Paddle TheGlobalAdvantage

The global
advantage
Why you should sell SaaS
internationally in 2024
and how to nail it
Paddle helps SaaS companies grow faster with
fewer distractions. As a SaaS merchant of record,
we take away the complexity of managing a ‘best
in breed’ payments stack — handling all payment
routing, tax collection, compliance, invoicing,
subscription management, renewals, reporting,
and fraud protection.
Learn more at Paddle.com

Contents
0 INTRODUCTION
Go where there’s growth
1
PA R T O N E
Why selling SaaS internationally matters
in 2024
• SaaS slowdowns
• Longer CAC payback
• New territory opportunities
2
PA R T T W O
Avoiding the ‘Internationalization Theater’
3
PA R T T H R E E
How to prepare for international expansion

• Build an international task force
• Select regions to target
• Validate international assumptions
4
PA R T F O U R
How to prepare for international expansion

• Monetize quickly
• Ensure global tax compliance
• Hyper-localize payments, products and pricing
5 CONCLUSION
How Paddle helps you go global
The global advantage paddle.com
INTRODUCTION
Go where
there’s growth
If you’re not selling internationally in 2024,
you’re leaving money on the table.
Given the US has the largest SaaS market in the world, US-based
SaaS companies often consider international expansion a nice-to-
have. With slowing US SaaS growth and flourishing SaaS markets
in the EU, South America and Asia, expanding to new markets is
now a must-have.
In this guide, we’ll explain why you should take your SaaS
business international and how to successfully launch a
global sales strategy in 2024. From creating an international
task force and choosing territories to localizing pricing and
avoiding common pitfalls, here’s everything you need to know.
We’ve got the data and the experience to back it all up too.
4
PA R T O N E
Why selling SaaS

internationally
matters in 2024
Unsaturated SaaS markets. New revenue streams.
Global growth opportunities. There are many reasons
why SaaS companies should care about international
sales, but global SaaS market conditions make global
expansion a no-brainer in 2024.
TAM is so huge in
SaaS right now.”
Jason Lemkin
Founder, SaaStr
5
1
SaaS slowdowns
After years of fast-growth, OpenView’s 2023 SaaS
benchmarks report found SaaS revenue growth slowed
from 28% to 21% across all SaaS and from 45% to 29%
for product-led growth (PLG) companies between 2022
and 2023.
Net Dollar Retention (NDR) has also become harder to

pocket, dropping to an average 108% from 121% in
2022, and monthly recurring revenue (MRR) growth
declined for the first time hitting -4.0% in December
2023 (a massive drop from 81.5% in February 2022).
Taking a step back to look at performance over the last

five years, 2023 was the toughest year for SaaS. Year-on-
year growth was down 21.9% from 2022. When compared
to 2019, before the pandemic and the substantial growth
that followed, 2023 also saw a 23.1% decline.
2023 was the toughest year for B2B SaaS

MRR Index CAGR - B2B SaaS
48%
41%
34% 33%
11%
2019 2020 2021 2022 2023
Source: Profitwell By Paddle, Subscription Index as of 1/10/2024
6
The double whammy of falling sales and declining

retention has naturally impacted SaaS growth and
valuations. 48% of SaaS companies are growing slower
than in 2022 and even the likes of Snowflake (98% to
60%) and Datadog (79% to 39%) have suffered drops
in revenue growth over the last 12 months.
The US SaaS market, in particular, is taking a breather.

Much of the slowdown in SaaS growth has come from
the software industry’s traditional centers in North
America and the UK. After experiencing a COVID-era
boom (with the shift to remote work driving incredible
growth), these markets have become increasingly
saturated with competitors vying for many of the
same customers.
In short
The US SaaS market is taking a
timeout from rapid growth.
7
2
Longer CAC payback
How’s your CAC payback looking? Despite the increased

focus on operational efficiency last year, CAC payback
periods have continued to worsen year-on-year. Larger
mid-market companies dealing with multiple stakeholders,
increased CFO scrutiny, and the involvement of procurement
teams when making a sale have faced the brunt of the storm.
According to Openview, the average CAC payback

period for $20-$50M ARR companies grew 30% from
17 months to 22 months, while $50M+ ARR companies
now have a 37.5% longer payback period than in 2022
(from 16 months to 22 months).
Even smaller mid-market companies have felt the heat.

