If you want your SaaS business to remain competitive, it’s important you understand how you stack up to your competition when it comes to financial performance.
By benchmarking your company on several SaaS benchmarks, you’ll understand how effectively you’re operating. These benchmarks serve as a diagnostic tool, offering a clear lens into a company's financial health, operational efficiency, and potential for scalability. There are knock-on effects here too: the stronger your company is on these SaaS benchmarks, the more attractive it is to potential investors or acquirers.
In 2025, SaaS businesses face a unique set of challenges. The rapid adoption of AI technologies is upending the way many SaaS businesses operate. Customers are adopting new types of solutions, and venture capital is increasingly flowing to AI companies, not traditional SaaS solutions.
To successfully weather these complex market dynamics, your SaaS business doesn’t just have to meet these benchmarks: it needs to exceed them. But what benchmarks are most relevant in 2025, and how should you track them?
Today, we’re answering those questions. We’ll share the benchmarks that we see as being the most predictive of success across the companies we work with. Take note: these benchmarks aren’t just numbers; they’re indicators of a company’s capacity to adapt, innovate, and lead in an evolving landscape.
At G-Squared Partners, we have a simple model that we like to use to benchmark the performance of the SaaS companies we advise. We call it the SaaS Triangle.
The SaaS Triangle framework highlights three essential metrics that form the foundation of a SaaS company’s financial performance. Over time, we’ve seen companies that meet these SaaS benchmarks have more success raising funding and growing their business than companies that don’t. That’s not to say you can’t be successful if you don’t meet these three benchmarks: just that you’ll be operating from a much stronger position if you do.
You can think of the triangle as a three-legged stool: for a company to be extremely successful, they have to satisfy all three of the SaaS benchmarks outlined below. If they fall short on one metric, the stool doesn’t function.
Gross margins for SaaS businesses measure the percentage of revenue remaining after accounting for the cost of delivering the software service, such as hosting, support, and other direct expenses. You can think of gross margin as a way of measuring how efficiently your company delivers its service to customers.
On the whole, SaaS companies tend to have higher gross margins than companies that make physical products. Since the product is software-based, the costs to deliver it tend to be relatively low.
We like to see SaaS companies achieve gross margins of 75% or more. Some SaaS companies have gross margins close to 90%, reflecting efficiency in their infrastructure and business model. SaaS companies that fail to meet this 75% gross margin benchmark typically face issues with pricing, service delivery, or cost control.
Want to learn how to calculate gross margin in your SaaS business? Read this article: SaaS Gross Margin: Everything Founders Need to Know
Customer Acquisition Cost (CAC) Payback Period measures how quickly a company can recoup the expenses incurred in acquiring new customers.
To calculate CAC, tally all of the sales and marketing costs in a time period and divide them by the number of new customers your business acquired during that time period. Then, determine how many months of revenue from a customer it takes for those costs to be recouped. You can do this on a revenue basis, but it’s typically better to do the calculation using gross margin numbers since this gives a more accurate representation of your cash-on-cash returns.
We recommend that businesses aim for a CAC payback period of 12 - 15 months or less. A CAC payback period of under 12 months might indicate your business should be spending more aggressively on growth, whereas a period of 16 months or more indicates that your product is not particularly efficient to sell.
There is of course some nuance here. Companies targeting larger, enterprise clients will likely have longer CAC payback periods. These are often offset by the length of the relationship. For instance, if your company signed a three-year contract with an enterprise client, having a CAC payback period of 18 months wouldn’t be an issue.
The data supports this. Benchmarkit’s 2024 B2B SaaS Performance Metrics Report found that companies with an Average Contract Value (ACV) of over $100,000 had a median CAC payback period of 24 months, compared to 9 months for companies with an ACV of $5,000 or less.
Net Dollar Retention is a powerful indicator of a company’s ability to retain customers and grow its relationship with them over time. This metric measures the percentage of recurring revenue retained and expanded from existing customers over a specific period (typically one year), accounting for upgrades, downgrades, and churn.
We see 111% as the target NDR for a SaaS company. Clearly, the higher the NDR, the better. Companies with an NDR of 111% or more tend to have strong product-market fit and the ability to deepen relationships with customers through additional services, upgrades, or new offerings. Data from Benchmarkit found that the median NDR for a SaaS company was 103% in 2023, with those in the 75th percentile and above having an NDR of 111%.
Companies with NDR below the median experience significant customer churn, which makes growth far more challenging. While some level of churn is inevitable, companies need to offset this with growth among their existing customer base.
While the SaaS Triangle provides a foundational understanding of a company’s financial performance, additional metrics are critical for evaluating a company’s scalability and operational health.
The SaaS triangle doesn’t account for growth: a goal that all SaaS companies are eager to achieve. The following two SaaS metrics provide companies with a good benchmark for their growth.
Annual Recurring Revenue (ARR) represents the total value of predictable, recurring revenue a SaaS business expects to generate annually from subscription-based customers. ARR growth is a barometer of a company’s ability to scale and generate predictable income streams.
If your company has received any form of investment, it’s likely expected to grow in a significant way. Funded SaaS companies often achieve ARR growth rates exceeding 60%, but some top-tier investors expect their portfolio companies to double revenue each year for the first two or three years following their initial investment. This expectation often changes as the business matures since sustaining this pace of growth tends to be unrealistic for all but the most successful of companies.
The SaaS rule of 40 offers a holistic view of a company’s growth and profitability and is especially applicable to more mature companies. Calculating the rule of 40 is simple: simply add your company’s revenue growth rate percentage and add it to your EBITDA profit margin percentage. If the two sum to over 40%, you pass this SaaS benchmark.
By combining growth rate and profit margin, this SaaS benchmark serves as a performance benchmark that ensures long-term sustainability. While this benchmark is more applicable to SaaS companies that are more mature and are trying to balance revenue growth with profitability, it does apply to scaling companies too. Rapidly growing companies may have revenue growth rates well in excess of 40%, but negative EBITDA margins of -40% or more as they burn through capital. Aiming for the 40% benchmark ensures that revenue and profitability remain somewhat balanced, even as your company grows.
These SaaS benchmarks are not one-size-fits-all. A company’s stage of growth and external market conditions significantly influence which metrics take precedence. For instance, early-stage SaaS businesses might prioritize ARR growth and CAC efficiency, while mature companies are focused on profitability and long-term retention.
Determining which of these SaaS benchmarks are the most relevant to your business, and determining how to best measure and manage them, is central to the success of your business. In the fast-evolving SaaS landscape, performance benchmarks are more than just metrics—they are strategic tools that guide decision-making and growth.
Understanding and acting on these benchmarks empower founders and CFOs to make informed choices, taking a comprehensive approach to SaaS business accounting and ensuring that their companies remain competitive and resilient.
At G-Squared Partners, we’re here to support SaaS businesses in identifying, measuring, and improving upon these benchmarks. Our experienced outsourced CFOs provide the financial leadership required to take your business to new heights. With years of combined expertise managing accounting and finance for successful SaaS businesses, our team is well-equipped to help you build your SaaS business on a solid financial footing. Contact us today to learn more about how we can help your SaaS business.