SaaS & growth

SaaS Magic Number Calculator

Compare annualized quarterly subscription revenue growth with the previous quarter’s sales and marketing spend.

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US dollars
US dollars
US dollars
Revenue-based SaaS magic numberExample1×
Quarterly subscription revenue change
$50,000

Understand the result

How to calculate saas magic number

SaaS magic number = (current-quarter revenue − previous-quarter revenue) × 4 ÷ prior-quarter sales and marketing spend

Uses the revenue-based quarterly convention, without gross-margin adjustment. Exclude one-time revenue. Acquisition timing and expansion can affect the ratio; it is not LTV/CAC.

Worked example

An illustrative scenario. “Reset to example” restores it in the calculator.

Current-quarter subscription revenue
$300,000
Previous-quarter subscription revenue
$250,000
Previous-quarter sales and marketing spend
$200,000

Revenue-based SaaS magic number: 1×

Common questions

SaaS Magic Number FAQ

Why use the prior quarter’s spend?

The convention allows a simple lag between selling effort and revenue. Long or short sales cycles may need a different analysis; this ratio does not establish causation.

Guides for this calculation

Build context around the numbers with worked examples from our guides.

CAC Payback Period: Calculate Months to Recover Acquisition Cost →