Although the average CAC payback period for $5-20M
ARR companies remained at 14 months between 2022
and 2023, a healthy CAC payback depends on NDR,
which dropped from 121% to 110% for the top quartile and
as low as 102% for the average $5-20M ARR company.
In short
SaaS customers are more expensive
to acquire and harder to retain.
8
3
New territory opportunities
That’s enough of the stick, here’s the carrot. We are seeing
clusters of ‘non-traditional’ SaaS markets growing fast in
Australia, Europe, Asia and Latin America. Between 2022-
2023, for instance, the average MRR growth in the US was
17%, while Australia/New Zealand (38.6%) and Western
Europe (49.6%) grew 2-3x faster.
Worldwide SaaS market volume is predicted to hit

$344 billion in 2027. International regions provide an
opportunity to outflank the competition, pick up new
customers before anyone else and secure market share.
In Germany, SaaS sales are projected to hit $14 billion

in 2024. In Brazil, it’s $2.4 billion. In Australia, it’s $4.7
billion. Growth may be easier to find away from the
States, especially if you’re a product-led company that
self-sells to customers at low prices.
SaaS Revenue Growth by Region

MRR CAGR (Feb–July 2023)
Overall 15%
Canada 6%
UK and Ireland 15%
United States 17%
Australia and New Zealand 39%
Western Europe 50%
Southern Europe 50%
Source: Profitwell By Paddle, B2B SaaS Index as of 8/1/2023
In short
Go international to acquire customers
in less saturated markets.
9
PA R T T W O
Avoiding the
‘Internationalization
Theater’
Expanding TAM. Outflanking competitors.
Diversifying against market risks. Diving headfirst
into your internationalization efforts without
a clear strategy can backfire badly.
Expanding internationally can have huge

upside, but pretending that you’re making
this move without adequately preparing
can do more harm than good.”
Elena Verna
B2B SaaS growth expert
10
B2B SaaS growth expert Elena Verna has said SaaS

companies that talk big about going international without
doing any meaningful preparation are simply putting on an
‘Internationalization Theater’. This not only gives the false
illusion of progress, but leads to a disappointing lack of
impact and a demoralized internal team.
For Verna, the most common trap is assuming your product

and target market will work exactly the same for every new
region. From preferred payment methods and willingness-
to-pay, to average churn rates and cultural expectations,
each new target geography is different and the wider the
difference, the more you need to localize your approach.
What is Internationalization Theater?

When a company talks a big talk about going
international without actually doing any meaningful
work to get there.
They set international revenue goals, assign

expansion to an unsuspecting individual, and even
execute some of their rollout plans — only to see a
disappointing lack of impact.
Putting on an ‘international show’ without doing

any meaningful preparation gives the illusion of
progress and it’s often more dangerous than
doing nothing at all.
11
PA R T T H R E E
How to prepare for

international expansion
There are some things you can’t know

until the product is fully live in a new
region, but before you build a lot of
hype around a global expansion strategy,
put in the work to do the research first.”
Elena Verna
B2B SaaS growth expert
12
1
Build an international task force
If you change your market, your product-market fit (PMF)
may no longer, well, ‘fit’. You therefore need a committed
international team to devise an international expansion
strategy that assesses product-market fit in each new
market before you press the green button.
Start by creating an international task force led by an

authority who owns multiple levers of the user journey
(including acquisition, monetization and retention), such
as product, marketing and growth leads (i.e.. CPO, CMO
or Head of Growth).
The task force should include product and go-to-market

stakeholders, who have the experience to test core
assumptions and refresh your product’s UX and marketing
elements, and operations stakeholders with the authority
to identify and design solutions for your tech stack.
The task force should also track progress by setting

achievable goals and collaborate with senior leadership
to create a realistic timeline for regional expansion.
13
2
Select regions to target
Clearly, you’re not planning to target all 200+ countries of
the world, so how do you choose which markets to enter?
As each market comes with different challenges,

you should select regions that make sense for
your business, prioritizing regions where localization
will require fewer adjustments and addressing
smaller markets before tackling more complex,
broader targets.
To work out where to start, break the world into three

regional tiers.
TIER 3
Where you
aspire to be
TIER 2
Where you see
good traction but
poor monetization
TIER 1
Where
you’re winning
right now
14
TIER 1 Tier 1 includes your ‘core’ geographies and markets

Where you’re where you already generate revenue thanks to strong
winning right now acquisition, monetization and retention. For example,
if you’re a US SaaS company, your Tier 1 markets will be
the USA, Canada, Australia and the UK due to shared
language and similar GDP growth, pricing tolerance,
monetization models, and cultural preferences.
Tier 1 is not subject to international expansion efforts.
TIER 2 Tier 2 includes markets where you have promising

