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The SaaS CFO

5 resources from The SaaS CFO we point people to, and the questions each answers.

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One number that tells you whether your whole GTM spend is working, with current benchmark bands (under 0.5 underinvesting, 0.75 to 1.0 efficient, over 1.0 exceptional) and the precise definition of what to include in the spend.

How to Calculate the SaaS Magic Number

From The SaaS CFO by Ben Murray 8 min read

  • Magic number = (this quarter's ARR minus last quarter's ARR) times 4, divided by last quarter's sales and marketing spend.
  • Above 0.75 means step on the gas; 1.0 or better is the efficient zone.
  • A magic number of 1.0 implies you paid back customer acquisition cost inside a year.
  • It only reads true on short sales cycles: with a 12 month enterprise cycle, use trailing twelve month figures instead.
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One metric you can start tracking this month: AI product revenue divided by inference cost. It moves before your gross margin does, which makes it the early warning you want rather than the postmortem you get from the P&L.

How to Calculate the Inference Efficiency Ratio

From The SaaS CFO by Ben Murray 8 min read

  • Inference efficiency ratio is AI product revenue divided by inference cost for the same period.
  • For AI infused SaaS, 8:1 is the floor and 10:1 or better is healthy, below 5:1 is a warning.
  • For AI native products the healthy zone is 5:1 or better, since inference is structurally about 20 percent of revenue.
  • Unlike gross margin, which lags, IER is a leading signal: model routing, prompt caching and tiered pricing moved one example from 4.4:1 to 8.0:1 at the same revenue.
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