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General SaaS

60+ SaaS Facts, Statistics & Trends for 2023

Rashi Jaitly
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October 25, 2022
60+ SaaS Facts, Statistics & Trends for 2023

Software as a Service, or SaaS, has taken the world by storm. No industry is left untouched; from tech to healthcare, SaaS has become integral to most business operations. 

But there is nothing more satisfying than seeing its growth through numbers. As a SaaS SEO and link building agency, we looked at 50+ reports (not kidding) to uncover the most interesting findings about SaaS growth, usage, market, pricing, trends, views, and challenges. 

We are sure you will not find these latest stats anywhere else. 

So, let's get started. 

What We'll Cover:

Top SaaS Statistics - Editors Pick

  • Organizations use an average of 110 SaaS tools [5] 
  • The SaaS market is growing 20.6% YoY [1]
  • The SaaS reached $152 Billion in end-user spending as of 2021 [26]
  • The global SaaS market is estimated to reach $223.7 Billion by 2022 [1]
  • SaaS market size is expected to hit $716.52 billion by 2028  [26]
  • 93% of software that businesses use is SaaS in 2022 [6]

Growth Statistics for SaaS

The SaaS industry is seeing unprecedented growth because of the increasing use of automation over traditional methods. Many businesses are transitioning to becoming entirely SaaS-based, which leads to higher SaaS demand and a higher rate of return. Let's look at the widespread success of SaaS and its future in the coming years. 

  • The global SaaS market is estimated to reach USD 223.7 billion by 2022 and over USD 571.9 billion by 2027, with a compound annual growth rate (CAGR) of 20.6% during 2022-2027. [1]
  • The banking, financial services, and insurance (BFSI) sector of the global SaaS market is expected to reach USD 54.4 billion by 2022 and over USD 130.7 billion by 2027, with a CAGR of 19.2% during 2022-2027. [1]
  • The retail and e-commerce sector of the global SaaS market should reach USD 48.1 billion by 2022 and 138.9 billion by 2027, with a CAGR of 23.6% during 2022-2027. [1]
  • The global SaaS market represents 0.15% of the world economy and 2% of Fortune 500 companies' total revenue. [2]
  • Best cloud companies will turn USD 1 investment into USD 18 in just a year. That's why cloud-model businesses are often valued 10-20x their annual revenue in recent markets. [3]
  • Companies like Datadog, Zoom, Digital Ocean Shopify, Adobe, and Atlassian will generate 100% IRR in 2021. [3]
  • The biggest investment of 2022 was made in fintech, CRM, business management, eCommerce, etc. [4]
  • More SaaS companies funded their growth since last year (43% in 2021 vs. 30% in 2020). Use of funding from debt financing (up by 2%), venture capture sources (up 3%), while angel investors (down 8%) and bank loans (down 7%) dropped. [5]
  • Businesses that use an average of 212 SaaS apps are 93% powered on SaaS software. Workspaces in transition that use 79 average number of SaaS apps are 55% SaaS-based. Lastly, traditional workspaces that use 39 average SaaS tools are 8% SaaS-focused. [6]

Usage statistics for SaaS 

To stay organized and automated, many companies are planning to increase their SaaS app usage. These sets of statistics will detail SaaS adoption and usage across the organization.

Let's discuss them in detail:

  • The enterprise software segment dominated the SaaS market and accounted for 70% of its revenue. This growth is directly related to the rising trend toward cloud deployment among small and medium businesses. [6]
  • The productivity software segment will also grow by 10.6% CAGR from 2022 to 2028. This is mainly because businesses are going office-less and relying on productivity applications. [6]
  • A survey of 100 technology executives says that 64% of people plan to deploy a SaaS management tool in the next two years. [7]
  • The number of SaaS apps used per organization continues to grow from just 8 in 2015 to 110 in 2021. That's a 38% growth in numbers compared to last year and a 1275% increase since 1275% [5]
  • The number of SaaS apps used also depends on the company's size. An enterprise with less than 750 employees uses 59 SaaS tools compared with 447 apps used by a large company. [5]

Market statistics for SaaS 

China, the United States, and India are amongst the nations with the highest number of SaaS companies and extreme potential to grow their SaaS markets. These stats will discuss their SaaS market in detail.

