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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Introduction
In today's complex business landscape, understanding how your company performs relative to industry standards is crucial for strategic decision-making. Revenue per industry—a metric that measures the total income generated within specific market segments—serves as a fundamental benchmark for executives aiming to gauge market position, identify growth opportunities, and make data-driven decisions. For SaaS executives in particular, this metric offers invaluable context when evaluating business performance, setting realistic goals, and identifying untapped market potential.
What is Revenue per Industry?
Revenue per industry represents the cumulative income generated by all businesses operating within a specific industry sector. This metric can be examined from multiple angles:
Macro Level
This refers to the total revenue generated across an entire industry, such as the global SaaS market, which according to Gartner reached approximately $195.2 billion in 2023.
Micro Level
At a more granular level, revenue per industry can be broken down by:
- Geographic regions (e.g., SaaS revenue in North America vs. APAC)
- Sub-sectors (e.g., CRM software vs. project management tools)
- Company size categories (e.g., revenue per enterprise-level customer vs. SMB customer)
Competitive Analysis
Within your competitive landscape, revenue per industry helps identify:
- Market share percentages
- Revenue distribution among market leaders
- Growth rates relative to the overall industry
Why is Revenue per Industry Important?
Understanding revenue per industry delivers multiple strategic advantages for SaaS executives:
Market Opportunity Assessment
By quantifying the total addressable market (TAM), you can determine the realistic ceiling for your growth. According to McKinsey, companies that make data-driven market sizing decisions are 1.5 times more likely to achieve above-market growth rates.
Benchmarking Performance
Revenue per industry provides context for your company's performance. For instance, if your SaaS company grew by 15% last year, that might seem impressive—until you learn that the industry average was 25%. This context is crucial for setting appropriate targets and evaluating executives.
Investment Decision Support
Investors and board members use industry revenue metrics to assess investment opportunities. According to PitchBook, VCs evaluate SaaS companies not just on their absolute growth but on their growth relative to industry averages.
Strategic Direction
Understanding which industry segments generate the highest revenue helps inform product development, market entry strategies, and resource allocation. For example, Salesforce's strategic focus on specific high-revenue industries like financial services and healthcare has contributed to its continued market dominance.
Forecasting and Planning
Historical revenue trends within your industry provide the foundation for realistic forecasting. Deloitte reports that companies with strong industry benchmarking in their forecasting process achieve 10% better forecast accuracy than those without.
How to Measure Revenue per Industry
Measuring revenue per industry effectively requires a systematic approach:
1. Define Your Industry Parameters
Before measurement begins, clearly define the industry scope:
- Industry Classification: Determine which standard industry classification system you'll use (NAICS, SIC, GICS, etc.)
- Geographic Scope: Define whether you're measuring global, regional, or local market revenue
- Timeframe: Establish whether you're looking at annual, quarterly, or monthly revenue figures
2. Data Collection Methods
Several approaches can be used to gather industry revenue data:
Primary Research
- Customer Surveys: Direct surveys of potential customers to estimate spending patterns
- Competitor Analysis: Public financial statements of publicly traded competitors
- Industry Expert Interviews: Insights from analysts, consultants, and industry veterans
Secondary Research
- Market Research Reports: Publications from firms like Gartner, Forrester, and IDC
- Government Statistics: Census data, economic reports, and regulatory filings
- Industry Associations: Reports from trade groups relevant to your sector
Internal Data Analysis
- Sales Data: Analysis of your company's win/loss patterns and deal sizes
- CRM Insights: Customer segmentation data showing revenue by industry
- Financial Trend Analysis: Historical performance compared to industry growth rates
3. Key Metrics and Calculations
Several formulas can help you derive meaningful insights from raw revenue data:
Total Addressable Market (TAM)
TAM = Total number of potential customers × Average revenue per customerServiceable Available Market (SAM)
SAM = TAM × Percentage of market you can realistically targetMarket Share Percentage
Market Share = (Your Company Revenue ÷ Total Industry Revenue) × 100Industry Revenue CAGR (Compound Annual Growth Rate)
CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ number of years) - 1Revenue Concentration
Revenue Concentration = (Revenue from Industry Segment ÷ Total Revenue) × 1004. Visualization and Reporting
Effective presentation of industry revenue data is crucial for driving decisions:
- Dynamic Dashboards: Interactive visualizations showing industry trends
- Competitor Matrices: Quadrant charts positioning your company against competitors
- Segmentation Analysis: Breakdowns of industry revenue by customer type, geography, etc.
- Growth Trend Charts: Visual representations of year-over-year changes
Practical Application: Revenue per Industry in Action
Let's examine how understanding revenue per industry translates into strategic action:
Case Study: Zoom's Pandemic Response
During COVID-19, Zoom identified that industries like education, healthcare, and professional services were experiencing exponential growth in video conferencing needs. By analyzing revenue potential across these sectors, Zoom strategically:
- Prioritized feature development for specific industry use cases
- Adjusted pricing models to accommodate different industry budgets
- Created specialized sales teams focused on high-growth sectors
This industry-specific approach contributed to Zoom's revenue jumping 326% year-over-year in 2020, according to their financial reports.
Case Study: HubSpot's Market Expansion
HubSpot used industry revenue analysis to transition from exclusively targeting SMBs to entering the enterprise market. By identifying which industries had the highest enterprise SaaS spending (financial services, manufacturing, and education), HubSpot:
- Developed enterprise-specific features for these industries
- Created specialized content marketing strategies per industry
- Built targeted sales playbooks for each high-value sector
This strategy helped HubSpot grow enterprise revenue by over 30% year-over-year, as reported in their 2022 financial statements.
Common Challenges and Solutions
Despite its importance, measuring revenue per industry comes with several challenges:
Data Accuracy and Availability
Challenge: Industry data may be incomplete, outdated, or prohibitively expensive.
Solution: Triangulate between multiple data sources, combine paid reports with free government data, and supplement with primary research.
Industry Definition Fluidity
Challenge: Industry boundaries are increasingly blurred in the digital economy.
Solution: Create custom industry definitions that match your business reality, even if they don't perfectly align with standard classification systems.
Competitive Intelligence Limitations
Challenge: Private companies rarely disclose detailed revenue figures.
Solution: Use employee counts, funding rounds, and growth indicators as proxy metrics to estimate revenue ranges.
Conclusion: Turning Industry Revenue Intelligence into Action
Revenue per industry is more than a metric—it's a strategic lens through which SaaS executives can view their business landscape with clarity. By systematically tracking and analyzing industry revenue patterns, leaders can:
- Make more informed strategic decisions
- Set realistic growth expectations
- Allocate resources to the most promising market segments
- Create more accurate forecasts and financial models
- Demonstrate market understanding to investors and board members
In today's data-driven business environment, companies that master the art and science of industry revenue analysis gain a significant competitive advantage. They can identify emerging opportunities faster, pivot away from declining sectors more gracefully, and ultimately build more resilient, growth-oriented organizations.
For SaaS executives specifically, the ability to contextualize company performance within broader industry revenue trends isn't just helpful—it's essential for sustainable success in an increasingly competitive marketplace.