Plainhub
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Burn multiple calculator

What you burn to add one euro of new ARR, against the benchmark bands investors use, plus what churn is costing you on identical spending. Nothing stored.

Cash
ARR movements
Burn multiple
1.5x
great
Net new ARR
€80,000
for the period
Cost per €1 of ARR
€1.50
burned per recurring euro
Without churn
1.0x
if you retained everything
Burn multipleVerdict
Under 1xExceptional, growth funds itself
1x to 1.5xGreat ← you
1.5x to 2xGood
2x to 3xSuspect, the model needs a story
Over 3xTrouble at any stage past seed

Great: you pay €1.50 for each euro of recurring revenue, and efficient at any stage. Losing nothing this period would have put you at 1.0x on identical spending, which is the whole argument for treating efficiency as a retention problem first.

The burn multiple formula

One division, over a period, usually a quarter:

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 full breakdown, with a worked quarter and the two levers that actually move it, is in the burn multiple guide.

Common questions

What is the burn multiple formula?

Burn multiple = net burn / net new ARR, both measured over the same period, usually a quarter or a year. Net burn is spending minus cash revenue. Net new ARR is new plus expansion, minus churn and contraction.

What is a good burn multiple?

Under 1x is exceptional and means growth largely funds itself. 1x to 1.5x is great, 1.5x to 2x is good, 2x to 3x is suspect and needs a story, and above 3x is trouble at any stage past seed. Benchmarks loosen at seed and in downturns.

Why does churn hurt the burn multiple twice?

Because the denominator is net new ARR. You spend to win the customer, then lose the ARR they carried, so the same burn produces a smaller number underneath it. A company adding 100k of new ARR while churning 40k posts 60k net new, which can nearly double the multiple on identical spending.

Who created the burn multiple?

David Sacks popularised it in 2020. It caught on because it compresses product, sales, pricing and retention into one ratio and answers a single question: what does a euro of growth cost you?

What if my net new ARR is zero or negative?

Then the burn multiple has no meaningful value, and a calculator that prints one is lying to you. Churn cancelled out everything you added, so any spending at all bought no recurring revenue. Retention is the only lever that changes it.

How is burn multiple different from CAC payback?

CAC payback measures the sales and marketing cost of one customer. Burn multiple measures the whole company's cash against all the recurring revenue it added, so it catches inefficiency anywhere, including engineering spend that never turned into product anyone paid for.

A derived number is only as current as its inputs

Burn multiple needs your burn and your MRR movements to be true before it can be. If those live in a spreadsheet from two months ago, your multiple is fiction. Plainhub keeps both live, so the quarter-end number is a division you can do on a napkin before anyone asks for it.

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