SaaS Growth Calculator
SaaS Growth Calculator
How to calculate your SaaS company's growth?
How to use the SaaS growth calculator
Before using the SaaS growth calculator, you need to know what the key terms mean:
SaaS growth calculator key terms:
- Current customer count: The total number of paying customers using your SaaS product at the start of the calculation period.
- New leads this month: Potential customers who have expressed interest in your service through sign-ups, inquiries, or other engagement methods.
- Monthly growth in new leads (%): The anticipated percentage increase in new leads compared to the previous month.
- Conversion rate from lead to customer (%): The ratio of leads that convert into paying customers, expressed as a percentage.
- Monthly revenue per user ($): The average amount of revenue you generate from a single customer in one month.
- Current monthly churn rate (%): The percentage of customers who stop using your service each month.
How to calculate your SaaS growth
- Input your current customer count
Enter the total number of paying customers you currently have. This is your baseline for calculating growth and future projections. - Add new leads for the month
Include the number of leads you've generated in the past month. Leads are potential customers who have shown interest in your product. - Specify monthly growth in new leads (%)
Provide the expected percentage growth in leads for the upcoming months. For instance, if you anticipate generating 10% more leads next month, input "10". - Set the conversion rate from lead to customer (%)
Conversion rate is the percentage of leads that turn into paying customers. For example, if 5 out of 100 leads become customers, your conversion rate is 5%. - Enter monthly revenue per user ($)
Calculate the average revenue each customer brings in every month. If most customers pay a subscription fee of $100 monthly, this value is "100". - Input current monthly churn rate (%)
Churn rate represents the percentage of customers you lose each month. A churn rate of 2% means that out of 100 customers, 2 will stop using your service monthly. - Click "calculate"
The calculator will process your inputs and generate a visual forecast of your revenue growth over the next 36 months. You'll see metrics such as total customers, monthly revenue, and Annual Recurring Revenue (ARR).
What is revenue growth for SaaS?
Revenue growth is a percentage that shows how much your company’s revenue increases over a specific period, usually a year or a quarter. For SaaS businesses, it’s a critical metric for attracting SaaS funding because it highlights both financial health and growth potential.
It’s a key indicator of success, showing how efficient your sales strategies, pricing models, and customer retention efforts have been. Therefore, elements that contribute to SaaS revenue growth include customer acquisition, expansion revenue, reducing churn, and increasing monthly revenue per user (MRR).
What is a good revenue growth ratio?
There isn’t a universal “ideal” revenue growth rate for all SaaS companies. The optimal rate depends on various factors, such as the industry and the company’s stage of growth. For example, small and early stage companies can usually achieve higher growth rates compared to more established ones.
Research from Bessemer shows that companies with Annual Recurring Revenue (ARR) between $1 million and $10 million can hit revenue growth rates as high as 200%. However, larger organizations with ARR exceeding $100 million tend to grow at a steadier pace, averaging around 60%. Across all stages of growth, the average year-over-year (YoY) revenue growth rate is approximately 70%.
Other revenue growth terms to know
Here are a few more terms related to revenue growth that will give you a better understanding of the subject.
Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue is the predictable income your business generates each month from subscriptions. It’s a vital metric for assessing financial stability and forecasting future growth. You can work it out manually or use a monthly recurring revenue calculator to simplify the process.
Customer Lifetime Value (CLV)
Customer lifetime value estimates the total revenue a customer will generate over their relationship with your business. A higher CLV often indicates strong customer loyalty and efficient monetization strategies.
Churn rate
Churn rate measures the percentage of customers who cancel their subscriptions during a given time period. Reducing churn is crucial for maintaining steady revenue and minimizing customer acquisition costs.
Customer Acquisition Cost (CAC)
Customer acquisition cost is the average expense incurred to acquire a new customer. This metric helps SaaS companies evaluate the efficiency of their marketing and sales strategies.
Annual Recurring Revenue (ARR)
Annual recurring revenue, or revenue run rate, represents the total recurring revenue your business expects to earn in a year. It’s a key indicator for long-term financial performance and growth potential.
Sign-up rate
Sign-up rate tracks the percentage of users who convert from website visitors (or the offline equivalent) to registered accounts. This metric reflects the effectiveness of your website or product’s user journey in attracting new customers.
Ways to improve your SaaS revenue growth
Now you know what SaaS revenue growth is, let’s look into the juicy part of how to hit those high ratios.
Reduce churn rate
Reducing churn starts with understanding why customers leave. Use feedback and data analytics to identify pain points, then get proactive by offering enhanced support, product education, and value-added features to keep your users engaged.
Optimize lead qualification process
Refining your lead qualification process keeps your sales team working with prospects who have the highest potential. Use data-driven scoring models and consistent criteria to identify high-quality leads, improving conversion rates and resource efficiency.
Access non-dilutive capital
Non-dilutive funding provides SaaS companies with fast access to capital, enabling them to fuel revenue growth without giving up equity. By partnering with companies like Efficient Capital Labs, startups can access funding in as little as three days and immediately invest in critical growth drivers such as expanding sales teams, scaling marketing campaigns, or enhancing product offerings. These targeted investments can accelerate customer acquisition, boost subscription renewals, and increase overall ARR.
ECL’s non-dilutive funding model also allows you to retain full ownership and control over your business strategy, ensuring decisions align with long-term revenue goals. By extending your operational runway, this funding gives you the flexibility to focus on sustainable growth and meet key revenue milestones faster. With the ability to reinvest cash flows efficiently, non-dilutive funding empowers SaaS companies to scale quickly, outperform competitors, and maximize their revenue potential.
FAQs about SaaS growth
Here are answers to some of the most common questions about sustainable success in SaaS.
What is good growth for a SaaS company?
Good growth for a SaaS company varies by size and stage, but annual growth rates of 20% to 40% are considered healthy for established companies. For early-stage businesses, growth rates can be much higher, often exceeding 100% in their first few years.
What is the rule of 40 in SaaS growth?
The rule of 40 is a benchmark used to assess SaaS business performance. It states that a company’s revenue growth rate plus its profit margin should equal or exceed 40%, highlighting a balance between growth and profitability.
What is the ideal SaaS churn rate?
An ideal churn rate for SaaS companies is around 3% or lower annually for enterprise-focused businesses; anything above 8% is a major cause for concern. For smaller or consumer-facing SaaS companies, keeping monthly churn below 2% is a good target. Just as there are many factors that contribute to churn, there are a range of strategies for keeping churn low, such as proactive support, value-added features, and analysis of why churn occurs.