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Unit economics & SaaS
The SaaS magic number
New ARR added in a quarter, annualised, divided by the prior quarter's sales and marketing spend. How efficiently growth spend turns into recurring revenue.
Owned by: Manager / DirectorTest band: Manager / Director
The formula
Magic number = (ΔQuarterly revenue × 4) ÷ Prior quarter S&M spend
In practice
Above 0.75 says spend more on sales; below 0.5 says fix the engine before feeding it.
More in unit economics & saas
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