Article · 8 min read

SaaS Metrics: A History of the Magic Number

Dale Chang · Scale Venture Partners Free Intermediate

The magic number was invented at Scale, so this is the primary source, including the Omniture story behind the name and how the benchmark has drifted since 2005.

• The magic number measures first-year revenue generated per dollar of sales and marketing spend.
• It came from Scale's Rory O'Driscoll around 2005, when Omniture returned more than 2 dollars of first-year revenue per dollar of go-to-market spend.
• The long-term private SaaS median is about 0.7x, which Scale treats as a healthy baseline rather than a pass mark.