Vendr Presents

The SaaS Trends Report

2023 Year in Review

Introduction

If you’re looking for SaaS data, you’ve come to the right place. This report is our most comprehensive to date — encapsulating an entire year’s worth of SaaS trends.

Inside, you’ll find the data you’ve come to love in Vendr’s quarterly reports such as top products, ACV trends, and our SaaS leaderboard. However, you’ll also find fresh insights. Curious the best month to get a discount? Or the percent of spend that Vendr users devote to specific categories? Look no further — our 2023 year-in-review delivers.

Vendr was founded on the principle that software buyers and sellers deserve equal access to information. With equal access comes better and faster decision-making for software buyers and healthier customers for software sellers — a true win-win. This report is one of my favorite things we deliver each quarter, because it embodies that principle. I hope our 2023 report helps you determine where to invest, ensure fair pricing, and set your strategy for the year ahead.

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2023 Overview

Mapping Software Budgets by Category

Vendr Q2 2023 SaaS Market Report Trends
Vendr Q2 2023 SaaS Market Report Trends

Across all company sizes in our data set, companies allocate the majority of software budgets to IT Infrastructure, Sales, Data Analytics & Management, and Security & Compliance.

Why this matters

Where are companies spending their budgets? We receive this question more than almost any other at Vendr — and for good reason. Knowing where other companies are spending can help determine where you may be over- and under-investing.

Key insights

  • Productivity, Vertical Industries, Dev Ops, and Human Resources have the most consistent percent of spend, regardless of company size. 
  • The percent that companies spend on Design and Content Tools, Marketing and Advertising, Finance and Accounting, and Commerce and Retail declines as company size increases. 
Amanda Taitel

In 2023, we saw three major changes in customers’ approach to buying SaaS. First, payment terms became a major priority to preserve cashflow. In some cases, customers accepted higher rates for better payment terms. Next, we saw an increase in customers shopping competition for new purchases and renewals. Finally, we saw an increase in customers avoiding multi-year agreements to offer as much flexibility as possible.

– Amanda Taitel, Principal SaaS Consultant

Understanding SaaS Seasonality

The best months to buy, sell, and save on SaaS—sales peak in winter, and purchases take longest during summer.

Why this matters

When you’re making a big purchase, it’s important to understand how long it will take, when you’re most likely to get a discount, and what seasonal trends are in play.

Key insights

  • In 2023, January had the most renewals, but it was also the month that renewals took the longest. If you’re renewing in January, start early.
  • December was the hottest month for net new purchases, which is a frequent YoY trend, because it’s when companies learn if they have money left in their budgets. 
  • Looking to buy net new during summer? Add some extra time into your buying cycle. June, July, and August tied for the longest buying cycles in 2023.
Tyler Garwood

In 2023, the dominant negotiation trends focused on maintaining rates on descopes, reducing uplifts, and securing longer-term contracts for less flexible products. Given the tighter budgets most organizations faced, it was crucial to reference past rates, account for budget limits, and formulate clear future plans with suppliers.

– Tyler Garwood, Senior SaaS Consultant

Q1
$53,000
Q2
$43,000
Q3
$75,000
Q4
$98,000
Q1
$80,000
Q2
$67,000
Q3
$79,000
Q4
$104,000

ACV dipped in Q2, indicating that buyers exercised caution. However, the trend reversed in Q3, with both net new purchases and renewals reaching year-highs in Q4.

Why this matters

Tracking ACV helps us identify shifts in pricing strategies from suppliers and purchasing strategies from buyers.

Key insights

  • ACV for net new purchases increased 32% YoY, while the YoY for renewal ACV dropped 11%.
  • Blended ACV for net new purchases and renewals averaged $87k in 2023, representing a 4% decrease from 2022’s blended ACV.
  • The highest ACVs occurred among the IT Infrastructure, Data Analytics, and Customer Support categories.
  • The lowest ACVs occurred in Design and Content tools, Human Resources, and Collaboration and Communication.

Suppliers displaying the Vendr+ badge are exclusive members of our invite-only program. These suppliers provide leading software solutions with proven customer satisfaction and low attrition rates. They commit to a purchasing experience that is quick, equitable, and transparent. This commitment is why each Vendr+ supplier offers the Vendr+ Guarantee of competitive pricing and customer satisfaction when you purchase through Vendr.

SaaS market snapshot

Top Suppliers by Average Contract Value (ACV)

Vendr Q2 2023 SaaS Market Report Trends
Vendr Q2 2023 SaaS Market Report Trends

In 2023, the leading suppliers predominantly recorded an Average Contract Value ranging from $20,000 to $60,000, with over two-thirds of these top suppliers falling within this bracket.

Why this matters

Average Contract Value tells us where the industry's pricing is moving. Buyers and sellers can assess the position of specific suppliers compared to competitors and alternatives. Additionally, this analysis reveals trends in the popularity of different products relative to ACV.

