How Much Do SaaS Companies Spend On Marketing?

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SaaS companies typically spend around 10-20% of their annual revenue on marketing efforts. This can vary depending on factors such as the company’s growth stage, target market, and marketing strategy. Growing companies tend to have larger marketing budgets compared to more established companies.

Marketing is a critical component of the success of any business, and this is particularly true for Software as a Service (SaaS) companies. With the competitive landscape constantly evolving and new players entering the market every day, it’s essential for SaaS businesses to have a well-planned marketing budget.

It’s no secret that successful SaaS companies often invest in marketing to grow and reach new audiences. But how much do they really spend, and what strategies are they deploying to maximize their return? This article will explore the typical budgets for SaaS companies, as well as the types of marketing initiatives they invest in.

Let’s get started!

The Importance of a Well-Planned Marketing Budget for SaaS Companies

One of the primary reasons why a well-planned marketing budget is crucial for SaaS companies is the high cost of customer acquisition. According to a survey by HockeyStack, the average cost of acquiring a single customer for a SaaS business is $205, and this number can be much higher for some companies.

While customer acquisition costs (CAC) can be significant, SaaS companies must also consider the lifetime value of their customers (LTV). LTV represents the amount of revenue a customer is expected to generate for the company during their entire relationship.

For example, if a company knows that the LTV of a customer is $1,000, it may be willing to spend more on customer acquisition than a company whose LTV is only $500. A well-planned marketing budget takes into account not only the cost of acquiring new customers but also the potential revenue they will generate over time.

Another reason why a well-planned marketing budget is critical for SaaS companies is that it helps to establish a clear strategy for growth. By defining specific goals and objectives for marketing efforts and allocating resources accordingly, a SaaS business can create a roadmap for success.

This approach can be particularly useful for startups and early-stage companies that may not have a clear understanding of which marketing channels are most effective.

A well-planned marketing budget helps SaaS companies to be more efficient and effective in their marketing efforts. It can help them to evaluate the return on investment (ROI) for each marketing channel and make data-driven decisions about where to allocate resources.

Average Marketing Budgets for SaaS Companies

As per multiple surveys, SaaS companies generally invest between 10-20% of their income in marketing activities. This percentage varies depending on factors such as the company’s growth stage, target market, and marketing strategy.

When it comes to determining a marketing budget for SaaS companies, there is no one-size-fits-all approach. However, by analyzing industry benchmarks and trends, businesses can gain a better understanding of what percentage of their revenue should be allocated toward marketing efforts.

Companies spend a lot more in the earlier stages of growth as they strive to establish a presence in the market. According to OpenView’s 2017 Benchmarks report, the average marketing budget for a SaaS company is around 30 to 35% of its annual recurring revenue (ARR) before it reaches $2 million annual revenue.

The most successful SaaS companies also tend to have higher marketing budgets and are willing to take risks with new initiatives. According to VentureBeat, the quickest-growing companies allocate around 58% of their ARR on sales and marketing initiatives compared to slow-growers, who spend an average of 34%.

How Much the Saas Market Leaders Spend on Their Marketing?

The industry-setting SaaS companies with over 20% growth in revenue spend over half of their total revenue on sales and marketing efforts. This is evident from the marketing budgets of some of the biggest SaaS market leaders.

Adobe Inc., for instance, one of the biggest SaaS companies out there, reported a revenue of $17.606 billion in 2022, with a significant portion of that revenue being spent on sales and marketing efforts. Specifically, Adobe spent $5 billion, or 29.41% of its total revenue, on sales and marketing in 2022.

Tableau, which provides business analytics solutions, spends an even higher percentage of its revenue on sales and marketing than Salesforce. In 2016, Tableau spent 57.6% of its total revenue ($476.5 million) on marketing and sales, up from 54.6% in 2015. This massive marketing budget has helped the company compete with giants like IBM and Oracle.

Salesforce spends a whopping 49% of its total revenue on marketing and sales. In 2016, the company’s marketing and sales spending amounted to $3.2 billion out of a total revenue of $6.6 billion. While Salesforce has been able to reduce its marketing costs over the years, it still allocates a significant portion of its budget to sales and marketing.

