Who created the SaaS Magic Number?

The SaaS Magic Number metric was developed and popularized by Scale Venture Partners and is widely used across venture capital firms including Bessemer and Andreessen Horowitz.

Updated: August 2026 • Verified v1.2

B2B SaaS Magic Number & Sales Efficiency Calculator

Q: What is a good SaaS Magic Number?

A Magic Number above 1.0x is exceptional, indicating customer acquisition costs are recouped in under a year. A ratio between 0.75x and 1.0x is healthy. Ratios below 0.5x suggest sales inefficiencies that must be fixed before spending more capital.

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Magic_Number = (Quarterly_Growth * 4) / Prior_Qtr_SM_Spend; CAC_Payback = 12 / (Magic_Number * Gross_Margin)

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Understanding Your Results

Calculates SaaS Magic Number multiple, estimated CAC payback in months (adjusted for gross margin), annualized net new ARR, and venture capital recommendations (>1.0x Pour fuel on fire, 0.75x-1.0x Healthy, <0.5x Inefficient).

Practical Guidance & Next Steps

A Magic Number over 1.0 means you recover customer acquisition costs in under 12 months. Scale Venture Partners and Bessemer consider 0.75+ a signal to aggressively expand sales hiring.

What is this?

A venture finance utility that measures the return on investment of sales and marketing expenditures in subscription software businesses.

How does it work?

1. Enter Prior Quarter and Current Quarter revenues. 2. Enter Prior Quarter Sales & Marketing spend and Gross Margin %. 3. View Magic Number multiple, CAC payback period in months, and VC action recommendation.

Why use it?

Diagnoses whether your sales engine is ready for growth capital or needs customer acquisition optimization.

Technical Scope & Calculation Limitations

Calculates standard Bessemer Venture Partners and Scale Venture Partners SaaS formulas.

Frequently Asked Questions

A Magic Number above 1.0x is exceptional, indicating customer acquisition costs are recouped in under a year. A ratio between 0.75x and 1.0x is healthy. Ratios below 0.5x suggest sales inefficiencies that must be fixed before spending more capital.

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