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Burn Multiple Calculator

Net burn divided by net new ARR. The cleanest single number showing how efficiently your startup converts cash into revenue.
Burn multiple
1.33x
Net burn
$200K
Net new ARR
$150K
VerdictExcellent capital efficiency. Above the bar most growth-stage investors look for.
Benchmarks
  • < 1.0xBest-in-class
  • 1.0–1.5xGreat
  • 1.5–2.0xOK
  • > 2.0xInefficient

What is the burn multiple calculator?

Burn multiple = net burn ÷ net new ARR, both measured for the same period (typically a quarter).

It tells you, in one number, how much cash you're burning per dollar of new annualized revenue. A burn multiple of 1.5 means you're burning $1.50 to generate every $1 of new ARR.

Why this matters for founders & operators

Burn multiple has replaced "growth at any cost" as the dominant SaaS performance metric since 2022. Investors at every stage now ask for it. Why it works:

  • It captures both growth efficiency and capital discipline in one number.
  • It's harder to manipulate than CAC payback or LTV:CAC.
  • It scales naturally — companies at $1M ARR and $50M ARR can use the same metric.

Below 1x is best-in-class — every $1 of burn produces more than $1 of new ARR. Above 2x typically means your growth motion isn't sustainable at the current spend.

How to use this calculator

  1. 1
    Use a quarterly window

    Quarter is the standard. Monthly is too noisy; annual hides recent shifts.

  2. 2
    Calculate net burn

    Cash out − cash in (revenue collected). Don't use gross burn — net burn captures real cash impact.

  3. 3
    Calculate net new ARR

    (New ARR + expansion ARR) − (churned ARR + contracted ARR). Use ARR, not MRR × 12 — they differ.

  4. 4
    Read the multiple and the verdict

    Compare against the benchmarks. Below 1.5 is healthy; above 2 needs attention.

  5. 5
    Track quarter over quarter

    Direction matters as much as the level. A burn multiple improving from 2.5 to 1.8 is a great story even at 1.8.

FAQ

What's a 'good' burn multiple?+
Best-in-class is below 1x. Most healthy growth-stage SaaS sits between 1-2x. Investors get concerned above 2x at scale.
Should I use net burn or gross burn?+
Net burn. Burn multiple is about cash efficiency including revenue. Using gross burn double-counts revenue against you.
Does this work for non-SaaS businesses?+
Yes — replace 'net new ARR' with annualized new revenue or contribution margin. The framing applies to any subscription or recurring model.
How does this compare to CAC payback?+
Burn multiple is broader (includes all burn, not just S&M). CAC payback is sharper for sales efficiency. Both useful; burn multiple is more durable across stages.
What if I have negative net burn (profitable)?+
Profitable companies have negative or undefined burn multiples. The metric loses meaning past profitability — switch to growth efficiency or Rule of 40.