Podcast · episodes roughly 25 to 40 min

The Official SaaStr Podcast: SaaS, Founders, Investors

Jason Lemkin · SaaStr Free Intermediate

For the practitioner gut-check on how much services revenue is actually healthy, SaaStr is the reference voice, and Jason Lemkin has run these numbers across hundreds of software companies. His consistent take: roughly 8 to 10 percent of revenue from services is normal, up to about 20 to 25 percent is still fine for true enterprise, and services that speed adoption and lock in customers are worth doing even at break-even. Listen for the framing that services should support the product, not become the business.

  • Most enterprise SaaS companies pull about 8 to 10 percent of revenue from services, and up to roughly 25 percent is still normal for genuine enterprise deals.
  • Many companies run services near break-even on purpose, because they speed adoption and reduce buyer fear, not because they are a profit center.
  • If services revenue creeps past about a quarter of the total, investors start pricing you as a services business, not a software one.
Listen on Spotify ↗

The question it answers

  1. How do I decide whether to add a services layer to my product business, and will investors hate it?

Read with it

  1. When you bolt a services layer onto a product business, the number investors actually stare at is your blended gross margin,... Bottom Up by David Sacks (Substack) Essay · about 12 min read The Gross Margin Problem: Lessons for Tech-Enabled Startups David Sacks
  2. If your real question is "can I use services to fund the product without getting stuck there," this is the practical playbook.... SKMurphy, Inc. Article · about 10 min read Bootstrapping Your Way from Services to Scalable Products Sean Murphy
eChai Partner Brands The partnership →