What is SaaS Magic Number (MN)?

Magic Number is a common metric showing how efficiently Software-as-a-Service firm is growing its recurring revenue compared with sales and marketing spendings.

Calculating SaaS Magic Number

The Magic Number of 1.0 means that marketing and sales spendings will come back to the company’s bank account in revenue in one year’s time. The result of 1.0 is generally a desired outcome by SaaS businesses. A downside of this metric is that it doesn’t take into account various important factors like churn, or gross margins.


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