Magic Number Calculator
Measure how much new ARR each sales & marketing dollar returns.
MAGIC NUMBER
0.75
Efficient — scale up
Magic number = net new ARR ÷ prior-period sales & marketing spend. Above 0.75 signals efficient growth you can scale.
What is Magic Number?
The magic number measures sales efficiency: how much new annual recurring revenue you generate for each dollar spent on sales and marketing. It tells you whether it's time to pour fuel on the fire.
Magic number = net new ARR ÷ prior-period S&M spend
How to read your result
- Above 0.75 generally means your go-to-market is efficient — consider spending more.
- Below 0.5 suggests acquisition is inefficient; fix it before scaling spend.
- It uses the prior period's spend, since sales take time to close.
- Read it alongside CAC payback and LTV:CAC for the full picture.
Frequently asked questions
What is a good magic number?
A magic number above 0.75 is considered efficient and a signal you can invest more in growth. Below 0.5 usually means go-to-market needs work first.
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