SaaS Quick Ratio & Magic Number 2026 Comparison Calculator
SaaS quick ratio magic number are the two core efficiency tests for 2026. Quick Ratio = MRR gain divided by MRR loss (target above 4). Magic Number = net new ARR divided by S&M spend (target above 1). This calculator runs both and tiers your efficiency.
| Quick Ratio (SaaSOptics) | |
| MRR gain (new + expansion) | — |
| MRR loss (contraction + churn) | — |
| Quick Ratio | — |
| Net MRR change | — |
| Benchmark | Above 4 = healthy; above 8 = elite |
| Magic Number (Scale Venture / ProfitWell) | |
| Net new ARR (quarterly × 4) | — |
| Quarterly S&M spend | — |
| Magic Number | — |
| Implied CAC payback | — |
| Benchmark | 0.75-1.0 good; 1.0-1.5 great; above 1.5 elite |
Quick Ratio and Magic Number are the two most-cited operational efficiency metrics in SaaS. Quick Ratio (popularized by SaaSOptics and Mamoon Hamid) compares MRR gained from new and expansion accounts against MRR lost from churn and contraction. Magic Number (originated by Scale Venture Partners, refined by ProfitWell) compares the ARR generated each quarter against the sales and marketing dollars spent the quarter before. Together they tell you whether your growth engine is durable and whether the dollars you spend on it pay back.
How Quick Ratio Works
Quick Ratio = (New MRR + Expansion MRR) divided by (Contraction MRR + Churned MRR). A Quick Ratio above 4 is considered healthy — meaning for every dollar of revenue you lose, you gain at least four. Above 8 is elite. Below 2 signals a leaky bucket where new sales effort is being eaten by churn. The metric is best used monthly to spot inflection points, and quarterly for trend reporting. SaaSOptics published the modern definition and most board decks now report Quick Ratio alongside NRR and gross retention.
How Magic Number Works
Magic Number = (Quarterly Net New ARR) divided by (Prior-Quarter S&M Spend). The metric assumes your sales and marketing spend in Q1 generated the new ARR you booked in Q2. Benchmarks: 0.75-1.0 means S&M payback is within reach (roughly 12-18 months). Above 1.0 means the sales engine is paying back in under a year. Above 1.5 is elite — typically only achieved by product-led growth motions or very high-NRR enterprise SaaS. Below 0.5 usually signals over-investing in S&M or weak pipeline conversion. ProfitWell maintains the most widely-cited public benchmarks.
How the Two Metrics Reinforce Each Other
Quick Ratio measures the quality of your revenue motion. Magic Number measures the efficiency of your sales spend. Both above benchmark means you have an elite SaaS engine — high gross retention, strong expansion, and S&M that pays back fast. High Quick Ratio with low Magic Number suggests durable customers but over-spending on sales (typical for early enterprise SaaS where deals are long). Low Quick Ratio with high Magic Number suggests a fast pipeline but a leaky retention problem — common in SMB or freemium models. Investors look at both side by side to triangulate where the growth lever actually lives.
Common Mistakes Comparing Quick Ratio and Magic Number
Avoid: (1) Mixing time periods — Quick Ratio is a monthly metric, Magic Number is quarterly. Don't average across periods or you'll smooth away signal. (2) Ignoring CAC payback — Magic Number is roughly the inverse of CAC payback in years (Magic Number 1.0 ≈ 12-month payback). Report both. (3) Conflating expansion with new — Quick Ratio counts expansion as gain, but Magic Number typically counts only new logo ARR. Make sure your inputs match the definition you're using. (4) Skipping seasonality — both metrics are noisy in Q1 (renewal cliff) and Q4 (enterprise close); use trailing twelve months when reporting to a board.
Last updated May 2026. Sources: SaaSOptics (Maxio) Quick Ratio definition, ProfitWell Magic Number benchmarks, Scale Venture Partners original Magic Number framework, Bessemer Venture Partners.