Definition
Burn multiple is a growth efficiency metric: how much net cash you burn to generate $1 of net new ARR.
Formula
Burn multiple = net burn / net new ARR
Example
If net burn is $2.5M in a quarter and net new ARR is $1.0M, burn multiple = 2.5.
How to use it
- Use consistent windows (typically quarterly).
- Adjust for annual prepay seasonality if needed.
- Pair with retention and gross margin to judge growth quality.
Measured as
Burn multiple = net burn / net new ARR
Operator takeaway
- Use consistent windows (typically quarterly).
- Adjust for annual prepay seasonality if needed.
- Pair with retention and gross margin to judge growth quality.
- Keep Burn Multiple consistent by cohort, segment, and period before you use it as a decision signal in planning or reporting.
- Interpret the metric alongside retention, margin, or payback so one ratio does not hide the real operating trade-off.
Next decision
- Quantify the impact with Burn Multiple Calculator if you need to turn the definition into an operating assumption.
- Read Burn multiple: definition, formula, and how to use it if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
Where to use this on MetricKit
Calculators
- Burn Multiple Calculator: Calculate burn multiple: net burn / net new ARR (a growth efficiency metric).
- Net New ARR Calculator: Calculate net new ARR from new, expansion, contraction, and churned ARR movements.
- SaaS Magic Number Calculator: Formula, Benchmark, and Example: Calculate SaaS Magic Number using net new ARR and prior-period sales and marketing spend, with formula, benchmark ranges, and example.
Guides
- Burn multiple: definition, formula, and how to use it: Burn multiple explained: net burn / net new ARR. Learn how to compute it, interpret it, and avoid common mistakes.
- Net new ARR: definition, formula, and how to calculate it: Net new ARR explained: how to calculate net new ARR from new, expansion, contraction, and churned ARR movements - plus common mistakes.
- Unit economics hub: CAC, LTV, payback, and runway (a practical stack): A practical hub for unit economics: CAC, fully-loaded CAC, LTV, payback, margin impacts, burn multiple, and runway planning.
- ARR waterfall: reconcile starting ARR to ending ARR (net new ARR): A practical ARR waterfall guide: starting ARR + new + expansion - contraction - churn = ending ARR, with examples and pitfalls.