SaaS Magic Number Calculator
Measure sales efficiency: net new ARR this quarter divided by last quarter's sales and marketing spend, with the spend behind each dollar of new ARR.
- Free
- No sign-up to try
- Works as you type
SaaS magic number
Net new ARR this quarter
$600,000
Magic number
0.80
Spend per $1 of net new ARR
$1.25
- Net new ARR = ARR at the end of this quarter − ARR at the end of last quarter.
- Magic number = net new ARR ÷ last quarter's sales and marketing spend.
- Spend per $1 = last quarter's spend ÷ net new ARR (the inverse).
Free, no sign-up to try. Save it as a live calculator you can share; an estimate from the numbers you enter, not financial advice. Check the result against your own records before you rely on it.
How it works
How the SaaS Magic Number Calculator works
- 1
Enter your numbers
Every result updates as you type, with the formula shown under it.
- 2
Check the method
See how each number is worked out and what it assumes.
- 3
Save it as a Room
Share a live calculator: others can change the numbers and see the result update.
Worked example
What it makes
Example inputs
- ARR at the end of this quarter
- $6,400,000
- ARR at the end of last quarter
- $5,800,000
- Sales and marketing spend last quarter
- $750,000
Results
- Net new ARR this quarter
- $600,000
- Magic number
- 0.80
- Spend per $1 of net new ARR
- $1.25
How it's calculated
- Net new ARR = ARR at the end of this quarter − ARR at the end of last quarter.
- Magic number = net new ARR ÷ last quarter's sales and marketing spend.
- Spend per $1 = last quarter's spend ÷ net new ARR (the inverse).
- Assumes: Spend is lagged one quarter, because deals take time to close.
- Assumes: Some versions use quarterly revenue change × 4 instead of ARR; the result is similar for subscription-only revenue.
- Assumes: Many operators read above about 0.75 as efficient and below 0.5 as a reason to look harder, but targets vary.
An estimate from the numbers you enter, not financial advice. Check the result against your own records before you rely on it.
Who it's for
Who uses it
SaaS CFOs
Decide whether to put more into sales and marketing.
Sales leaders
Show how efficiently last quarter's spend turned into ARR.
Investors
Compare go-to-market efficiency across quarters.
Good to know
What to consider
- Spend is taken from the previous quarter because deals take time to close.
- Some people use quarterly revenue change × 4 instead of ARR; results are close for pure subscription revenue.
Questions
About the SaaS Magic Number Calculator
What is a good magic number?
A common rule of thumb reads above about 0.75 as efficient enough to spend more, and below 0.5 as a sign to fix the funnel first. Your sales cycle and margins matter, so treat it as a guide.
Can I share the calculator with my team or a client?
Yes. The Room keeps the calculator live: anyone with the link can change the numbers and see the result update, with the method and assumptions on the same page.
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