Metrics
Magic Number
Quick definition
Sales efficiency metric: new ARR per dollar of S&M spend.
Magic Number = (Quarterly ARR growth × 4) / Prior-quarter S&M spend. Above 1.0 is strong, above 0.75 is healthy, below 0.5 means your GTM isn't returning efficient growth.
Frequently asked questions
- What is Magic Number?
- Magic Number = (Quarterly ARR growth × 4) / Prior-quarter S&M spend. Above 1.0 is strong, above 0.75 is healthy, below 0.5 means your GTM isn't returning efficient growth.
- Why is Magic Number important for startups?
- Magic Number is a metrics concept that matters for startup founders because it shows up in fundraising readiness, financial decision-making, and operational discipline at the stage where mistakes are expensive to undo. Founders who understand it are better prepared for diligence, board meetings, and investor conversations.
- What category does Magic Number belong to?
- Magic Number is a Metrics term in the StartupCFO finance glossary, alongside other metrics concepts that founders, CFOs, and accountants use in startup operations and reporting.
- Where can I learn more about Magic Number?
- Beyond this definition, see the related metrics terms below, or explore StartupCFO's insights and tools that put Magic Number in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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