SaaS vs. Open Core: Which Business Model Is Best?

Since there are fewer Open Core companies that have gone public recently I started with those companies and tried to find similar SaaS companies based on the year of IPO (2017-2019), annual revenue, valuation at the pricing of the IPO ($1-$3 billion) and the average customer value ($20-$200k) as a proxy for customer type. Let’s look at R&D costs as a percentage of revenue:

While Mulesoft has very low R&D costs as a percentage of revenue, the other Open Core companies do not, relative to the proprietary SaaS companies. We also saw some data that suggests if Open Core companies could limit the services component of their revenue or if SaaS companies could deliver their solution on-premises to lower their cost of revenue (i.e., hosting expenses), you could have the best of both worlds.

Source: gravitational.com