Efficiency
SaaS magic number calculator
Enter this quarter's revenue, last quarter's revenue and last quarter's sales and marketing spend. The calculator gives the SaaS magic number.
SaaS magic number
0.86
- Annualised new revenue
- $600,000
How to read the result
A result of 1 means a dollar of sales and marketing spend created a dollar of annualised revenue within a quarter. The usual reading is that above about 0.75 it is worth spending more, and well below that the spend needs fixing before it is increased.
The formula
EfficiencyMagic number = (revenue this quarter − revenue last quarter) × 4 ÷ sales and marketing spend last quarter.
Frequently asked questions
Because spend takes time to become revenue. Using the previous quarter is a rough allowance for the sales cycle. If yours is longer, look further back.
They describe the same efficiency from two sides. The magic number looks at revenue created per dollar spent; payback looks at how long a customer takes to repay their cost.
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