How much do public SaaS companies charge their customers?

Contract sizes are one of the most important inputs into a SaaS company — the dollars that can be extracted per customer is critical to success. Is the annual price customers pay large enough to cover acquisition and operating costs? And then create a profit?

Many SaaS CEOs I speak with constantly have the debate whether to continue to build out their product suite to go up-market, or focus on their current core market. Smaller ASPs or ACVs ( i.e. <$10K) can be sold over the phone, or through a self-serve model often very quickly, while large ASPs ($100K+) are typically sold by field sales reps and entail much longer sales cycles. A business user paying with a credit card or going through legal and other procurement processes are very different. Does a SaaS company need to have high ASPs to be successful?

I looked at ~20 of the fastest growing public software companies and how much they sell their products for — implied subscription ARR over total customers. This is a great proxy for current ASPs. These companies also range in market cap from Salesforce at $50B, to AppFolio at ~$700M. As you can see from the chart below, the ASPs vary greatly. Veeva is a $5.6B market cap company with current ASPs of ~$1M, and Atlassian has a market cap of $6B, but only has a $6K ASP. The largest company in the group, Salesforce, is at $35K. The median of the group is $18K. Much lower than I would have expected for multi-billion dollar public software companies, all of which are growing 25%+ YoY.

Very large and enduring companies can be created with ASPs of <$10K as evidenced in the data above. Furthermore, there is little to no correlation between market cap and ASPs for these 21 companies. A great product and market opportunity are more important factors than how much a company charges. If a product is differentiated, delivers strong value, solves a pain point, and the market is sizable, a successful company can be built through continued execution.

Below is a table with each company’s last quarter ARR, total customers and implied ASPs for reference.

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