Non-recurring revenue in SaaS

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 77 SaaS companies that went public on median generated 10% of their revenue from non-SaaS sources and 14% on average (27 of the 77 reported non-recurring revenue, or 35%). 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.

It can make you sticky. The customer wants customer service and doesn’t mind paying for it, especially when ACV is $24k+. It’s about not just being a product, but a solution which encompasses a significant level of touch with the client. Companies that touch their clients often with support, consulting, services, repeat onboarding, customer success initiatives, ideas on new use cases, etc tend to have way less churn.

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