Atlassian has a different approach to marketing. The company spends only 20.4% ($94.4 million) of its total revenue ($457.1 million) on sales and marketing. It relies on a viral marketing model to target new customers, relying on word of mouth and robust documentation on its website to secure sales.

Why Saas Companies Invest So Much in Marketing?

SaaS companies invest heavily in marketing for a few key reasons. First of all, the market is highly competitive, with numerous players vying for attention and market share. With so many options available, it’s important for SaaS companies to differentiate themselves and create brand awareness to capture potential customers’ attention.

Marketing is also crucial for driving customer acquisition and revenue growth. Unlike traditional software sales, SaaS companies rely on a subscription-based model, where customers pay a recurring fee for access to the software. Acquiring and retaining customers is essential to generating a reliable and predictable revenue stream.

Moreover, SaaS companies often have high customer acquisition costs due to the nature of the subscription-based model. While the recurring revenue generated by customers over time can be substantial, the upfront costs of acquiring those customers through marketing and sales efforts can be significant.

That’s why they need to ensure that their marketing efforts are efficient and effective, reaching the right audience with the right message at the right time to maximize return on investment.

Marketing is also crucial for driving product adoption and engagement. SaaS companies often have complex and feature-rich software products that require customers to invest time and effort to learn and use them effectively. Marketing can play a key role in educating customers about the software and encouraging them to explore and use it regularly.

Overall, investing in marketing is an essential part of the business model. It’s an investment that can yield high returns over time and help generate a reliable revenue stream. It’s understandable why so many SaaS businesses invest substantially in marketing and sales tactics, given the incredible returns they can generate.

What are the Main Marketing Channels for SaaS Companies?

SaaS companies have a variety of marketing channels at their disposal to reach potential customers and drive growth. While the specific mix of channels used may vary depending on the company’s target audience and goals, there are several main marketing channels that are commonly used across the industry.

  1. Paid Search Marketing: One of the most popular channels for SaaS companies is paid search marketing, which involves bidding on keywords to show ads on search engine results pages. By targeting high-intent keywords related to their product or service, they can reach potential customers quickly and easily.
  2. Email Marketing: Email marketing is a powerful channel for SaaS companies to nurture leads and engage with customers. Companies can provide value-added content through personalized email campaigns, highlight new features or updates, and promote special offers or promotions.
  3. Display Ads: Display ads are graphical ads that appear on websites or social media platforms. They can be targeted based on demographics, interests, and behaviour and can effectively raise awareness and drive traffic to a SaaS company’s website.
  4. Social Ads: Social media advertising allows SaaS companies to reach potential customers on popular platforms like Facebook, Twitter, and LinkedIn. Through targeted ads, companies can promote their products or services to specific audiences based on who may be interested in the product.
  5. Retargeting: Retargeting is a powerful way to bring potential customers back to a SaaS company’s website. By targeting ads to people who have already visited the site or shown interest in the company’s products, companies can increase the chances of conversion and drive more sales.
  6. Affiliate Marketing: Affiliate marketing involves partnering with other businesses or influencers to promote a company’s products or services. By offering commissions or other incentives for referrals, SaaS companies can leverage the reach of their partners to drive more leads and sales.
  7. Influencer Marketing: Influencer marketing is a powerful tool that many SaaS companies rely on to reach wider audiences and establish credibility. By partnering with influencers in their industry, SaaS companies can promote their products and services to an extended network of social media followers who trust the opinion of the influencer.
  8. Event Marketing: Events such as trade shows, conferences, and webinars can be a great way for SaaS companies to showcase their products, build relationships with potential customers, and generate new leads.


Marketing is essential to any SaaS business model and can play a major role in driving growth. Leveraging the proper channels, SaaS companies can effectively target potential customers and generate leads that will eventually turn into sales. With a well-planned marketing strategy in place, SaaS businesses can ensure they are on track to achieve their goals and sustain long-term success.

Good luck!

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