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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.

See a worked example

How it works

How the SaaS Magic Number Calculator works

  1. 1

    Enter your numbers

    Every result updates as you type, with the formula shown under it.

  2. 2

    Check the method

    See how each number is worked out and what it assumes.

  3. 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.

Make your calculator now

Free, no sign-up to try. It becomes a Room you can edit, publish and share.

Create my calculator

Related

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