China

  • China is home to over 300 unicorns valued at USD 1 billion. The country is eyeing SaaS and cloud to fuel its market. It has more than 42 SaaS companies that exceed USD 15M ARR. [3]
  • China has the highest cloud spend growth rate in the world at 45% [3]
  • The government is set to invest USD 1.6 trillion through 2025 for developing next-generation technologies AI, 5G, cloud, etc. [3]
  • China produces innovative products that capitalize on supply chain advantage and B2B-B2C distribution channels. It has some of the world's super apps like Tiktok (>600M), WeChat (>1.2B MAU), and DingTalk (>220 MAU) [3]
  • WeChat has already connected more than 10 million businesses with over 500 million users. [3]
  • Reports say that China is set to experience a SaaS boom in the coming years as venture deals rose by 56% bringing USD55 billion as an investment. [8]

US

  • Investment in US SaaS startups has been consistently growing since over a decade. We saw a 150% growth in capital invested, driven by series C and late-stage VC deals that increased by over 64% and 73%, respectively. [9]
  • Deal sizes in US SaaS continue to climb with 2021, recorded the highest number of 260 deals greater than USD 100 million which is 3x last year and 7x times since 2015. [9]
  • The US SaaS company, Databricks raised over a billion dollars twice a year. [9]
  • There are a total of 25000 SaaS companies, out of which 17000 are in the US, accounting for 60% of the total SaaS companies. [10]

India 

  • India has over 1150 active firms driving a total revenue of 8billion in 2021. [11]
  • India's cloud companies offer faster payback cycles and the ability to make over USD 100M ARR with less than USD 100M in equity. [12]
  • The market size of India's SaaS is valued at USD 8.2 billion in 2021, which is estimated to reach USD 73.4billion (in current growth rate) and USD 116.4 billion (in aggressive growth rate) [12]
  • India's healthtech is estimated to reach USD 3.5 billion by 2025, growing at a whooping CAGR of 45%. [13]

Pricing statistics for SaaS 

SaaS companies are playing with various pricing models to impress their customers into buying more.

Let's see what pricing methods they're adopting:

  • Research shows that B2B SaaS companies prefer sales-negotiated pricing (44% of companies) the most, after fixed pricing (34%) and variable pricing (24%). [14]
  • However, 64% of businesses are still exploring new pricing options in 2022. [14]
  • Usage-based pricing is also going mainstream, with 45% of companies using them, which is twice its adoption rate in 4 years. It is now expected to reach 56% in 2023. [15]
  • 24% of companies adopting a usage-based pricing model have implemented it in the last 12 years. [15]
  • Research says that 82% of SaaS companies list their actual prices, 48% offer a free plan, 40% offer an annual discount, and 16% contain a cost calculator. [16]
  • Subscription plans for best-in-class SaaS companies are far from simple. Some of them offer upto 23 plans; the average plan is 4. [16]
  • 46% of SaaS companies use multiple pricing pages separated by market segment or service type. [16]
  • 38% of SaaS product pricing pages localize for language, 20% for currency, and 44% for language and currency selectors. [16]
  • 36% of SaaS companies included logos from customers' pages, and 30% included on-page testimonials on their pricing page. [16]
  • 74% of SaaS companies include FAQs, 20% include "cancel anytime," and 6% add a link to refund policy on their pricing page. [16]
  • 78% of SaaS companies follow product-led growth strategies by offering potential customers free plans or trial periods. [16]

Trends for SaaS

These statistics discover new 2022 SaaS trends that you should definitely watch out for:

  • Unicorn is now overhyped. From 2020 to 2021, we have seen a 120% increase in unicorns. 1.½ unicorns are minted every day; in fact, 520 unicorns were minted last year alone. [3]
  • 2022 will be the year of Centaur. The Centaur refers to a business that has reached USD100 million in Annual Recurring Revenue (ARR). Out of 520 unicorn SaaS companies recognized in 2021, only 60 achieved the Centaur status. [3]
  • Centaurs are said to be 7x times rarer than unicorns. Till now, we have identified only 150 private centaurs, and the number is expected to reach 220 by 2022. [3]
  • Rule of 40 and Net Revenue Retention rate is the top metric for CEOs and investors to estimate growth potential. [17]
  • Customer success is least likely to receive department cuts from SaaS companies. [17]
  • Fast implementation and lower cost are why businesses are moving their ERP (Enterprise Resource Planning) solutions to the cloud. A 28% YOY increase with searched ERP solutions up 243% YOY. [18]
  • Searches for "compliance management system" are up by 3,671% YOY. Since Feb 2022, it has grown from 480 searches per month to 20k searches a month. [18]
  • Marketing automation is mainstream. Searches for "marketing intelligence tools' 'are up by 2300% YOY. [18]
  • The migration to the cloud is at an all-time high and is estimated to reach USD 2.8T by 2025. [19]
  • There is an increased opportunity for a vertically-focused SaaS solution. Businesses are looking for SaaS solutions that directly target users' pain points. In 2021 alone, a total of 20 vertical SaaS unicorns. [20]

