Bloomberg Businessweek has a chart with the sales and marketing costs as a percentage of revenue in the last 12 months for several notable public SaaS companies:
- Workday – 37%
- Salesforce.com – 49%
- ServiceNow – 50%
- NetSuite – 52%
- Marketo – 60%
- Box – 80%
https://twitter.com/guan/status/734536100027478017
A few thoughts:
- These companies clearly believe there is tremendous growth in the market, and investors are backing them up
- While it isn’t this simple, imagine cutting sales and marketing costs by 80% and many of these companies would be very profitable (another reason why it’s reasonable to value SaaS companies at 4 – 6x revenue)
- If these public SaaS companies with scale are spending 50%+ of their revenue on sales and marketing, imagine what the unicorn SaaS companies are spending as a percentage of revenue (hint: well over 100%)
Knowing this, it’s easy to see why Sales-Oriented Startup CEOs are preferred. The most successful SaaS companies are incredibly focused on sales.
What else? What are some more thoughts on sales and marketing as a percentage of revenue for SaaS companies?
David Cummings on Startups 
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