy organization and use. They are not locked in any way and can be extended to fit your particular market and business challenges.

If purchased separately, $49.99

Prepare Your Business for 2019 with The Softletter SaaS Report

SaaS has evolved from an outlier to the industry’s dominant model. More companies are entering the market every day and once sleepy niches are filling up with new competitors. To help maximize your chances for success, you need The Softletter SaaS Report’s timely information and insights to help spot opportunities and thrive and grow in today’s hyper-competitive markets.

The Corporate Strategy team at Motorola Solutions uses the report to provide us guidance in our plans as we incubate a new software business. The metrics are very helpful in providing guidance vis a vis our current and future investment levels in sales and marketing, R&D, etc., Anthony Bigornia, Senior Director, Corporate Strategy, Motorola Solutions, Inc.

The Softletter SaaS Report is an invaluable resource. I was able to find information about SaaS and business trends that I couldn’t find in any other publication or on any website. The information on freemium and trial access trends and the cross tabs were critical in guiding us on our monetization strategy. Mitch Russo, CEO, PowerTribes, former COO of Sage

Read Complete Table of Contents

Introduction and Methodologies

Report Highlights and Observations 13

Company Profiles and Demographics 15

Development stage of your company? 16
Current gross revenue? 18
For how many years has your company been selling SaaS systems? 20
What is the primary industry you target? 24
What is the primary type of SaaS system that you sell? 25
How many companies subscribe to your SaaS system? (We understand that within a company, you may have multiple subscribers who use and access the software. Please tell us only the number of companies who have subscribed to your system; the next question will ask about the total number of individuals who access your system). 27
How many people accessed and used your SaaS system over the last 12 months? 28
Does your SaaS system incorporate a physical component that captures and aggregates data within your service? (Examples of this include asset tracking devices, “smart bandages,” body sensors, remote drone managers, etc.) 29
What is your primary market for your SaaS product? 30
What is your primary geographic market? 34

SaaS Revenues, Pricing, Upgrades and Installation 39

Did your company’s SaaS revenues grow from this period in 2010 to this period in 2011? * 41
By what percentage did your revenues grow? 44
What percentage of your revenues come from international markets? 49
Is your SaaS company or business unit profitable? 53

Functionality and Updates 59

Does your SaaS product offer more than one level of functionality? 60
How many functionality levels do you offer? 63
How often do you release a “major update” of your SaaS product to your customers? (A “major update” is defined as including significant new features and functionality, not just incremental improvements and bug fixes) 67
Do you charge for major new product capabilities when they are introduced? 71
Do you offer a “freemium” version of your SaaS system? 77
Over the last 12 months, what percentage of your freemium subscribers converted over to any paid version of your SaaS system? 82
Based on paid conversions from freemium versions, approximately how much do you charge per seat for your SaaS systems per month? (Please provide a monthly cost even if you have signed the customer to a subscription agreement that spans X period of time) 85
Do you offer trial access to your SaaS software? (Trial access is defined in this survey as the process of allowing a potential subscriber or company to have complete access and usage to at least a basic version of your software that’s completely functional. We do not define trial access as a system that cripples the SaaS software in some critical way, such as preventing the user of the system from storing records or marking the output of the system or labeling it in such a way that the system could not be used for commercial purposes.) 89
Do you allow visitors to your SaaS site to sign up for trial access to your SaaS system without first speaking to a sales or marketing person in your organization? 92
Over the last 12 months, please tell us what % of your trial access prospects converted to a paid version(s) of your SaaS product? 93
If the trial period ends without a conversion to sales: 96

Pricing and Subscription Models 97

Do you price your SaaS system on the basis of (please pick 98
your PRIMARY method): 98
Based on concurrent seats, what is the average size of your typical initial sale in seats? 102
Based on concurrent seats, approximately how much do you charge per seat for your SaaS software per month? (Please provide a monthly cost even if you have signed the customer to a subscription agreement that spans X period of time) 107
Based on named subscribers, what is the average size of your typical initial sale in paid subscribers? 112
Based on named subscribers, how many ADDITIONAL seats do you typically sell to the customer during the twelve months after the initial sale? 117
Based on named subscribers, approximately how much do you charge for your SaaS software per month? (Please provide a monthly cost even if you have signed the customer to a subscription agreement that spans X period of time) 121
What is your most popular subscription length option? 124
Please check all the subscription options you offer your customers 128

Discounting and Pricing Methodologies 129

Do You Offer Discounts to Customers Who Sign Quarterly, Yearly or Multi-Year Contracts? 130
Based on offering quarterly contract length discounts, what percentage discount do you typically offer over your monthly subscription pricing? 134
Based on offering yearly contract length discounts, what percentage discount do you typically offer over your monthly subscription pricing? 135
Based on offering multi-year contract length discounts, assuming a two year or more contract, what percentage discount do you typically offer over your monthly or yearly subscription pricing? 138
Do you have different pricing and subscription models for each country you do business in? 140
Do you typically create custom contracts for new customers or sign them up using standardized contracts? 141
Do you publish your pricing schedule on your website? 143
Do you allow your customers the option of installing your SaaS software behind their own firewall (on their servers, the licensed model) rather than on your servers? 144
What percentage of your customers choose the option of installing your SaaS software behind their own firewall rather than on your servers? 148

