If you’re leading a software-as-a-service (SaaS) organization today, growth alone isn’t enough. For years, SaaS companies leaned on a “grow at all costs” model, prioritizing expansion over efficiency. But markets and investors have shifted. Margins, cost discipline, and profitability matter just as much now as annual recurring revenue (ARR) and churn.

The reality? Many SaaS leadership teams are unprepared. A generation of executives have never managed a generally accepted accounting principles (GAAP) profitable business, and the familiar dashboard of ARR growth, churn rates, and customer acquisition cost (CAC) doesn’t paint the whole picture.

That’s where TSIA’s 10-10-10 Rule comes in. This framework provides SaaS leaders with a new lens to evaluate their financial health, highlighting where profitability is leaking and how to build a more resilient business model.

This pivot toward profitability isn’t just about appeasing investors—it’s about survival in a market where competition is fierce and customer expectations are high. If your company can’t prove sustainable margins, funding dries up, acquisitions stall, and growth strategies collapse under their own weight. That’s why leaders across finance, product, customer success, and operations need to embrace profitability as a shared responsibility, not a finance-only metric.

Key Takeaways

• Traditional SaaS success metrics don’t capture the whole story—profitability must take center stage.
• The 10-10-10 Rule provides leaders with a clear framework for measuring service costs, monetization, and acquisition efficiency.
• Applying these benchmarks helps you protect margins, capture overlooked revenue, and build a sustainable SaaS business.

Why Growth Metrics Aren’t Enough Anymore

Metrics like ARR, churn, CAC, and customer lifetime value (CLTV) have long been the SaaS gold standard. They still matter, but they don’t answer the bigger question: Is your business model profitable?

It’s possible to celebrate strong ARR growth while your margins quietly erode. If customer success and support are rolled into cost of goods sold (COGS) without monetization, your long-term profitability is at risk.

Take ARR as an example. A company might double ARR in a year, but if churn climbs or customer acquisition costs balloon, profitability plummets. Similarly, CAC looks impressive when acquisition is fast, but if those customers never reach their full CLTV, the return on investment collapses. These blind spots explain why many SaaS businesses reach revenue milestones but still struggle to achieve healthy margins.

For SaaS leaders, this is a wake-up call: growth metrics must be paired with profitability metrics to provide a comprehensive view of financial health.

Related: Sources of Profitability for Software-as-a-Service Businesses

The Current Profitability Challenge for SaaS Orgs

The industry is at a turning point. While some larger SaaS companies are narrowing the profitability gap with traditional software providers, many still face challenges:

• Negative operating income remains the norm for too many providers.
• Layoffs have been the primary lever to boost margins, but cuts alone don’t create sustainable efficiency.
• Visibility gaps mean many organizations can’t even measure what they spend on support or customer success.

The consequences of these challenges ripple far beyond the balance sheet. For employees, repeated layoffs can lead to low morale and make it difficult to retain top talent. For customers, cost-cutting may mean reduced service quality or a slowdown in innovation. And in the boardroom, leadership teams face tough questions about whether their strategies can truly scale.

Simply put, ignoring profitability doesn’t just put margins at risk—it threatens the long-term stability of the entire organization. Without new approaches, these gaps will continue to drain profitability—even for companies with strong, top-line growth.

What a Profitable SaaS Model Looks Like

At TSIA, we’ve seen that a truly profitable SaaS model doesn’t happen by accident. It’s designed with three key priorities in mind:

• Healthy gross margins: Aligning closer to traditional software companies.
• Balanced cost structure: Keeping sales, marketing, research and development (R&D), and general and administrative (G&A) in check.
• Monetized Services: Treating customer success and premium support as revenue drivers, not just cost centers.

When SaaS leaders build with these factors in mind, profitability becomes a natural outcome, not a constant struggle.

The Missed Opportunity: Non-Monetized Services

Customer success and support are critical for adoption and renewals—but most SaaS organizations still provide them at no cost. These services get buried in subscription COGS, creating:

• Margin pressure: You absorb the costs without offsetting revenue.
• Lost revenue: You miss opportunities to monetize high-value services.

The data is clear: companies that monetize services like customer success and premium support generate stronger margins while creating more value for customers.

Related: The New Growth Levers for Successful SaaS Companies

The 10-10-10 Rule Explained

The 10-10-10 Rule is a straightforward framework that helps SaaS leaders pinpoint where profitability is breaking down. Ask yourself three questions:

1. Are we overspending on non-monetized services?

If more than 10% of revenue is spent on customer success and support that isn’t monetized, it’s a red flag.

For example, if 15% of your revenue goes into “free” success programs, you’re effectively subsidizing adoption at the expense of margins. Trimming or restructuring those services into paid offerings can immediately shift the balance.

2. Are we monetizing enough of our services?

At least 10% of total revenue should be generated from paid customer success and support services. Anything less suggests you’re leaving value on the table.

Think of monetization not as nickel-and-diming customers, but as formalizing value. Premium support, strategic success packages, or outcome-based services often justify price tags customers are willing to pay—especially if they accelerate results. 

3. Are we acquiring revenue efficiently?

Look at your Revenue Acquisition Cost (RAC), a proxy for CAC. If your RAC is more than 10% higher than that of your direct competitors, you’re spending too much to grow compared to peers.

Say your organization spends heavily on marketing to fuel the pipeline, but your RAC shows you’re paying nearly twice what peers do to add each percentage point of revenue growth. That inefficiency isn’t just a marketing problem—it’s a profitability problem that leadership must address collectively.

‍

‍

‍

Together, these benchmarks offer SaaS leaders a straightforward yet powerful lens for evaluating profitability.

Related: The Year of Profitable SaaS

The Path to Sustainable and Profitable SaaS Growth

The era of growth without profitability is over. Investors and boards seek SaaS businesses that are efficient, resilient, and have strong financial margins. That means leaders at every level—from finance to product to customer success—need to rethink how success is measured.

Organizations that move first will gain an edge. By adopting profitability frameworks now, you not only reassure investors, but also free up resources to reinvest in innovation, customer value, and long-term competitiveness. Those who wait risk falling behind peers who can grow and show sustainable margins.

The 10-10-10 Rule is a powerful starting point. By applying these benchmarks, you can identify inefficiencies, turn services into revenue, and ensure your growth story is one of both scale and profitability.

‍

‍

FAQs

1. Why should SaaS leaders care about profitability now?

Because markets and investors are demanding it, growth without margins isn’t sustainable, and organizations that ignore profitability will struggle to compete in today’s environment.

2. How does monetizing services impact customer relationships?

When done thoughtfully, monetized services create more value. Customers often prefer premium support or success packages that deliver measurable outcomes, which benefits your business with higher margins.

3. Is the 10-10-10 Rule only for finance teams?

No—the framework is for all SaaS leaders. Profitability is a cross-functional effort that involves finance, sales, product, customer success, and beyond.