Where you see customer acquisition and engagement (i.e. market
penetration is already happening), but poor monetization
good traction but
and low conversion (30-70% conversion compared to
poor monetization Tier 1 countries).
For US companies, Tier 2 markets are usually non-native

English speakers and have different payment preferences,
sales processes, cultural expectations and regulatory needs
from the US, such as Western Europe, Israel and Singapore.
Tier 2 should be your international strategy focus with

the aim of moving countries from Tier 2 into Tier 1 over
the next five years. Enter each Tier 2 region on a rolling
basis and narrow your focus on specific countries at
the start. By launching in Germany instead of EU-wide
or Mexico instead of LatAm, you can better validate
elements of your international strategy and go deep
on testing PMF before moving onto another country.
TIER 3 Tier 3 includes markets where you don’t have active

Where you acquisition or monetization. This will include markets
aspire to be where you need to figure out how to acquire customers,
generate demand and position your offer before even
considering revenue, such as China, India or Brazil.
Tier 3 should be a secondary focus. You should work

on customer acquisition in these markets, but wait
until they’ve moved into Tier 2 before trying to
monetize these customers.
15
3
Validate international assumptions
Before launching, your international task force should
identify and test product, GTM and operational
assumptions for each target market.
The task force should design and run experiments that

prove or disprove each assumption in such a way that even
if the assumption fails, it teaches you something new.
For example, you could test if a kind of outbound

messaging works similarly well in the new market as in
existing ones (i.e. ‘our US-style punchy messaging will
lead to a 5% response rate from cold emails in Germany’).
Or you could use market research to test the value of your
product and features in a new market vs what you know
in the existing market.
Then, when you have a set of proven assumptions for the

new regional market, you can operationalize and scale
your approach based on those assumptions.
Operationalize
Analyze Experiment
16
As a starting point, answer these questions:
Product
Are your existing use cases common in the new market?
Do target users appreciate the same features as current users

(i.e. will feature packaging make sense in the new context)?
Are buyers willing to pay the same as current customers

(i.e. do your current price points still work)?
Will users understand your product UX and in-app messaging

without extra friction or translation?
Will users receive adequate support and enablement from existing

Help Docs and Customer Success teams?
Go-to-market
Are market segments and buyer personas similar in the new market?
Will existing positioning and messaging resonate with local buyers?
Will buyers purchase without the influence of local reference

customers, partnerships or networks?
Will buyers purchase from a sales rep based in a different region

or who doesn’t speak the local language?
What level of customer support do buyers expect in the

target market?
17
SaaS operations
Will technical buyers have similar procurement and expense

approval requirements to existing customers?
Will customers purchase using the same payment methods

and currencies as existing customers?
Do we have the resources to manage sales tax liability and

compliance in the new market?
Are we protected from security risks, fraud and chargebacks

when entering the new market?
Can our existing technology stack handle the payment

processing, support, reporting, and localization processes
in the new region?
18
PA R T F O U R
How to nail your

international strategy
Task force created?
Target markets selected?
Assumptions validated?
Now, it’s time to put your international strategy into

place. These three tips will help grease the tracks.
19
1
Monetize quickly
Ever had your card declined abroad? As cross-border payments
are more likely to run into complications, such as chargebacks
and failed transfers, you need international billing infrastructure to
monetize quickly and minimize payments failures.
Back office billing infrastructure that supports an international

checkout, handles foreign banking systems and manages
international payments gateways is essential, but building these
capabilities is expensive and delays your monetization efforts in
new markets. Unless you use a merchant of record (MoR).
An MoR is an all-in-one billing solution that handles your payments,

tax, subscription management and takes away the back office
admin of handling international transactions. The global payments
infrastructure delivers a local purchase experience to international
customers (and deals with all the local banking systems and
entities), increasing payment acceptance and reducing churn.
Offloading billing complexities to a merchant of record (MoR) will
accelerate your team’s productivity and revenue growth, so you can
focus on implementing your international acquisition strategy.
2
Ensure global tax compliance
A ‘wait and see’ approach is no longer acceptable when
it comes to international sales taxes. You know what will
happen eventually. Convoluted registration. Complicated
filing systems. Heavy penalties for non-compliance. It’s not
worth the stress, let alone the costs.
For US SaaS companies, they have to pay sales tax depending

