Dear SaaStr: How Much Should a SaaS Company Invest in Professional Services?

A rough yardstick is that most enterprise-focused SaaS companies tend to get about 8%-10% of their revenues from professional services.

A few data points:

• At $800m ARR, Qualtrics was still getting 25% of revenue from professional services.? More here.
• At $500m ARR, OneStream gets about 8% of its revenue from professional services.? More here.
• Crowdstrike gets 8% of its revenues from professional services, too, and makes money on them, with 27% gross margins.? More here.
• Okta gets about 3% of its revenue from professional services.
• HubSpot gets about 2.3% of its revenue from services.? It’s SMB.

Bear in mind, for these leaders, third parties often do the majority of the heavy lifting here.? HubSpot has a huge agency and partner program that does deployments for ~ 40% of its customers.? Salesforce similarly on the enterprise side has built a huge ecosystem to do the services work for them.? Oftentimes, changing more than Salesforce does itself.? But this gives you a sense of what these leaders do internally.

Now how much to invest is a different question.

I say overinvest.? You gotta make those top customers successful, and happy.

Many enterprise SaaS companies lose money on services, and only provide them to support the deals and deployments — and success. In that case, implicitly, they are spending more than that 8%-10% to help their customers.

But some do make services profitable, for sure.

Net net, in bigger deals ($50k-$100k+), charge for services if you can. Up to 20% of the ACV is usually OK and you will still be seen as a software business, not a services business.

And then do them as inexpensively as you can — but don’t sweat it if you just break even on services. That’s usually good enough.

More here: