SaaS Magic Number Calculator
Enter net new ARR and the prior period's sales & marketing spend to find the magic number.
Result
How to use
- Enter your values in the fields above.
- Press Calculate to see your result instantly.
- Use the Share button to copy a link to your result.
About this calculator
The SaaS magic number is a quick gauge of go-to-market efficiency: (current quarter’s net new ARR annualized) ÷ the prior quarter’s sales and marketing spend. It essentially asks how many dollars of new annual recurring revenue a company generates for every dollar it spent on sales and marketing one quarter earlier, allowing for the typical lag between spending and closed deals.
Popularized by venture capital firm Scale Venture Partners, a magic number above roughly 0.75 is generally read as efficient enough to justify pouring more money into sales and marketing, while a number near or below 0.5 suggests the company should fix its funnel or product-market fit before scaling spend further. SaaS founders, CFOs and venture capital investors track this figure quarterly as a quick health check on sales efficiency, alongside deeper metrics like CAC payback and net revenue retention.
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