Revenue Leakage
Revenue leakage is recurring revenue that should be collected but is not — due to billing errors, failed payments, pricing gaps, untracked usage, discount abuse, or process breakdowns. It is money flowing out of your business through cracks in your revenue infrastructure.
Annual Leakage Found
Across 5 leakage sources at a single engagement
Why Revenue Leakage Matters for SaaS Companies
Most SaaS companies leak 5-10% of revenue without realizing it. At $5M ARR, that is $250-500K per year walking out the door. Unlike churn (which you track), leakage is invisible until you audit for it. For Seed to Series B companies, plugging revenue leakage is the fastest way to grow without spending more on acquisition.
An Operator's Take
Revenue leakage is the first thing I audit in any engagement because it is almost always larger than founders expect. At BatchService, we found five leakage sources: failed payments not being retried optimally ($380K), expired promotional pricing that was never updated to standard rates ($210K), features being used above plan limits without triggering upgrades ($180K), manual invoicing errors on enterprise accounts ($95K), and free trials that converted but were not billed for the first month ($78K). Total: over $940K in annual leakage. Most of the fixes were systems and automation — not strategy.
Common Mistakes
What I see go wrong at Seed to Series B companies.
Assuming your billing system handles everything correctly. Manual processes, edge cases, and legacy pricing create gaps that billing software does not catch.
Only looking at churn for revenue loss. Leakage from billing errors, pricing gaps, and process breakdowns can exceed churn-related losses.
Not auditing promotional pricing. Customers on introductory rates that were never updated to standard pricing are a common leakage source.
Treating revenue leakage as a finance problem. It is an operations and systems problem that requires cross-functional attention.
What to Do This Week
Concrete steps you can take right now.
Use the Revenue Leakage Scorecard to identify your highest-risk leakage areas.
Audit your last 90 days of failed payments. How many were retried? How many recovered? What is the gap?
Check for customers still on promotional or legacy pricing that should have converted to standard rates.
Review your usage tracking: are customers exceeding plan limits without being billed for overages?
Related Resources
Related Terms
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Further Reading
Frequently Asked Questions
How much revenue leakage is typical in SaaS?
Most SaaS companies leak 5-10% of revenue. The primary sources are failed payments (20-40% of leakage), pricing gaps and discount abuse (20-30%), billing errors (15-20%), and untracked usage above plan limits (10-20%). Companies that have never audited for leakage typically find more.
How do you find revenue leakage?
Audit five areas: payment failure recovery rates, customers on outdated or promotional pricing, usage above plan limits that is not billed, manual invoicing accuracy, and free trial to paid conversion billing. Each requires pulling data from your billing system and comparing expected revenue to actual collected revenue.
Need Help With Revenue Operations?
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