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%
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?
2 thoughts on “Sales and Marketing as a Percentage of Sales, for Public SaaS Companies”
Great Insight David! This is very helpful when planning the deployment of resources short and long term.
Thanks for this! Indeed will be helpful to those who are just planning on whose SaaS to invest on or for those who are looking for something better than their old one. I have been long aware of Salesforce and NetSuite and they really are great SaaS providers. Also a bonus point is that they are being assisted by a SaaS support team (Lirik – http://lirik.io/) consisting of SaaS experts which in turn makes SaaS users’ experience wonderful and maximized!