SaaS Magic Number & CAC Payback Period Efficiency Calculator

Measure sales & marketing efficiency (Magic Number), months to recover customer acquisition costs, and SaaS unit economics.

SaaS Magic Number and CAC payback: formulas and benchmarks

The Magic Number measures a SaaS company’s sales efficiency: net new ARR for the quarter ÷ sales and marketing spend of the previous quarter. CAC payback shows how many months of a customer’s gross margin it takes to repay acquisition cost: CAC ÷ (monthly revenue per customer × gross margin).

Formulas used

  • Net new ARR = ARR at quarter end − ARR at previous quarter end, floored at 0 if it falls.
  • Magic Number = net new ARR ÷ previous quarter’s sales and marketing (S&M) budget.
  • CAC = S&M budget ÷ new customers signed in the quarter.
  • CAC payback (months) = CAC ÷ (monthly ARPU × gross margin %).

The tool’s Magic Number scale: 1.0 and above, exceptional; 0.75 to 1.0, very good; 0.5 to 0.75, average; below 0.5, critical. Benchmarks shown: payback under 12 months and gross margin above 80%. These are indicative market standards, not rules.

Example (default values)

€45,000 of S&M in the previous quarter, ARR up from €180,000 to €240,000, 20 new customers, €250 monthly ARPU and an 80% gross margin. Net new ARR: €60,000. Magic Number: 60,000 ÷ 45,000 = 1.33, i.e. €1.33 of ARR per euro spent (exceptional). CAC: 45,000 ÷ 20 = €2,250. Monthly margin per customer: 250 × 80% = €200. Payback: 2,250 ÷ 200 = 11.3 months. At a 60% gross margin, payback would stretch to 15 months.

Limits

  • The whole S&M budget is charged to new customers: expansion from existing customers, which lifts ARR, has no dedicated cost.
  • Net new ARR already includes churn, so heavy attrition lowers the Magic Number regardless of spend.
  • Payback ignores churn during the repayment period.

This tool assesses acquisition efficiency. For the recurring revenue trajectory (churn, NRR, Quick ratio), use the MRR simulator; for cash autonomy, the runway calculator.

Frequently Asked Questions

How do you calculate the SaaS Magic Number?

Divide the quarter’s net new ARR by the previous quarter’s sales and marketing spend. ARR rising from €180,000 to €240,000 on €45,000 of spend gives 60,000 ÷ 45,000 = 1.33.

What is a good SaaS Magic Number?

On the tool’s scale, 1.0 and above is exceptional, 0.75 to 1.0 very good, 0.5 to 0.75 average and below 0.5 critical. These are indicative market benchmarks: at 1.0, each euro of sales and marketing adds one euro of ARR.

How do you calculate CAC payback in months?

Work out CAC (sales and marketing spend ÷ new customers), then divide it by a customer’s monthly gross margin (ARPU × gross margin). With €2,250 CAC, €250 ARPU and an 80% margin: 2,250 ÷ 200 = 11.3 months, under the 12-month benchmark shown by the tool.

Why does CAC payback depend on gross margin?

Only gross margin repays acquisition, because hosting and support are paid first. With the same €2,250 CAC and €250 ARPU, payback goes from 11.3 months at an 80% margin to 15 months at 60%.

Is this tool really free?

Yes, all tools on Kristools are 100% free and accessible without registration.

Is my data protected?

Yes. All processing is performed directly and securely inside your browser. No personal data is sent to our servers.