How do I calculate Magic number?

Use the formula(s) on this page. Keep inputs consistent by period and basis.

What are good benchmarks?

Benchmarks vary by model and stage. See Benchmarks on this page for ranges.

Inconsistent definitions/time windows; wrong basis (revenue vs gross profit).

Pitchkit

Magic number

Sales efficiency: new ARR growth per $1 of prior S&M spend.

Rule of thumb

≈ 0.7–1.0 suggests efficient spend; << 0.5 is weak; > 1.0 is strong but rare.

Worked example

ARR_t $2.6M vs ARR_{t−1} $2.2M → ΔARR = $0.4M. Prior quarter S&M = $0.5M → Magic = (0.4×4)/0.5 = 3.2.

Common pitfalls

Using bookings not ARR; ignoring seasonality; not lagging S&M spend one quarter.

How to show in your deck

Financials slide footnote with CAC, payback, and magic number for completeness.

Deck snippet

Magic 3.2 (ARR growth vs prior S&M spend).

Formulas

SaaS magic number

((ARR_t - ARR_{t-1}) x 4) / (S&M expense in t-1)

FAQs

CACSee Payback periodSee

Magic number

Sales efficiency: new ARR growth per $1 of prior S&M spend.

Rule of thumb

≈ 0.7–1.0 suggests efficient spend; << 0.5 is weak; > 1.0 is strong but rare.

Worked example

ARR_t $2.6M vs ARR_{t−1} $2.2M → ΔARR = $0.4M. Prior quarter S&M = $0.5M → Magic = (0.4×4)/0.5 = 3.2.

Common pitfalls

Using bookings not ARR; ignoring seasonality; not lagging S&M spend one quarter.

How to show in your deck

Financials slide footnote with CAC, payback, and magic number for completeness.

Deck snippet

Magic 3.2 (ARR growth vs prior S&M spend).

Formulas

SaaS magic number

((ARR_t - ARR_{t-1}) x 4) / (S&M expense in t-1)

FAQs

CACSee Payback periodSee

Magic number

Sales efficiency: new ARR growth per $1 of prior S&M spend.

Rule of thumb

Worked example

Common pitfalls

How to show in your deck

Deck snippet

Formulas

FAQs

Related

Magic number

Sales efficiency: new ARR growth per $1 of prior S&M spend.

Rule of thumb

Worked example

Common pitfalls

How to show in your deck

Deck snippet

Formulas

FAQs

Related

Magic number

Sales efficiency: new ARR growth per $1 of prior S&M spend.

Rule of thumb

Worked example

Common pitfalls

How to show in your deck

Deck snippet

Formulas

FAQs

How do I calculate Magic?

What are good benchmarks?

Common pitfalls?

Related

Magic number

Sales efficiency: new ARR growth per $1 of prior S&M spend.

Rule of thumb

Worked example

Common pitfalls

How to show in your deck

Deck snippet

Formulas

FAQs

How do I calculate Magic?

What are good benchmarks?

Common pitfalls?

Related