Annual Recurring Revenue

Detailed Description

Burn multiple is a SaaS metric used to measure the efficiency of a company’s customer acquisition strategy. It represents the amount of money a company burns to generate incremental dollars of ARR (Annual Recurring Revenue). The more the Burn Multiple, the higher a company spends on achieving growth. A lower Burn Multiple represents efficiency in an organization.

How To Calculate

It is calculated by dividing the net burn rate by the annual recurring revenue. For example, if a company burns $1000,000 M in the quarter while adding $500,000 to its ARR, it represents a 2X Burn Multiple. A higher burn multiple is a signal for a company to cut costs immediately.


ƒ Sum(Net Burn) / Sum(Net New ARR)


A Burn Multiple is seen as a sign of a healthy company, and most SaaS companies target a Burn Multiple of <2 is good. A Burn Multiple >4 is alarming.

Related Metrics

Net Burn
Net Annual Recurring Revenue Added
Bessemer Efficiency Score


The Burn Multiple is used for measuring how long it takes for the company to recoup the cost of acquiring a customer, while the CAC represents the cost of acquiring a new customer.

Burn Multiple can only measure the cost of acquiring new customers. However, it doesn't consider customer churn, the cost of serving existing customers, and other operational expenses.