As with most success metrics, what’s considered a “good” average contract length for a SaaS company will vary based on a few different factors. For example, early stage, scrappy startups may opt for shorter ACLs due to monthly subscription plans. Younger companies are often still finding their product-market fit, and shorter ACLs provide a chance to get regular feedback from customers churning.
On the other hand, many established organizations may boast longer average contract lengths, particularly since some enterprise companies require multi-year contracts for customers. Longer-term contracts offer the advantage of predictability since enterprise companies can rely on more recurring revenue from these agreements.
To establish a benchmark for comparison, you can lean on a little research. One study showed that the median average contract length for SaaS companies was 1.3 years.