SaaS Magic Number Calculator
Compare annualized quarterly subscription revenue growth with the previous quarter’s sales and marketing spend.
Revenue-based SaaS magic numberExample1×
- Quarterly subscription revenue change
- $50,000
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×
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 →