Contract Length and Its Impact on Growth and Retention

In this research brief, we studied data from our annual survey of over 400 SaaS companies on how they contract with their customers (month-to-month, annual, multi-year and on a usage-basis).

We reviewed the distribution in contracting by company size and annual contract value (ACV) and we analyzed the impact different contracting methodologies have on growth rate and retention rate. We were surprised to find that month-to-month contracting is more compelling as a potential driver of revenue growth than any downside it might have on customer churn.