SaaS Magic Number Calculator
Measure your sales efficiency. Calculate exactly how many dollars of new ARR you generate for every $1 spent on Sales & Marketing.
Quarterly Data
Used to calculate your net new revenue growth.
Total Sales & Marketing expenses (ads, reps, software) from the previous quarter.
The Magic Number
What this means:
For every $1.00 you spend on Sales & Marketing, you are generating $3.08 in annualized recurring revenue.
You are generating huge ROI. Raise capital and scale your marketing immediately.
What is the SaaS Magic Number?
The SaaS Magic Number is a widely used metric by founders and VCs to measure Sales and Marketing (S&M) efficiency. It tells you whether it is mathematically safe to pour more money into marketing, or if you need to fix your sales funnel first.
The Formula
Magic Number = (Current Quarter Revenue - Previous Quarter Revenue) * 4 / Previous Quarter S&M Spend
How to Read Your Magic Number
- Below 0.75: Stop spending on marketing. Your sales funnel is broken, your churn is too high, or your ads are highly inefficient. Fix the product or sales process before spending more.
- 0.75 to 1.0: This is a healthy, sustainable range. You are efficiently acquiring customers. You can continue to scale your marketing budget steadily.
- Above 1.0: Pour fuel on the fire. You are generating more than $1 of ARR for every $1 you spend on marketing. You should raise capital and scale S&M aggressively to capture market share.
Frequently Asked Questions
What is the SaaS Magic Number?
The SaaS Magic Number is a free online tool designed to help you measure sales efficiency. How much new ARR do you generate for every $1 spent?
How much does the SaaS Magic Number cost?
Our SaaS Magic Number is 100% free to use. We do not require any signups, subscriptions, or credit cards.
Is my data safe when using this tool?
Yes. All calculations are performed locally in your web browser. We do not store or save your financial data or inputs on our servers.