SaaS Magic Number Calculator

About this calculator

The SaaS Magic Number measures how efficiently a company turns sales and marketing spend into new recurring revenue. The formula is: (current quarter revenue minus prior quarter revenue) multiplied by 4, divided by prior quarter S&M spend. Multiplying by 4 annualizes the single quarter's revenue gain so it can be compared directly against a full year of run-rate economics, even though the spend that produced it happened in just one quarter.

Venture investors and SaaS operators use this number as a quick health check on go-to-market efficiency: a magic number above 0.75 generally signals the business is ready to invest more aggressively in sales and marketing, a score between 0.5 and 0.75 suggests the engine works but needs tuning, and anything below 0.5 is usually read as a warning that new revenue is costing too much to acquire. Boards frequently ask for this figure alongside CAC payback and net revenue retention when deciding whether to fund a bigger sales team.

This calculator takes this quarter's and last quarter's recurring revenue along with last quarter's sales and marketing spend and returns your magic number instantly, so you can track sales efficiency quarter over quarter.