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SaaS Magic Number Calculator

How efficiently sales spend turns into recurring revenue.

Enter your values

ⓘ Live results

Results
Magic number
1.33
Gross-margin adjusted
1.07
New ARR added
$450,000.00
Annualised new ARR
$1,800,000.00
Implied CAC payback
11.3 months
Verdict
Efficient — push harder on spend
Quarterly growth
10.7%

Quick answer

Magic number = (this quarter ARR − last quarter ARR) × 4 ÷ prior quarter sales and marketing spend. Above 0.75 means it pays to spend more.

Magic number = ΔARR × 4 ÷ prior S&M spend

How to use the SaaS Magic Number Calculator

  1. 1Enter ARR at the start and end of the quarter.
  2. 2Enter the sales and marketing spend from the prior quarter.
  3. 3Add gross margin for the adjusted version.

Worked example

Using the values the calculator loads with:

Inputs

  • ARR at the start of the quarter4200000 $
  • ARR at the end of the quarter4650000 $
  • Prior quarter sales and marketing spend1350000 $
  • Gross margin80 %

Results

  • Magic number1.33
  • Gross-margin adjusted1.07
  • New ARR added$450,000.00
  • Annualised new ARR$1,800,000.00
  • Implied CAC payback11.3 months
  • VerdictEfficient — push harder on spend
  • Quarterly growth10.7%

Frequently asked questions

Why use the prior quarter's spend?

Sales and marketing spend takes a quarter to convert into revenue, so lagging the spend matches cause to effect.

Is magic number better than CAC?

It is a portfolio-level view that needs no per-customer data, which makes it useful for boards. CAC payback is better for channel-level decisions.

About this calculator

Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.