What is a good SaaS magic number?
The SaaS magic number measures sales efficiency: net new ARR in a period ÷ sales & marketing spend in the prior period. A value of 1 means each unit of S&M bought a unit of new recurring revenue. It is a scale-up metric: at pre-seed, spend is small and growth is largely organic, so the ratio is too noisy to be a verdict.
What is magic number?
Magic number = net new ARR ÷ prior-period sales & marketing spend. You will see “above 0.75 is healthy, below 0.5 is inefficient” quoted widely — those figures come from later-stage SaaS practice, not from our data, and we have not verified them. Startkeel computes your magic number and shows it, but does not grade it: publishing a threshold we cannot source would be inventing a verdict.
How to improve your magic number
- Lean on organic channels (SEO, content, referrals) that lower S&M spend.
- Improve conversion so the same spend yields more new ARR.
- Watch the lag: this period’s ARR comes from last period’s spend.
FAQ
Does the magic number work for product-led growth?
Less cleanly. PLG growth is largely organic, so S&M spend is low and the ratio can look unusually high or noisy. Treat it as one signal among several.
Why doesn’t Startkeel give a verdict on the magic number?
Because we could not source the thresholds, and because it is a scale-up metric. A pre-seed founder spending little on S&M can post a wild ratio that says nothing about whether the business survives. We grade what we can defend: runway, churn, unit economics, growth against your revenue base.
Related tools
- LTV:CAC Calculator — Is each customer worth more than they cost?
- CAC Payback Calculator — How long until a customer pays back what they cost?
- See all: Unit economics
Related guides
See where your numbers land.
Startkeel checks your magic number against these ranges and tells you if your SaaS holds up.
Last updated: June 25, 2026. Ranges based on Startkeel’s benchmark set for early-stage SaaS. For information only — not financial advice.