How much do SaaS companies typically spend on software

12.10.2020
Bailee Prosacco
  |  

To ensure continued growth, SaaS companies today are becoming more aware of how essential it is to actively engage with their own operational software. Surprisingly though, an area that heavily influences the outcome of this is how much do SaaS companies typically spend on software.

This is why for all of your business SaaS efforts, it's a good idea to look at your approach to various software tools for successful growth.

In order to get an overall viewpoint for this, you are going to want to focus on four main topics, to begin with:

1. How do you know what percentage of revenue to spend on outreach?

For almost any industry, it could easily be said that 10% of your revenue is perfectly reasonable for reinvestment into marketing purposes. For SaaS companies, however, it can be anywhere from 15-20%. This number is only considered to be rising, as competitive business fuels more aggressive growth strategies, especially in service sectors.

2. What software or programs are you currently utilizing in order to achieve this success? What methods should be deployed to track progress?

Tools used to track inventory, manage employees, or even just schedule daily tasks are now easily accessible to the everyday business person and large-scale corporation alike. Even further, using tools like Monthly can help you stay on top of all the various resources you may have subscriptions for.

3. Are there better options for your software services related to your specific industry? Should you hire an expert or conduct results yourself?

Many service providers in this category leave their potential clients with a feeling of confusion about what they actually offer. Sometimes, when looking into how much do SaaS companies typically spend on software, will need to consult with outside creative help in order to share their services appropriately with their target audience and make sure that they are not presenting a confusing message.

4. How well can you actually track your success, and what level is your confidence in the accuracy of the analysis?

This is a good starting point for considering how we can get an overview of budgeting for SaaS companies’ software expenses. So, how exactly can we investigate further into the ways in which our businesses can stay on top of all of their unique expenses? In order to find out more about this, we are going to discuss the actual methods for tracking this, and perhaps most importantly what some of these expenses typically actually are.

Finding Out The Bottom Line: Getting To Know Your Data Points

For every company, it is important to be able to monitor everyday expenses and keep track of everything so that you aren’t spending too much in unnecessary areas. A financial model template is usually the tool for this. With SaaS companies, this is especially true, because of the usually much more aggressive growth models.

Beyond that, it is most important to consider how you will likely manage some or all aspects of certain expenditures with automatable or trackable services and software. Here are some general points related to software as a service model, and possibly areas that will require unique software solutions themselves:

  • Typical SaaS marketing expenses are very high, commonly upwards of 20%
  • Most models like this require ongoing investments and financing
  • Business-to-business relations are essential for continued growth in this sector
  • Tracking business expenses can easily get out of hand if not kept in check
  • Determining your payroll structure and how to deploy it might require a unique approach
  • Consider how to handle consulting fees from any 3rd party assistance
  • What your hiring process looks like from start to finish will be very crucial
  • Daily operational reporting from all departments of the company is essential
  • The concepts related to IT and security also heavily influence this area

When applied to most of these companies asking themselves how much do SaaS companies typically spend on software, some of these topics may be even more exaggerated and possibly require extra focus. 

To take this a step further though, here are some of the common essential areas to hone in on and ask more about when it comes to budgeting and expense strategy for your SaaS company.

Again, the critical concept to keep in mind as a backdrop for each of the following questions, is how can existing software solutions help for your specific SaaS company?

Specifically, with:

1. Acquisition and attainment

  • Who are your target customers?
  • How will they know that you exist?
  • What ways will you reach them for offering services?

2. Growing with your business

  • Does your clientele have an incentive to share your services?
  • How will your model grow and evolve over time?
  • Is there a strategy or set of goals set in place for your SaaS business?

3. Great stories from great writers

  • How does your messaging come across to potential customers?
  • What questions do you typically get asked by clients?
  • Does your company stand out from other competitors in a unique way?

4. Testing it all from start to finish

  • Where do your operations record progress regularly?
  • How can this system be monitored and improved regularly?
  • What does the company track record actually look like for this?

5. Getting metrics on everything

  • How can you quickly get key info on the current state of financial details?
  • Who is in charge of recording or maintaining this data?
  • Has the process for measuring data been verified for accuracy?

6. Analyzing the results

  • In what ways can the analysis improve your results?
  • Who controls the outcome of managing process changes?
  • What do forecasts from the current data foretell?

7.Conducting research and development

  • How does the progress so far influence areas for research?
  • What ways can improvements be made to how research is conducted?
  • How is analysis in this sector verified and tested before being implemented?

8. Being aware of side effects

  • How do your regular operations affect ancillary or competing entities or systems?
  • Are you entering a “blue” or “red” ocean for business?
  • Do your employees or business partners have any feedback about anything?

9. Taking into account user-interface design concepts

  • Is your service simple to understand, or does it require an expert in the niche?
  • How quickly can you explain your business, like in an “elevator pitch”?
  • Do you experience high volumes of repetitive frequently asked questions?

10. Attaining an overall identity

  • What exactly is your company's mission statement?
  • Who handles the public image and relations of your services?
  • How can you improve the overall messaging of the company?

Final Thoughts About Common SaaS Expenses

In closing, the way that you approach analyzing your overall strategy for business-related software expenses with a SaaS model will surely affect your overall outcome and direction. 

Managing all of these digital resources doesn’t need to be a challenge though, especially with tools like Monthly.

Don’t forget to sign-up for free and if you haven’t started already, get going with your SaaS budgeting strategies. You will definitely be glad you didn’t wait around and let the other brands get ahead of you.

Try Monthly Now

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