Compensation Management Software

You’re reading Category Surfers, where we spend hours researching the fastest-growing software categories every week. So you can discover the next unicorn SaaS idea before it explodes. 

Hope you'll crush 2023! Now let's get back to the free report.

Compensation Management Software

What is it?

Salaries are the biggest company expense. Control payroll control company burn rate. Compensation management tools help companies understand what is the market rate for the position they’re hiring and help manage salaries, benefits, and perks for its employees. Usually features include:

• Provide a dashboard to visualize compensation data

• Enable users to publish internal compensation policies and bonus structures

• Help users create comprehensive salary budgets

• Display compensation data for reporting purposes

Who’s the buyer?

Job titles include HR leadership or at larger companies payroll leadership.

8% of buyers are in the SMB segment, 42% in the mid-market, and 50% in the enterprise market.

What is the problem?

Companies need data to figure out how to fairly compensate employees. Without data they could be overpaying or losing great talent by not giving market rate. Dealing with multiple teams and locations could also lead to unfair compensation policy or favoritism.

Compensation management tools help companies save money by providing current salary rates and help track compensation (salary, equity, perks) across all employees.

How big is the market?

The top 10 players bring about $12B in ARR. The combined annual revenue of all players in the market is north of $50B. Crazy, right? The reason this is high is because most of these businesses have been around for about 20 years.

How fast is it growing?

In the past 3 years, the market's supply side has grown 21% with an average of 6.5% year-over-year growth. 

Who are the top 10 players?

SAP has about $33B in ARR, but I decided to remove it from calculations as they have many business lines.

How much are people paying?

Companies usually pay $2 to $10 per month per employee just to track compensation. However, for salary market rate data, companies pay from $10,000 to $300,000 per year.

How are they buying?

It’s a sales-assisted motion only. Complexity of the deal and deal size suggest lack of PLG play.