Efficiency
Burn multiple calculator
Enter your net cash burn and your net new ARR for the same period. The calculator gives the burn multiple.
Burn multiple
1.5x
Dollars burned per dollar of net new ARR
How to read the result
Lower is better. The measure was popularised by the investor David Sacks, whose rule of thumb treats a multiple under 1 as excellent and one above 2 as a sign to look hard at spending.
It counts all burn, not only sales and marketing, so it catches inefficiency wherever it sits.
The formula
EfficiencyBurn multiple = net burn ÷ net new ARR.
Frequently asked questions
Cash spent minus cash received over the period: the fall in your bank balance, leaving out money raised.
Then net burn is zero or negative and the multiple stops being meaningful. Use the Rule of 40 instead.
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