Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Burn Multiple
1.50
Efficiency rating
Good
$ burned per $1 net new ARR
1.50
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How to use this
- 1Enter net cash burned (period) ($).
- 2Enter net new arr added (same period) ($).
- 3Read your burn multiple on the right — it updates as you type.
- 4Hit Share to keep the scenario or send it to someone.
About this calculator
Burn multiple, popularized by investor David Sacks, divides net cash burned in a period by net new ARR added in that same period. It answers a capital-efficiency question that ARR growth rate alone can't: are you buying growth cheaply or expensively? A burn multiple under 1 is exceptional (rare outside of the best PLG or usage-based businesses); 1-1.5 is great; 1.5-2 is good; 2-3 is suspect and worth investigating; above 3 is bad and typically means either the go-to-market motion is broken or the company is over-hiring ahead of proven demand. Unlike magic number, which only looks at S&M spend, burn multiple captures total company cash burn including R&D and G&A, making it a more holistic (and harsher) efficiency check that investors use heavily in later-stage and growth-equity diligence, especially since 2022 when capital efficiency replaced growth-at-all-costs as the dominant investor lens.
Worked example
Using the values the calculator loads with:
Inputs
- Net cash burned (period): 1500000 $
- Net new ARR added (same period): 1000000 $
Results
- Burn Multiple: 1.5
- Efficiency rating: Good
- $ burned per $1 net new ARR: 1.5
What each field means
Inputs
- Net cash burned (period) ($)
- The net cash burned (period) used in the calculation, measured in $. Starts at 1500000 $ so you have a working example on load.
- Net new ARR added (same period) ($)
- The net new arr added (same period) used in the calculation, measured in $. Starts at 1000000 $ so you have a working example on load.
Results
- Burn Multiple
- Returned as a decimal number and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Efficiency rating
- Returned as a plain value. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- $ burned per $1 net new ARR
- Returned as a decimal number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
How does burn multiple differ from magic number?
Magic number isolates sales and marketing efficiency specifically; burn multiple captures total company cash burn across R&D, G&A, and S&M against net new ARR. Burn multiple is the harsher, more complete number and is what most growth-stage investors actually underwrite to.
What's a good burn multiple by growth stage?
Early-stage companies (under $5M ARR) chasing product-market fit can tolerate 2-3x since absolute dollars are small and finding fit matters more than efficiency. Growth-stage companies ($20M+ ARR) should be under 1.5x, and anything consistently above 2x at scale draws serious investor scrutiny.
Can burn multiple be negative or undefined?
If net new ARR is zero or negative (the base shrank), burn multiple is undefined or meaningless — you're burning cash while going backward on revenue, which is worse than any positive multiple can express. Report ARR decline separately rather than forcing it into this ratio.
Does a low burn multiple always mean a healthy company?
Not necessarily — a company can post a low burn multiple by underinvesting in growth (low burn, modest but 'efficient' ARR gains) while a faster-growing competitor with a higher multiple is building a bigger moat. Read burn multiple alongside absolute growth rate, not in isolation.
Accuracy and 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.
Related tools
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SaaS Quick Ratio Calculator
See how much growth you generate for every dollar of churn and contraction.
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Burn Multiple Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/burn-multiple
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/burn-multiple" target="_blank" rel="noopener">Burn Multiple Calculator — RevenueLab</a> (2026).</p>
Source: [Burn Multiple Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/burn-multiple) (2026).