SaaS Magic Number Calculator
The SaaS Magic Number measures sales efficiency: how many dollars of new annual recurring revenue each dollar of sales and marketing spend generates, using prior-quarter spend to respect the lag between spend and revenue.
Magic Number = Net New ARR in Quarter / S&M Spend in Prior Quarter | Variable | Meaning |
|---|---|
Net New ARR in Quarter | ARR added this quarter (new + expansion − churn − contraction). |
S&M Spend in Prior Quarter | Total sales and marketing spend in the preceding quarter. |
Worked example
- Net New ARR (this quarter)
- $300,000
- S&M Spend (prior quarter)
- $400,000
- → Magic Number
- 0.75
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SaaS Magic Number Formula
Magic Number = Net New ARR in Quarter / S&M Spend in Prior Quarter | Variable | Meaning |
|---|---|
Net New ARR in Quarter | ARR added this quarter (new + expansion − churn − contraction). |
S&M Spend in Prior Quarter | Total sales and marketing spend in the preceding quarter. |
How to Calculate SaaS Magic Number
Worked example
- Net New ARR (this quarter)
- $300,000
- S&M Spend (prior quarter)
- $400,000
- → Magic Number
- 0.75
Full definition, benchmarks, and common mistakes live on the SaaS Magic Number glossary page ; quick answers are in the SaaS Magic Number FAQ .