on where their customers are (not where they’re based),
they need to understand each country’s different tax rates,
systems, processes and penalties. For instance, the EU
software sales tax rate varies from 17% in Luxembourg to 27%
in Hungary. In Peru, you submit VAT returns every month,
while in Brazil you pay taxes to each individual state, not the
federal government. If you mix up your Slovakias and your
Slovenias, then you could receive fines for non-compliance.
20
To make matters worse, tax rules keep changing. In the EU, for
example, the CESOP regulations which came into force in January
2024 require you to handle VAT from the very first taxable transaction.
If you make over 25 sales per quarter in the EU, your payment
processor will log the details and you’ll need to calculate, file and remit
the corresponding tax to the authorities to stay above board.
One way to forget about sales tax is using a merchant of record

that handles your billing and sales tax compliance. This MoR would
also be liable for your taxes, taking away all the administration
and responsibility for sales tax globally. This not only saves hours
of manual work for your finance team, but also cuts out non-
compliance risk from day one.
3
Hyper-localize payments, product and pricing
True localization adapts your product for local contexts, but hyper-
localization adapts your payments, product and pricing within
regions and can increase your conversion by up to 70%.
Payment localization
Converting your price into local currencies is baby steps. To boost
your conversion, you also need to embrace local payment methods.
In the US, card payments are the dominant way to pay (accounting
for 57% of transactions), but that’s not the case internationally.
In Germany, 16% of payments are made by card and 77% by
Paypal. In China, Alipay accounts for 83% of transactions.
In the Netherlands, iDeal handles 50% of purchases.
21
Regions with most non-card payment methods

Percentage of payments (USD)
PayPal Alipay Google Pay Apple Pay iDEAL
90%
82% 79%
80%
75%
70% 66%
63% 62% 60% 59%
60%
51% 50% 48% 48%
50%
40% 35%
30%
20%
10%
0%
y
y
na
am
co
sh
ia
es
es
nd
an
al
ai
n
tr
iu
at
in
de
oc
hi
Ko
It
Sp
tn
us
m
rla
lg
pp
C
St
or
la
ie
er
Be
g
A
he
ng
ili
M
V
on
d
G
i te
Ph
et
Ba
H
N
Un
Source: Paddle Billing, % of revenue for vendors allowing multiple payment methods
Whether it’s ApplePay or GooglePay, many countries prefer using

non-card payments for transactions, so if you only offer card or
bank transfers you’re missing out on potential revenue.
Payment methods offered by SaaS companies

Europe North America
90%
80%
77%
77%
70%
60%
62%
58%
50%
50%
50%
40%
40%
30%
13%
13%
13%
13%
20%
9%
7%
10%
2%
0%
0%
1%
1%
0%
eb /
Pa /
L
er
er
ay
ck
al
o
D CH
e le
m
EA
yP
sf
sf
lip
he
it
y
gl pp
n
an
an
ct A
iD
Pa
Ve
A
C
A
tr
tr
nk
ire
oo
ire
Ba
G
D
Source: OpenView, 2023 SaaS Benchmarks Report
22
Product localization
Have you changed the language of your product to match

local contexts? Have you adapted your customer support
to local time zones and preferences? Have you introduced
cultural nuances like international date format (date/
month/year) and 24-hour clock?
Be it offering live chat support during various office hours

(i.e. Colombians work an average 47.6 hours per week
compared to 38.7 in the US) or adhering to local marketing
regulations (i.e. GDPR is very strong in the EU), hyper-
localization requires adaptations to local rules.
Even then, it’s not a case of one-size fits all. In the EU’s free
travel Schengen area, for instance, many citizens move
across the continent for work, so your end-user in Portugal
may actually be Danish.
Pricing localization
Charging in local currencies boosts payment acceptance

and reduces FX fees, but you shouldn’t simply convert your
current USD payment plan - you need to hyper-localize your
pricing depending on willingness-to-pay (WTP).
WTP varies according to a multitude of factors, including

demographics, state economies and your competitor’s
footprint. For instance, Brazilians (-12%) and South East
Asians (-38%) are prepared to pay less for your SaaS
product, but Western Europeans (+21%) and Nordics
(+28%) are willing to pay more.
Hyper-localized pricing enables you to set an auto conversion

of your US rate for each target country to maximize your
revenue, so your $1000 per month enterprise account could
be 1000€ in France, 900€ in Spain and R$3,400 (700 USD)
in Brazil. According to OpenView, 50% of SaaS companies
don’t localize their prices, but adjusting for pricing sensitivity
can maximize revenue.
23
Customers in different regions have varying WTP

