SaaS Magic Number Calculator
Sales & marketing efficiency.
Calculate SaaS magic number from quarterly MRR growth and sales + marketing spend. Enter quarter mrr and previous quarter mrr for an instant result.
What this tool does
This tool calculates the SaaS magic number from current quarter MRR, previous quarter MRR, and previous quarter S&M spend.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
The SaaS Magic Number measures sales and marketing efficiency: how much new ARR each pound of previous-quarter S&M spend generated. Formula: (current MRR - previous MRR) × 12 ÷ previous-quarter S&M spend. Above 0.75 means 'invest more'; 0.5-0.75 means 'invest cautiously'; below 0.5 means 'efficiency problems'.
120k current MRR - 100k previous = 20k incremental MRR, or 240k new ARR. Against 200k of previous-quarter S&M spend, Magic Number = 1.2. Excellent - each 1 of S&M is producing 1.20 of new ARR within one quarter, and the CAC payback compounds over future quarters. Invest more aggressively.
The one-quarter lag matters. S&M spent this quarter drives pipeline and wins next quarter, not this quarter. Measuring current quarter MRR against current quarter spend inflates the number; against previous quarter spend is the standard benchmark. Most public SaaS companies report Magic Number 0.6-1.2 in growth stages; mature SaaS 0.3-0.6.
A worked example
Try the defaults: current quarter mrr of 120,000, previous quarter mrr of 100,000, previous quarter s&m spend of 200,000. The tool returns 1.20. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.
What moves the number most
The result responds to Current Quarter MRR, Previous Quarter MRR, and Previous Quarter S&M Spend. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.
The formula behind this
Magic Number = (MRR growth × 12) ÷ previous quarter S&M spend. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.
Using this as a check-in
Re-run this every three months. A single reading tells you where you stand; four readings tell you whether things are improving. The trend matters more than any individual snapshot.
What this doesn't capture
The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.
(£120,000 £ - £100,000 £) × 12 ÷ £200,000 £ = 1.20.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Magic Number = (MRR growth × 12) ÷ previous quarter S&M spend.
References
Frequently Asked Questions
What's the interpretation?
Why the 1-quarter lag?
Magic Number vs CAC payback?
Does this work for early-stage?
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