What is Magic Number?
Magic Number is a core concept in modern B2B revenue. Here is a clear, accurate definition, why it matters, and how Ardovo handles it.
Short answer
The SaaS magic number measures sales and marketing efficiency by dividing the new recurring revenue added in a period by the sales and marketing spend of the prior period. A result near or above one signals efficient, scalable growth spending.
Key takeaways
- New ARR divided by prior-period S&M spend.
- Above ~0.75 to 1 signals efficient growth.
- Guides whether to increase go-to-market spend.
Why it matters
It tells leaders whether each dollar of go-to-market spend is producing enough new revenue to justify spending more.
How Ardovo handles it
Ardovo ties bookings to source and campaign so the new-revenue side of the magic number is grounded in real, attributed pipeline.
Frequently asked questions
What is a good magic number?
Above 0.75 is generally considered efficient enough to invest more in growth; below 0.5 suggests fixing efficiency before scaling spend.
Why use prior-period spend?
Because sales and marketing spend takes time to produce revenue, comparing this period's new revenue to last period's spend reflects the real lag.