Kyle Poyar’s writing at Growth Unhinged is normally solid and well researched, plus a handy source of benchmarks if you’re trying to evaluate startups, so it tends to be one I watch out for. This piece has some I treating stats on NRR for B2B SaaS/B2C SaaS and AI companies. The number of datapoints vary and we should take the results with a pinch of salt as they’re based on scraped data but they do point to an interesting trend, the data shows:

B2B SaaS is relatively sticky. The median NRR was 82%. (The upper quartile was 97%.)

B2C is much less sticky with minimal upsell. The median NRR was only 49%.

AI-native companies had even worse retention than B2C. The median GRR was a mere 40% and median NRR was 48%.

World class businesses in the SaaS era have/had NRR of 110-120%. It goes without saying that you can’t really value a business based on an aggressive ARR multiple if >50% of your revenue churns each year. Kyle points out that GRR is improving for AI companies but you’ve got to expect there is a major correction coming.

If you’re trying to evaluate a company without access to this data, then pricing power is a strong indicator of likely revenue quality:

AI-native products that sell for >$250 per month see 70% GRR and 85% NRR. This is essentially the same as B2B SaaS.

AI-native products that sell for $50-$249 per month see 45% GRR and 61% NRR. This is 15 points worse than B2B SaaS. (Few B2C products charge beyond $100 per month.)

AI-native products that sell for <$50 per month see just 23% GRR and 32% NRR. This is 20 points worse than either B2B or B2C SaaS.

There’s a neat conclusion from Kyle in what this means:

With 80%+ gross margins, supporting free users doesn’t need to break the bank. Users upgrade when they’ve consciously decided to buy. And there’s minimal disruption: people know what they’re getting when they purchase SaaS.

The calculus changes with AI products. Each token has a cost. AI products push for conversion either immediately or upon any level of serious usage.

We’re in a different era for sure.