Many SaaS businesses have some services/one-time revenue. While this type of revenue doesn’t have enterprise value, customers do expect to pay some level of onboarding or up front cost for enterprise grade software, so charge for it. The list below shows the last 81 SaaS companies that went public on median generated 10% of their revenue from non-SaaS sources and 13% on average (29 of the 81 reported non-recurring revenue, or 36%). A few things to know:
It’s a source of cash. The most obvious reason one-time revenue is valuable is that it’s a source of cash to fund overhead. While a VC or acquirer may not ascribe a multiple to that revenue stream, they’ll look at it as “financing” for the core business. While the business is still burning money, one-time revenue is as important as recurring revenue as a source of cash.
It’s a negotiating point. If the buyer wants to negotiate with you, giving up the onboarding fee or customer success fee is something you can easily do, and may save you from negotiation on the things that really matter like tenure or annual contract value.
Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Other resources we’ve built for founders include: SoftwareMultiples.com; softwareMRRcalculator.com; FounderInvited.com, and TwoFoundersTalk.com. Founders are always welcome to reach out to sammy@blossomstreetventures.com as well.
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