Unit economicsMetric 17 of 35

Burn Multiple

How much net burn you spend to generate each dollar of new ARR.

A capital-efficiency ratio showing how much cash you burn for each dollar of net new ARR created in the same period. Unlike CAC, it includes the whole operating system: product, support, G&A, sales, and churn quality.

Formula

Burn Multiple = Net Burn ÷ Net New ARR

Worked example

Burn $300,000 in Q1 and add $200,000 of Net New ARR → Burn Multiple = 1.5x.

Illustrative comparisons

Capital efficiency

These unsourced ranges are illustrative scenarios, not measured industry benchmarks, percentiles or recommended targets. Their qualitative labels are editorial interpretations. Compare your own cohorts using the same segment, period, currency and measurement basis.

Excellent

< 1x

Healthy

1–2x

Concerning

> 3x

Why it matters

Burn Multiple is the cleanest founder-level answer to 'are we buying growth efficiently?' A company can have solid LTV:CAC and still have a bad Burn Multiple if churn is high, headcount is too heavy, or expansion is weak. It is especially useful once fundraising gets harder and capital efficiency matters as much as growth.

Common mistakes

Using gross new ARR instead of net new ARR — ignores churn and contraction.
Calculating from bookings instead of actual recurring revenue added.
Reading one month in isolation; use quarterly or trailing periods for stability.

Track Burn Multiple in FlowMRR