There are outliers. Rules of thumb are just general guidelines, and sure enough there are significant outliers. 45% of Dropbox’s spend was on R&D while only 13% of Zoom’s spend is on R&D. Similarly, 73% of Zoom’s spend was on sales & marketing, Dropbox spent only 37% on S&M, and Bill.com spent 28% on S&M.
COGS isn’t 20%. The other rule of thumb is that COGS should be 20% of revenue. As you can see though, the median and averages are 26% and 27% respectively.
Overall we found the data to be really compelling: 30/50/20 is the new 40/40/20 for more established SaaS businesses, unprofitability is ok so long as your business economics are solid and you’re growing, and COGS is allowed to be slightly higher than 20% of revenue.
Visit us at blossomstreetventures.com and email us directly with Series A or B opportunities at sammy@blossomstreetventures.com
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