WTP relative to United States WTP
30%
28%
20%
21%
18%
10%
0%
-9% -3%
-10% -12%
-20%
-30%
-38%
-40%
Southeast Brazil Eastern Canada United Western Nordics

Asia Europe Kingdom Europe
Source: Price Intelligently by Paddle Study
Factors that influence regional pricing

Europe North America
41%
Don’t localize pricing
53%
40%
Based on willingness-to-pay
36%
16%
Based on operating costs
12%
18%
Based on FX rates
10%
3%
Based on tax rates
3%
Source: Openview 2023 SaaS Benchmarks report
24
CONCLUSION
How Paddle helps

you go global
At Paddle, we do all the international leg work
for you. As a merchant of record, we handle all
your international billing, minimizing foreign
payment issues, reducing churn and helping
you monetize customers quicker.
We take on all the sales tax liability for payments made

through our platform, ensuring you’re globally compliant
from your first transaction in over 100 jurisdictions.
We also personalize your entire checkout experience
by localizing your checkout in a language and currency
familiar to your customer, so you maximize conversions
and revenue in every market.
If you are a SaaS company that might find yourself

growing overnight like we did, then you need to
find a way to future-ready your business. You need
to ensure your stack is extremely scalable and
that you are able to comply in every geography
that matters to you. And even if there are some
geographies that may not matter to you, you might
see traffic and users from there, so you’ve got to be
prepared for that too. I highly recommend Paddle
as the solution – without it our growth would have
been simply unmanageable.”
Vedant Maheshwari
Co-founder and CEO, vidyo.ai
25
Want to go global the right way?

Check out Paddle’s webinar with Elena Verna for more
information or get started with Paddle now to get your
international expansion rolling.
26
The only complete provider of payments
infrastructure for SaaS companies.
Learn more at Paddle.com

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The global

Learn more at Paddle.com

Avoiding the ‘Internationalization Theater’

How to prepare for international expansion

How to prepare for international expansion

Why selling SaaS

Net Dollar Retention (NDR) has also become harder to

Taking a step back to look at performance over the last

2023 was the toughest year for B2B SaaS

2019 2020 2021 2022 2023

Source: Profitwell By Paddle, Subscription Index as of 1/10/2024

The double whammy of falling sales and declining

The US SaaS market, in particular, is taking a breather.

How’s your CAC payback looking? Despite the increased

According to Openview, the average CAC payback

Even smaller mid-market companies have felt the heat.

Worldwide SaaS market volume is predicted to hit

In Germany, SaaS sales are projected to hit $14 billion

SaaS Revenue Growth by Region

Source: Profitwell By Paddle, B2B SaaS Index as of 8/1/2023

Expanding internationally can have huge

B2B SaaS growth expert Elena Verna has said SaaS

For Verna, the most common trap is assuming your product

What is Internationalization Theater?

They set international revenue goals, assign

Putting on an ‘international show’ without doing

How to prepare for

There are some things you can’t know

Start by creating an international task force led by an

The task force should include product and go-to-market

The task force should also track progress by setting

As each market comes with different challenges,

To work out where to start, break the world into three

TIER 1 Tier 1 includes your ‘core’ geographies and markets

Tier 1 is not subject to international expansion efforts.

TIER 2 Tier 2 includes markets where you have promising

For US companies, Tier 2 markets are usually non-native

Tier 2 should be your international strategy focus with

TIER 3 Tier 3 includes markets where you don’t have active

Tier 3 should be a secondary focus. You should work

The task force should design and run experiments that

For example, you could test if a kind of outbound

Then, when you have a set of proven assumptions for the

As a starting point, answer these questions:

Are your existing use cases common in the new market?

Do target users appreciate the same features as current users

Are buyers willing to pay the same as current customers

Will users understand your product UX and in-app messaging

Will users receive adequate support and enablement from existing

Will existing positioning and messaging resonate with local buyers?

Will buyers purchase without the influence of local reference

Will buyers purchase from a sales rep based in a different region

What level of customer support do buyers expect in the

Will technical buyers have similar procurement and expense

Will customers purchase using the same payment methods

Do we have the resources to manage sales tax liability and

Are we protected from security risks, fraud and chargebacks

Can our existing technology stack handle the payment

How to nail your

Now, it’s time to put your international strategy into

Back office billing infrastructure that supports an international

An MoR is an all-in-one billing solution that handles your payments,

For US SaaS companies, they have to pay sales tax depending