According to the Maxio 2023 Growth Index report, after an uptick in Q2/Q3, overall subscription growth rates leveled off in Q4 2023. Rates settled around the 14% mark for sub-$100MM companies — a notable 6% decline from Q4 2022 figures.
In other words, the market has undoubtedly normalized again. But "normal" looks very different depending on your business sector and situation. Businesses seeking to rebound or accelerate their growth will need to update their go-to-market playbook if they want to achieve steady growth in today’s market.
Benchmarking B2B SaaS growth rates
Growth rates have fluctuated widely even as broader stabilization occurred. With so much fluctuation happening in the market, you need the right context to set your business goals in 2024.
The Index reveals useful comparatives—while overall expansion settled around 14%, sectors like Cybersecurity tech maintained 37% annual growth, with the Southeast region leading at 21% over 8 quarters.
Of course, it's critical to keep context in mind: not all industries recover at the same pace. For example, the eCommerce and Retail tech industries had just 11% average annualized growth over the last two years — lower than the overall 17% B2B average.
Regardless of where your business’s growth rate currently stands, you should constantly be thinking about your next steps toward growth.
If your growth significantly outpaces industry benchmarks, leverage that momentum. It signals unrealized opportunities in your business or customer segments. But if your growth lags the broader market, we recommend you reevaluate your go-to-market strategy, prioritize stabilization and prepare a contingency plan to ensure your business stays afloat.
The catch-22 of steady growth
At first, it seems that stabilizing growth rates is good news for B2B SaaS companies–but there are some downsides to consider.
First, fixed growth rates make it harder to achieve breakout expansion above industry averages. While this doesn’t pose any immediate threats to a business, achieving outlier growth metrics is often critical for securing ongoing funding from investors who expect to see steady, or aggressive, growth from their portfolio companies. Additionally, just because certain sectors are seeing rapid expansion, this doesn’t mean that your company will experience the same level of growth we’re seeing in individual verticals.
In other words, stabilization may hide the very real changing market conditions underneath. The new normal is unpredictability, and B2B subscription businesses have to optimize for constant changes in growth rates between industries.
Using hybrid billing models to adapt to new market conditions
The Maxio Institute’s latest report also revealed an often overlooked GTM tactic: changing your pricing models.
Leading companies are safeguarding against the fluctuations we’re seeing in the market by combining their fixed subscription revenue with flexible consumption-based pricing. This approach reacts dynamically to spikes in product usage and dips in the market.
Hybrid models also help hedge risks by limiting downside exposure when compared to pure consumption pricing models. This is because fixed subscription revenue can cushion any revenue losses that may result from lowered product usage. This is especially helpful during periods of market fluctuation as the steady baseline income provided by a fixed subscription model helps avoid any overdependence on a consumption or usage-based pricing model.
Growth rates in 2024 and beyond
Now that you understand how growth fluctuated over the past year, it’s time to look ahead. What does 2024 have in store?
While we at the Maxio Institute (unfortunately) don’t have a Magic 8 ball, we do expect to see growth normalization to occur industry-wide in the coming year. Despite this stabilization, opportunities still exist for companies who decide to implement complex, hybrid billing models. By diligently tracking microtrends and buyer behavior shifts, companies utilizing consumption billing and outcome-based pricing can continue to outperform their peers.
For an in-depth look at the most recent B2B subscription growth trends, check out the latest Maxio Institute Report to benchmark your performance against 2,400 B2B subscription companies.
