Burn Multiple Calculator

What is Burn Multiple? Burn Multiple is a capital-efficiency metric that compares net cash burn to net new ARR over the same period. It answers one question: how expensive is yo...

Burn Multiple Calculator

Measure SaaS growth efficiency: how much net burn you spend to add $1 of net new ARR. Includes scenarios and a short “What It Means” interpretation.

$/yr

Annual Recurring Revenue (ARR) at the beginning of the period. Use recurring revenue only (exclude one‑time fees).

$/yr

ARR at the end of the same period. Net New ARR is computed as ARR end − ARR start.

$

Net burn is the net cash consumed over the period (often approximated as −Free Cash Flow). Enter a positive number for cash burned; enter a negative number for cash generated.

Try scenarios
Examples: efficient growth, solid growth, inefficient growth, and cash‑generating growth.
Efficient growth (~1.2×)Solid (~1.8×)Inefficient (~4.0×)Cash‑generating growth

Results

  • Burn Multiple—
  • Category—
  • Net New ARR (ARR end − ARR start)$
  • Net Burn Used$

Enter your inputs above to calculate the results.

What is Burn Multiple?

Burn Multiple is a capital-efficiency metric that compares net cash burn to net new ARR over the same period.

It answers one question: how expensive is your growth in cash terms?

It matters because it connects execution (sales & marketing + R&D spend) to outcomes (ARR expansion), helping you judge scalability, operating leverage, and whether growth is likely to create value relative to your cost of capital.

Formula

Burn Multiple = Net Burn / Net New ARR
Net New ARR = ARRend-ARRstart

Example

A SaaS company reports: ARR at Start = $5,000,000, ARR at End = $6,000,000, Net Burn (same period) = $1,200,000.

Net New ARR: Net New ARR = 6,000,000-5,000,000 = 1,000,000
Burn Multiple: Burn Multiple = 1,200,000 / 1,000,000 = 1.2x

Interpretation: the company used $1.20 of net cash burn to add $1.00 of net new ARR—a signal to review unit economics drivers like CAC Payback, NRR, Gross Margin, and Rule of 40.

How to Use the Burn Multiple Calculator

Frequently Asked Questions

Should I enter ARR as “annualized” ARR even if I’m measuring one quarter?

Yes. Enter ARR snapshots as annualized ARR at the start and end of the period, then enter net burn for that same period (e.g., that quarter). The calculator uses the change in annualized ARR over the period.

What’s the right “Net Burn” number to use here?

Use net cash burned during the period (cash outflows minus cash inflows from operations), ideally excluding financing cash flows. The key is consistency: same period, same currency, and the same definition every time.

Why is my Burn Multiple huge (or not showing) when growth is flat?

If Net New ARR is near zero, the ratio explodes; if it’s zero, the metric is not defined. That’s a signal that efficiency can’t be evaluated via Burn Multiple until ARR is growing again.

What if ARR went down (end ARR < start ARR)?

You’ll get negative Net New ARR, which makes Burn Multiple negative and not very meaningful as an “efficiency” metric. Treat it as a retention/churn warning and focus on fixing the ARR base before benchmarking burn efficiency.

Sources & Methodology