Magic Number vs NDR
Magic Number (SaaS Magic Number) and NDR (Net Dollar Retention) both come up in business conversations and get confused. Here's the plain-English difference, side by side, so you can use each one with confidence.
The key difference: Magic Number refers to saas magic number, while NDR refers to net dollar retention — they describe different things even when they show up in the same sentence.
Magic Number — SaaS Magic Number
Net new ARR in a quarter divided by prior-quarter sales & marketing spend. Above 1.0 means efficient growth worth accelerating; below 0.5 means the funnel is broken.
Full Magic Number definition →
NDR — Net Dollar Retention
Revenue retained from existing customers including upsells and downgrades, net of churn. NDR above 100% means the install base is growing on its own — the single best leading indicator of a healthy SaaS business.
When to use Magic Number
Reach for "Magic Number" when the conversation is specifically about saas magic number. Net new ARR in a quarter divided by prior-quarter sales & marketing spend. Above 1.0 means efficient growth worth accelerating; below 0.5 means the funnel is broken.
When to use NDR
Reach for "NDR" when the conversation is specifically about net dollar retention. Revenue retained from existing customers including upsells and downgrades, net of churn. NDR above 100% means the install base is growing on its own — the single best leading indicator of a healthy SaaS business.
FAQs
What is the difference between Magic Number and NDR?
Magic Number stands for SaaS Magic Number — Net new ARR in a quarter divided by prior-quarter sales & marketing spend. Above 1.0 means efficient growth worth accelerating; below 0.5 means the funnel is broken. NDR stands for Net Dollar Retention — Revenue retained from existing customers including upsells and downgrades, net of churn. NDR above 100% means the install base is growing on its own — the single best leading indicator of a healthy SaaS business.
Are Magic Number and NDR the same thing?
No. They're often used in the same conversation because they're related, but they describe different concepts. Magic Number = SaaS Magic Number. NDR = Net Dollar Retention.
When should I use Magic Number vs NDR?
Use Magic Number when you're specifically referring to saas magic number. Use NDR when the topic is net dollar retention.