Magic Number
Definition
A sales efficiency ratio calculated as the net new annualised recurring revenue added in a period divided by the sales and marketing expenditure in the prior period. A magic number above one indicates that the company is generating more than one pound of annualised recurring revenue for each pound of prior-period sales and marketing spend. A magic number above one is generally considered a signal to increase sales and marketing investment.
Common Misapplication
The most common misapplication is including all operating expenses rather than only sales and marketing costs in the denominator. Including engineering and general and administrative costs in the denominator is not consistent with the standard definition and produces a figure that is not comparable to published benchmarks.
FFI Standard Reference
This term is defined and applied in Book 2, Section 2.5: The Cost Structure Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Magic Number. https://ffistandard.org/glossary/magic-number/. 2026.