Key insights

  • Of the top suppliers on Vendr’s platform, Datadog, NetSuite , and Looker had the highest ACVs.
  • Avalara, Figma, and 1Password had the lowest ACVs of the top suppliers.
SaaS market snapshot

Top Categories by Average Contract Value (ACV)

Top Categories
Vendr Q2 2023 SaaS Market Report Trends

Ranking ACV by category for the leading 2023 categories.

Why this matters

Buyers and sellers can assess ACV by category to help determine what they should expect to spend when investing in top categories.

Key insights

  • Companies are spending the most on the cloud, ERP, and APM.
  • Companies are spending the least on e-sig tools, market and user research, and recruiting.
Community INSIGHT

Perimeter 81

Spotlight

We were able to negotiate the cost per user down from $14 to $10 by citing growth of user count and extremely firm budget. The initial conversation got the supplier down to $11.50 and after a push for quick movement to bring this down to $10, we got this down to $10 for Enterprise! Avoided the supplier's push to bring this down a tier to Premium to hit that number.

Community INSIGHT

Google

Spotlight

We were able to secure a 40% discount for year 1, 36% for year 2, and 33% for year 3 in exchange for quick movement, multi-year terms, and growth on this renewal with Google.

Community INSIGHT

CircleCI

Spotlight

We were able to see significant savings based on language in the previous contract under section 3(i) that stated that as long as the contract renewed at the same or higher usage, the effective credit rate would remain the same. This mitigated a 15% increase. Additionally, Circle agreed to an additional 10% discount for a case study.

Community INSIGHT

PagerDuty

Spotlight

PagerDuty reduced the rate by 16% when moving from month-to-month to an annual payment. Additionally, I worked with PagerDuty to determine many business licenses could be re-categorized to "Stakeholder - Business Pack of 50 Users,” which saved a lot of time and resources.

Community INSIGHT

Litmus

Spotlight

We were paying $30k for our Litmus Subscription. For the renewal, there was a 5% increase in place. Litmus was adamant this is the best they could do and shared that they had already fought internally to bring the cost down before coming to us. We challenged pricing on our call and the rep advised the best they'd be able to do is flat pricing ($30k). In the end we managed to get pricing down to $23.5k.

Community INSIGHT

Kandji

Spotlight

Kandji was initially only offering an improved price per device on a two-year term, even though we were increasing from 200 devices to 250. After pushing back on this, citing we had signed one-year terms in the past and were growing, they agreed to offer the two-year term price for a one-year contract, pending a short turnaround time signing date.

saas pricing trends

SaaS Buying Cycles in 2023

SaaS Buying Cycles in 2023
SaaS Buying Cycles in 2023

Buyers purchased SaaS 5% faster in 2023 than in 2022.

Why this matters

Buying cycles help buyers and sellers predict how long it takes to procure software.

Key insights

  • Despite ZoomInfo and Zendesk having near-identical ACVs, ZoomInfo boasts the shortest buying cycle, while Zendesk exhibits the longest buying cycle among Vendr's top suppliers.
  • 1Password has the second-shortest buying cycle behind ZoomInfo . Both are also Vendr+ suppliers, reflecting the program’s commitment to fast and fair buying experiences.
  • Most of Vendr's top suppliers have buying cycles ranging from 42 to 55 days.
SaaS market snapshot

Top Products by Quantity Purchased

01
1Password
02
LinkedIn
03
6Sense
04
CrowdStrike
05
Gong
06
G2
07
Sprout Social
08
Drata
09
Okta
10
Google
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01
Salesforce
02
Slack
03
LinkedIn
04
DocuSign
05
Zoom
06
ZoomInfo
07
GitHub
08
NetSuite
09
Carta
10
Okta
Click to scroll
01
Intigriti
02
QA Wolf
03
Asset Panda
04
Assemble
Technology
05
TalentLMS
Click to scroll

Who was buying what in 2023? These are the top SaaS products by net new purchases and renewals, based on quantity. Plus, a look at the top products that were purchased for the first time on Vendr’s platform in 2023.

Why this matters

Comprehending the most frequently purchased products provides SaaS buyers with insights into the essential tools that companies depend on, and highlights emerging products to monitor.

Key insights

  • 6Sense, Crowdstrike, Gong, and Okta made the Top 10 for New Purchases in 2022 and 2023.
  • Salesforce, Slack, Linkedin, Docusign, Zoom, Carta and ZoomInfo  topped the charts for both years in renewals.
SaaS market snapshot

Top-Purchased Categories

Vendr Q2 2023 SaaS Market Report Trends
Vendr Q2 2023 SaaS Market Report Trends

The top categories, purchased net new and renewed in 2023, broken down by quantity of transactions per category.

Why this matters

This chart shows which categories software buyers invested in most in 2023.

