Burn Multiple Calculator

Net burn = cash spent minus cash collected in the period (use 0 or a negative number if you were cash-flow positive). Net new ARR = ARR at period end minus ARR at period start, including expansion and net of churn. Pick any consistent period — a quarter is the usual choice.

What the burn multiple actually tells you

Burn multiple is net burn divided by net new ARR over the same stretch of time: net burn ÷ net new ARR. It answers one narrow question — how many dollars of cash does it cost you to add one dollar of new annual recurring revenue? A burn multiple of 1 means a dollar of cash bought a dollar of new ARR; a burn multiple of 3 means it took three dollars of cash to buy that same dollar.

Unlike the runway & burn rate calculator, which tells you how much time is left before the cash runs out, burn multiple tells you how efficiently that cash is being converted into growth — two companies can have identical burn rates and wildly different burn multiples if one is growing ARR twice as fast on the same spend.

How to read the number

• Under 1: excellent — you're adding more than a dollar of new ARR for every dollar burned.
• 1 to 2: good, the range most efficient growth-stage SaaS companies land in.
• 2 to 3: suspect — worth digging into whether spend is going toward durable growth or one-off pushes.
• Above 3: bad — cash is buying very little durable ARR relative to what's being spent.

Common mistakes

• Comparing burn multiples across wildly different revenue scales — a very early, pre-product-market-fit company will often run a high burn multiple for a quarter or two while it's still finding what works; that's a different situation than a company with years of revenue running the same number.
• Using gross new ARR (new sales only) instead of net new ARR (new sales minus churn and downgrades, plus expansion) — leaving churn out flatters the number and hides the real trend.
• Judging a single period in isolation. Burn multiple is noisy quarter to quarter (one big renewal or one slow sales month swings it a lot) — look at the trend over two or three periods, not one snapshot, and pair it with the Rule of 40 calculator for the profitability side of the same story.