SaaS Resubscription Metrics 151

On a per annum basis, what percentage of your SaaS customer base resubscribes? 152
On a per annum basis, what is the revenue renewal rate of your SaaS customer base? As a simplified example, if you entered the year with 10 customers paying $1M, what were the revenues generated by those customers at year’s end? If the revenue generated was $1.1M, that represents a 110% renewal rate or 10% gain. If the number is $900k, that represents a 90% renewal rate (or a 10% revenue loss/churn). Your answer to this question will help us understand how SaaS companies are managing the overall revenue value of their customer base 156

Product Architecture and R&D 161

Does your company implement “Agile” methodologies in its R&D? 162
What is the principal Agile methodology used by your development group? 166
Please tell us the primary business advantage of using Agile methodologies in your development cycle 167
Where does your SaaS client (the interface or “area” of the product with which a subscriber interacts) component execute? 168
Do you provide third parties with a documented API for your system? 169
Does your SaaS product incorporate Open Source software? 174
Have you developed a “smartphone” mobile application interface for your SaaS system? 177
Which of the following best describes your SaaS software architecture? 179
How was your SaaS multi-tenancy architecture primarily implemented? 181
Please tell us the primary reason you have not implemented a multi-tenanted architecture in your SaaS system 182
Is the primary development of your SaaS product done by an outsource (a third-party firm or firms hired for this specific task)? 183
Are you developing a SaaS product on top of a “full SaaS stack” third-party platform (PaaS) such as Force (, Servoy, NetSuite’s SuiteFlex or similar system? (Softletter defines a “full stack” SaaS product as one in which the vendor supplies most, if not all, of the underlying infrastructure and middleware required to run a SaaS application. For example, a full stack SaaS development platform typically supplies the underlying hardware, database, and middleware an application needs to run in an online environment, in addition to the programming language/tools required to build a user interface and business logic.) 186
Please tell us the primary reason you have not developed an application in a PaaS platform 190

SaaS Infrastructure Models 191

Do you maintain your own hardware/software infrastructure (personnel, servers, storage, security, software, etc.) for your SaaS system in-house? Or do you outsource your infrastructure operations? For the purposes of this survey, colocation, where you own servers stored at an offsite location, is regarded as an in-house infrastructure model. Using Cloud-based infrastructure services such as Amazon’s AWS, Microsoft Azure, and others is counted as an outsource. 192
What percentage of your gross SaaS revenues do you spend on maintaining your SaaS hardware/software infrastructure either internally or externally? (Please include the cost of all hardware and software such as servers, routers, backup hardware, cost of your server OS, web server software, security monitoring systems, etc. Please also include the salaries of the personnel required to manage your infrastructure, including any security personnel costs, whether in-house or third party. For example, if your total revenues over the last 12 months were $1m and you spent $100k on your infrastructure costs, you spent 10% of overall revenues) 196
What type of outsource model do you use? 199
Is your infrastructure company SSAE 16 certified? 203
Is your infrastructure provider ISO 27001 certified? 204
Please tell us the name of the primary Cloud infrastructure provider you are using 205
What baseline percentage of uptime do you guarantee your customers? (All percentages assume 24/7/52 availability and also assume they have not contracted for additional or premium uptime service levels) 207

SaaS Security, Standards and Audits 211

Has your firm undergone a SAS 70 (SAAE 16) audit? 212
Are your internal or external billing systems PCI compliant? 217
SaaS Escrow and Fallover 219
Does your company provide an escrow option for your customers in the event of a major service interruption or your company going out of business? 220
Does your company provide a complete fallover (“failover”) guarantee in the event your company goes out of business? (A failover guarantee means a third party will take over operations, maintenance and provisioning of your system for X period of time until you can migrate your data and business processes out of the current SaaS application or until another entity can be found to maintain operation of the system) 222
How is your fallover provision delivered? 223
What percentage of your customers or potential customers require you provide an escrow or fallover service as a condition of conducting business? 224