Key insights

  • YoY, the top two categories remained the same, with Identity and Access Management and Cybersecurity topping the list in 2022 and 2023.
  • YoY, 9 out of the top 10 categories were in the top 10 two years in a row. In 2022, Application Performance Monitoring made the Top 10. In 2023, that fell out of the Top 10 and Data Science and Analytics made the Top 10.
  • Categories that weren’t among the top suppliers in 2022 but made the cut in 2023 include Version Control, IT Service Management, Cloud Security, and Visual Design.

The SaaS Leaderboard: 2023

The top-purchased products through Vendr in 2023, organized by category.

Category
First Place
Second Place
Third Place
Identity and Access Management
1Password
Auth0
JumpCloud
Cybersecurity
Crowdstrike
SentinelOne
Tenable.io
Sales Intelligence + Engagement
Gong
Outreach
Salesloft
Project management
Asana
Monday
Productboard
Customer Relationship Management
Salesforce
Hubspot
Gem CRM
Sales Analytics
Zoominfo
6Sense
Clari
Data Integration
Fivetran
Skilljar
Hightouch
Data Science & Analytics
FullStory
Pendo
Mixpanel
Education and Learning Management System
Lessonly
Linkedin
Articulate360
Business Intelligence
Looker
Tableau
Domo
Job Marketplace and Recruiting
Linkedin
Built In
Glassdoor
Market and User Research
UserTesting
Dovetail
Trustpilot
Application Performance Monitoring
Datadog
New Relic
Sumo Logic
E-Signature
DocuSign
Adobe
Dropbox
Application Development
Retool
Airtable
LaunchDarkly
Version Control
GitHub
GitLab
Perforce
Enterprise Resource Planning
NetSuite
Workday
Certinia
Continuous Integration Tools
CircleCI
dbt
Sonarsource
Sales Acceleration
LeanData
Salesforce
Sendoso
Mobile Device Management
Jamf
Kandji
Mosyle
Demand and Lead Generation
Linkedin
Cognism
UserGems
IT Service Management
Freshworks
BetterCloud
Torii
Visual Design
Figma
Adobe
Ceros
Cloud Security
Cloudflare
Wiz
Lacework
Compliance
Drata
Vanta
Level Access
Expense Management
Navan
Airbase
Brex

The top three suppliers in Vendr’s top-purchased categories by transaction volume in 2023. 

Why this matters

The leaderboard showcases the highest achievers in key categories, noted for their consistent delivery of value, ability to attract and retain customers, and expansion of their market share.

Category Spotlight

Machine Learning & Artificial Intelligence

AI Spotlight

AI tools are here, both as co-pilots attached to existing products and as standalone applications.

Why this matters

AI’s impact on spend can be difficult to measure, since AI is typically embedded into products from non-AI categories. However, one way to track progression of AI is via our Machine Learning and Artificial Intelligence subcategory. This year, that subcategory saw a 54% increase YoY. Let’s dive in. 

AI Spotlight Buying Cycle
Ali Zofaghari

Throughout 2023, there was a noticeable, though expected, increase in AI-specific companies, allowing buyers to improve customer experiences and streamline internal operations. As we look forward to 2024, existing SaaS offerings are poised to continue integrating AI, adapting to the evolving needs of their customer. The question remains: who will shoulder the financial burden for these advancements?

– Ali Zolfaghari, SaaS Consultant

What to expect

CFO Predictions for 2024

1

Tighter software budgets are the new normal.

Despite forecasts of decreasing inflation and interest rates, organizations will keep budgets tight, with CFOs still closely involved in deals.

2

Multi-year deals come due.

In 2022, many companies were still prioritizing growth at all costs. In 2024, multi-year deals signed in 2022 will come up for renewal, and sellers should expect many of these deals to downsize.

3

Sales apps shine as return to growth emerges.

This year, companies will question how they can profitably return to growth. However, most companies won’t want to do this through massive hiring sprees, and instead rely on efficiency and SaaS driving ROI.

4

2023 Vintage Apps.

Companies founded in 2023 will make a splash in 2024, designed and developed as AI-first products.

5

Best products win.

Products that are merely "nice-to-have" are falling by the wayside, while category leaders are set to thrive. The old adage "no one ever got fired for buying IBM" has evolved. Now, the surefire path lies in investing in the category leaders we spotlight today.

Final Thought

Vendr has worked with thousands of buyers across 30k+ SaaS deals to form the foundation of this report.

This data not only shapes our insights, but it’s also given us a deep understanding of the operational strategies of top-tier SaaS companies.

In challenging economic landscapes, the leading companies actively prioritize customers, fostering trust and loyalty. SaaS companies that win big in 2024 will undoubtedly be those with an unwavering focus on customer satisfaction.

We hope this report gives you a head start of determining where to invest your dollars this year. We’ll be back next quarter with a full recap of Q1 SaaS Trends. Until then, you can always reach me at ryan@vendr.com.