Views and opinions for SaaS 

Everyone has something to say about SaaS; let's see some of the most popular and recent opinions that you should look for:

  • Most SaaS organization review their customer retention metrics weekly (38%) and monthly (33%) [21]
  • 49% of B2B Saas companies have seen no difference in their churn rate because of the pandemic. Only 35% of them feel it is slightly higher than normal. [21]
  • Most SaaS companies keep growth as their financial goal for 2021, whereas in 2020, they were looking to reduce churn, maintain operations, extend the runway and attract additional investors. [22]
  • Compared to 2020, fewer companies could achieve their financial goals (down 15%) in 2021. [22]
  • About 91% of SaaS professionals say financial alignment with marketing, SaaS, and customer success is crucial for growth. [23]

Challenges for SaaS 

SaaS businesses have to deal with security issues and inefficient operations, among other problems, in order to do well in the market.

These statistics will help you understand those SaaS challenges in detail:

  • SaaS configurations are a reason for growing security incidents. 43% of SaaS providers have dealt with security incidents because of misconfiguration. The major cause for this is lack of visibility (35%), multiple departments with access (34%), lack of SaaS security knowledge (22%), and misappropriated user permissions (8%). [24]
  • Lack of visibility in your SaaS organization leads to underutilized or unused SaaS app licenses. Nearly 1/3rd of your SaaS can get wasted; this can mean hundreds, thousands, or even millions of dollars, according to the size of your company. [5]
  • Lack of investment in security tools is leaving organizations exposed. Last year, we saw an 81% increase in investment for business-critical SaaS applications, but fewer organizations invested in security tools(81%) and staff (55%). [24]
  • Only 18% of IT organizations regularly monitor their SaaS environments to ensure no confidential data is leaked. [5]
  • Most SaaS organizations say that offboarding is a tedious task that can take up to 7 hours/per user. The hardest department to offboard is engineering, followed by operations, sales, and finance. [5]
  • Third-party access (56%) is a top concern when adopting SaaS applications. The least is an insufficient amount of SaaS security staff (32%), which explains why SaaS businesses face such high-security threats. [24]
  • SaaS businesses are behind in the hiring process. Mainly because most people now want to work remotely. Only 11% of new hires expect to work full-time in person, 70% want to work remotely, and 19% partially remote. [25]

Reference resources

  1. Software as a Service Market: Technologies and Global Markets (BCC Research)
  2. How Big is the SaaS Market in 2022 (Call Me Fred)
  3. State of the Cloud 2022 (BVP)
  4. SaaS Companies that Got Funded in 2022 (Software Suggest
  5. State of SaaSOps (Better Cloud
  6. GVR Report coverSaaS Market Size, Share & Trends Report (Grand View Research
  7. 2022 SaaS Visibility and Impact Report (ToriiHQ)
  8. China Is Set To Experience SaaS Boom With Infobird Leading The Charge (The Software Report)
  9. State of SaaS (March 2022) (SVB)
  10. Leading software as a service (SaaS) countries worldwide in 2022, by number of companies (Statista)
  11. India SaaS Punching Through The Global Pecking Order 2022 (Zinnov)
  12. Indian SaaS sector to clock USD 100 bn revenue by 2026: Chiratae-Zinnov study-(Business Standard)
  13. Healthcare SaaS Set To Grow Fastest Within Healthtech At 45% CAGR (Inc42)
  14. 2022 B2B SaaS Trends- (SaaSoptics)
  15. THE 2021 STATE OF USAGE-BASED PRICING REPORT (OpenView)
  16. SaaS Pricing (2022 Report) (FastSpring)
  17. SaaS Market Report 2022-(GainInsight)
  18. B2B SaaS Market Leaders & Tech Trends 2022 (Conductor)
  19. State of SaaS (March 2022) (Svb)
  20. State of Vertical SaaS 2021 (fractal)
  21. THE STATE OF CUSTOMER RETENTION (Docsend)
  22. 2022 SaaS Industry Report (RiverSaaSCapital)
  23. 2022 SaaS Performance Reporting Benchmarks (Revopssquared)
  24. 2022 Saas Security Survey Report (HubspotUserContent)
  25. 61-OpenView Report Highlights Key SaaS Hiring Challenges (Localogy)
  26. Public cloud application SaaS end-user spending  (Statista)
  27. SaaS expected growth rate by 2028 (Fortune Business Insights)