Calculate your SaaS Magic Number to measure sales efficiency. Compare against benchmarks by company stage. Includes Standard, Gross ARR, Net ARR, and Multi-Quarter Trend analysis modes.
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The SaaS Magic Number is a critical metric for measuring sales and marketing efficiency. Developed by Scale Venture Partners, it tells you how much annualized recurring revenue you generate for every dollar spent on sales and marketing. A Magic Number above 0.75 indicates your go-to-market engine is working efficiently. Below 0.5 suggests you're burning cash faster than you're growing. Our free calculator helps you compute your Magic Number, compare against stage-appropriate benchmarks, and make informed decisions about scaling your S&M investment.
The SaaS Magic Number measures the efficiency of your sales and marketing spend. It's calculated by dividing your annualized revenue growth by the previous quarter's sales and marketing costs. A Magic Number of 1.0 means every dollar of S&M spend generates one dollar of new annual recurring revenue. This metric helps SaaS companies determine whether to invest more aggressively in growth or optimize existing operations before scaling.
Magic Number Formula
Magic Number = [(Current Quarter Revenue - Previous Quarter Revenue) × 4] / Previous Quarter S&M SpendThe Magic Number directly measures how efficiently your sales and marketing investment translates into revenue growth.
A Magic Number above 0.75 suggests you can invest more in growth. Below 0.5 means fix your funnel before scaling.
Compare your efficiency to stage-appropriate benchmarks: Seed, Series A, Series B+, and public SaaS companies.
Monitor trends in your Magic Number to catch declining efficiency early and course-correct.
Investors love the Magic Number. A strong metric (>0.75) demonstrates capital efficiency and growth potential.
Magic Number inversely relates to CAC payback. A Magic Number of 1.0 implies a 12-month payback period.
Report Magic Number alongside other key metrics to demonstrate go-to-market efficiency to your board.
Check your Magic Number before increasing sales and marketing spend. Only scale when above 0.75.
VCs will calculate your Magic Number. Know it before they do and have a plan to improve it.
Track how new hires, territories, or sales processes impact your overall efficiency.
Use Magic Number trends to set realistic growth targets and S&M budgets for the coming year.
A Magic Number above 0.75 is considered healthy and indicates efficient S&M spend. Above 1.0 is excellent—pour more fuel on the fire. 0.5-0.75 needs optimization before scaling. Below 0.5 suggests serious efficiency problems.