How this calculator works
Burn multiple is net burn divided by net new ARR over the same period, usually a quarter, so it shows how many euros you burn for each euro of recurring revenue you add. Lower is better. The part people get wrong is the denominator: net new ARR is new plus expansion minus churned and contraction ARR, so churn raises the multiple.
One division, over a period, usually a quarter. David Sacks introduced the metric in The Burn Multiple, an April 2020 essay at Craft Ventures that defines it as net burn divided by net new ARR:
net new ARR = new + expansion - churned - contraction net burn = total spend - cash revenue burn multiple = net burn / net new ARR
A company that burns €300,000 in a quarter while adding €200,000 of net new ARR has a burn multiple of 1.5: it pays €1.50 for each recurring euro. Lower is better, because the euro of ARR keeps arriving every year while the €1.50 is gone once.
Churn is the hidden driver, and it is why this calculator asks for the movements separately rather than one net figure. Because the denominator is net new ARR, losing a customer costs you twice: once to acquire them, and again when their ARR leaves. That is why efficiency conversations so often turn out to be retention conversations, and why revenue concentration deserves watching before one account can move the number alone.
The quotable one-line definition sits in the burn multiple glossary entry; the full breakdown, with a worked quarter and the two levers that actually move it, is in the burn multiple guide. Two neighbouring ratios answer adjacent questions: the SaaS magic number judges the sales and marketing spend alone, and the Rule of 40 sums growth and margin for the whole company.