SaaS Regular and Alternate Reseller Channels 225

Do you have a recommender program for your SaaS product? (A recommender program pays an individual or company of record who recommends, but does not resell, your product) 226
How much do you pay recommenders of record for subscription sales. (Please provide a % figure based on the value of the initial subscriptions for the first 12 months of the subscription period even if you pay a fixed fee to the recommender; this will allow us to establish a baseline figure) 231
Do you resell your SaaS product via an affiliate-label reseller program? (An affiliate label program allows other companies to resell your software, usually from a link on your website. Affiliate resellers are normally automatically paid via an affiliate management system such as SaaS Max. In an affiliate sale, your company normally “owns” the customer in terms of company contacts and future business) 233
Do you resell your SaaS product via an aggregator? (An aggregator assembles a laundry list of SaaS applications for resale to their customer base) 238
Do you resell your SaaS product on an OEM basis? (In an OEM sale, your product is directly incorporated into another application. Your product’s core functionality can be altered to meet the OEM purchaser’s requirements and your corporate and brand identity, with the exception of licensing information, set aside in favor of those of the OEM customer’s product and services) 243
Are you reselling your SaaS product via a distributor? (A distributor, such as Ingram or TechData, normally resells your product in turn to its resellers) 246
Are you reselling your SaaS product via VARs (value added resellers)? 247
How many VARs do you have? 251
Does your VAR reseller program provide a branding option? (A branding option keeps your product identity intact but also incorporates the reseller’s logo and company information into the SaaS system’s initial login and/or operating screens) 254
Do you require your VAR resellers to undergo a training and certification program? 255
Do your VAR resellers offer professional services? 256
Over the last 12 months, what percentage of your total gross SaaS revenues did your VAR channel generate? 257

SaaS Sales Metrics 260

What is your primary means of selling your SaaS product? 261
What is your most important secondary means of selling your SaaS product? 265
Please tell us what percentage of your overall gross revenues are spent on your SaaS sales activities. (Please do not include the cost of marketing programs such as print advertising, website advertising, E-mail and snail mail campaigns, search engine optimization, social bookmarking and related programs. Also please do not include the salaries of marketing, marcom and product/community management personnel.) 269

SaaS Marketing Metrics 270

What do you believe is the primary reason your customers choose to subscribe to a SaaS system? 271
What do you believe is the main secondary reason your customers choose a SaaS system? 276
Please tell us the primary concern about subscribing to your SaaS system raised during the sales cycle by potential subscribers 281
Please tell us the main secondary concern about subscribing to your SaaS system raised during the sales cycle by potential subscribers 287
Please tell us what percentage of your overall gross SaaS revenues are spent on your SaaS marketing activities. (Please do not include sales salaries, expenditures for sales support software such as contact management/CRM, sales pipeline management, sales training, internal sales incentive programs and similar activities or costs) 288

SaaS Customer Service 289

Please tell us what levels of free support you offer your customers. (Please pick all that apply.) 290
Do you offer paid support programs? 291
Please tell us how many levels of paid support you provide your customers. (Please pick all that apply) 296
Please tell how your structure your customer support department in terms of personnel who provide customer assistance and service. (Please pick all that apply) 300
Please tell us what customer service metrics you track. (Please pick all that apply) 304

SaaS Initial Deployment and Professional Services 308

How do you charge for initial deployment services (these include training, application testing, and deployment)? 309
What percentage of your average initial SaaS sales revenue is derived from initial deployment services? For example, if the initial sale generates $1000, and the customer purchases $100 in basic training services, the percentage would be 10% 314
Do you have a professional services group? 316
What percentage of an average sale over 12 months of your SaaS system can be attributed to revenue generated by your professional services? (For example, if an average sale generates $1,000 in recurring revenue over 12 months and your customers typically purchase $3000 in advanced application training, the amount would be 25% ($12,000/$3,000). Please add all professional service options that you provide into this number) 321
Over the last 12 months, what was the highest percentage of a sale generated by your professional services organization? 326
What are your plans for your professional service group? 331

Community and Product Management in SaaS 337

Does your company employ product managers? 338
Does your company employ community managers? (In a SaaS company, community managers are responsible for creating and managing a SaaS community of customers and potential customers. Tasks associated with this responsibility can include transmitting customer requests for new capabilities to development, providing detailed reports on customer satisfaction with the company’s products and services to management, creating promotions and cross- and up-sells to the customer base, and leveraging the customer community to lower support costs) 342
Please describe the role of community managers at your organization 346
What activities do community managers carry out in your company? (Please pick all that apply) 348
Integrated Requirements Management, Analytics and Communities 349
Does your product incorporate a “new features or capabilities” requirements request mechanism by customers directly within the SaaS application environment? 350
How are you implementing your requirements management system? 354
Does your product system incorporate a customer community management system directly within the SaaS application environment? (By “within” we mean the customer can access the community from within the SaaS system via either direct access to an integrated community module or a direct link to a third party module) 356
How are you implementing your customer community management system? 359
What customer community activities are supported and/or active on your community management system? (Please pick all that apply) 361
Does your product incorporate a customer usage tracking analytic system directly within the SaaS application environment? 362
What type of analytics does your measurement system provide? (Please pick all that apply) 365
How are you implementing your analytics management system? 366

Further Important Reading for SaaS and Software Companies Softletter, $399 per year, two online issues per month along with special financial coverage and metrics 368

Purchase The Softletter SaaS Report


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