{
  "slug": "saas-burn-multiple",
  "title": "Burn Multiple Calculator",
  "heading": "Burn Multiple Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/saas-burn-multiple",
  "summary": "Measure how many dollars you burn to add one dollar of net new ARR.",
  "description": "Burn multiple divides net cash burned by net new ARR added over the same period, and it's the cleanest single read on capital efficiency because it captures everything — product spend, go-to-market waste, churn, pricing power — in one ratio. Under 1x is exceptional, 1-1.5x is great, 1.5-2x is good, 2-3x is suspect, and above 3x usually means the business is buying growth it can't sustain. This calculator returns the multiple, the implied months of runway at your current burn, and how much ARR your remaining cash can buy at the current rate of efficiency.",
  "formula": "Burn multiple = Net cash burned ÷ Net new ARR. ARR your cash can buy = cash ÷ burn multiple.",
  "dateModified": "2026-08-25",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=saas-burn-multiple",
  "inputs": [
    {
      "id": "burn",
      "label": "Net cash burned in period",
      "kind": "number",
      "hint": null,
      "default": 1800000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "netNew",
      "label": "Net new ARR added in period",
      "kind": "number",
      "hint": null,
      "default": 1200000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "months",
      "label": "Length of period",
      "kind": "number",
      "hint": null,
      "default": 12,
      "unit": "months",
      "min": 1,
      "max": null
    },
    {
      "id": "cash",
      "label": "Cash remaining",
      "kind": "number",
      "hint": null,
      "default": 4500000,
      "unit": "$",
      "min": 0,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "multiple",
      "label": "Burn multiple",
      "format": "decimal",
      "hint": null,
      "primary": true
    },
    {
      "id": "monthlyBurn",
      "label": "Average monthly burn",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "runway",
      "label": "Months of runway",
      "format": "decimal",
      "hint": null,
      "primary": false
    },
    {
      "id": "arrBuyable",
      "label": "ARR remaining cash can buy at this efficiency",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Net cash burned in period: 1800000 $",
      "Net new ARR added in period: 1200000 $",
      "Length of period: 12 months",
      "Cash remaining: 4500000 $"
    ],
    "outputs": [
      "Burn multiple: 1.5",
      "Average monthly burn: $150,000.00",
      "Months of runway: 30",
      "ARR remaining cash can buy at this efficiency: $3,000,000.00"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter net cash burned in period ($).",
      "Enter net new arr added in period ($).",
      "Enter length of period (months).",
      "Enter cash remaining ($).",
      "Read your burn multiple on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "burn": 1080000,
        "netNew": 720000,
        "months": 7,
        "cash": 2700000
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "burn": 1800000,
        "netNew": 1200000,
        "months": 12,
        "cash": 4500000
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "burn": 2880000,
        "netNew": 1920000,
        "months": 19,
        "cash": 7200000
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "Why is burn multiple better than CAC?",
      "a": "CAC only looks at sales and marketing on new logos. Burn multiple includes R&D, support, churn, and everything else, so it can't be flattered by shifting costs between departments — which is exactly why investors moved toward it."
    },
    {
      "q": "What multiple should I target by stage?",
      "a": "Seed-stage companies often run 2-3x and that's tolerated; Series B onward, investors expect under 2x, and best-in-class is under 1x. The direction of travel matters as much as the level — a multiple improving quarter over quarter tells a better story than a flat good one."
    },
    {
      "q": "Does net new ARR include churn?",
      "a": "Yes — it should be net of churn and downgrades, including expansion. Using gross new ARR makes a leaky business look efficient, which defeats the purpose of the metric."
    },
    {
      "q": "How do I improve it fastest?",
      "a": "Retention usually moves it more than acquisition. Cutting gross churn from 2% to 1% monthly on a $5M base adds roughly $600k of net new ARR a year with no extra burn, which mechanically improves the multiple."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/saas-rule-of-40",
    "https://www.revenuelab.fyi/toolbox/saas-magic-number",
    "https://www.revenuelab.fyi/toolbox/saas-net-revenue-retention"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Burn Multiple Calculator (https://www.revenuelab.fyi/toolbox/saas-burn-multiple)"
}