BUSINESS
Burn Rate Calculator - Calculate Startup Cash Burn
By Worldtickers ·
Calculate your monthly cash burn rate to understand how quickly your business is spending cash reserves.
This burn rate tool focuses on calculating your monthly cash burn rate to understand how quickly your business is spending cash reserves. Use it to turn operating metrics into practical business insight by entering costs, revenue, customers, margins, or growth assumptions and reviewing the numbers behind better decisions.
Calculator
Burn Rate Calculator
See how long your cash will last given your spending and revenue.
Monthly Burn Rate
$0.00
Net Burn
$0.00
Cash Runway (months)
N/A
What Is Burn Rate
Burn rate is one of the most critical financial metrics for startups and early-stage businesses. It measures the rate at which a company is spending its cash reserves, typically expressed as a monthly dollar amount. For a startup that has not yet reached profitability, burn rate determines the company's survival timeline — how many months it can continue operating before running out of money. Every founder, investor, and board member tracks burn rate because it directly answers the most urgent question in business: how long can we keep the lights on?
There are two forms of burn rate: gross burn and net burn. Gross burn is the total amount of cash a company spends each month, regardless of how much revenue it generates. If a company pays $150,000 per month in salaries, rent, and infrastructure, its gross burn is $150,000. Net burn — the more meaningful metric — is the difference between cash spent and cash earned. If the same company earns $60,000 per month in revenue, its net burn is $90,000. Net burn represents the actual rate at which the bank account is shrinking.
Burn rate is closely tied to another essential metric: runway. Runway is your current cash balance divided by your net burn rate, telling you how many months you have before the cash runs out. A company with $540,000 in the bank and $90,000 in monthly net burn has 6 months of runway. This is why burn rate and runway are always discussed together — burn rate is the speed of the fire, and runway is how much fuel remains.
For investors, burn rate is a key indicator of capital efficiency. A startup that burns $200,000 per month while generating $150,000 in monthly revenue (net burn = $50,000) is far more efficient than one that burns the same amount with only $30,000 in revenue (net burn = $170,000). Investors evaluate burn rate relative to revenue growth — a high burn rate funded by strong revenue growth is acceptable, while a high burn rate with flat or declining revenue is a red flag.
How to Use This Calculator
Enter your total monthly expenses and total monthly revenue. The calculator computes both your gross burn rate (total expenses) and net burn rate (expenses minus revenue). If you also enter your current cash balance, it calculates your runway in months.
Monthly Expenses
Include all cash outflows for the month: salaries, rent, cloud hosting, marketing, software subscriptions, professional services, equipment purchases, and any other cash expenses. Do not include non-cash items like depreciation. Use an average of the last 3 months for a more accurate picture if your expenses fluctuate.
Monthly Revenue
Enter your total cash revenue for the month — the actual cash received, not invoiced amounts. For subscription businesses, use recognized revenue. For project-based businesses, use cash collected. Revenue offsets your burn rate and extends your runway.
Cash Balance
Enter your total available cash: bank accounts, money market funds, and short-term investments that can be quickly converted to cash. Do not include lines of credit (that is borrowed money, not cash you have) or illiquid assets. The cash balance divided by net burn gives you your runway.
Formula
Gross burn: Gross Burn = Total Monthly Expenses
Net burn: Net Burn = Total Monthly Expenses − Monthly Revenue
Runway: Runway (months) = Cash Balance / Net Burn
Burn multiple: Burn Multiple = Net Burn / Net New ARR(lower is better; below 2x is efficient)
Examples
Example 1: Early-Stage SaaS Startup
Monthly expenses: $120,000 (team of 8, office, tools). Monthly revenue: $25,000 (growing 15% month-over-month). Cash balance: $800,000. Gross burn: $120,000. Net burn: $120,000 − $25,000 = $95,000. Runway: $800,000 / $95,000 = 8.4 months. The startup needs to either reach profitability or raise more funding within the next 8 months. However, with 15% monthly revenue growth, the net burn should decrease each month, potentially extending runway beyond the initial calculation.
Example 2: Pre-Revenue Startup
Monthly expenses: $80,000 (team of 5, office, R&D). Revenue: $0 (still in development). Cash balance: $500,000. Gross burn = Net burn = $80,000. Runway: $500,000 / $80,000 = 6.25 months. This is a critical situation — the startup has only 6 months to either launch and generate revenue or raise additional capital. The founders should immediately evaluate whether they can reduce burn by cutting non-essential spending, reducing headcount, or moving to a smaller office.
Example 3: Approaching Profitability
Monthly expenses: $90,000. Monthly revenue: $85,000 (growing 8% monthly). Cash balance: $200,000. Net burn: $90,000 − $85,000 = $5,000. Runway: $200,000 / $5,000 = 40 months. The company is almost profitable — just $5,000 short per month. At 8% monthly revenue growth, it will break even in about 1 month and achieve negative burn (cash-flow positive) shortly after. This is an ideal trajectory.
Tips
Track Burn Rate Weekly, Not Just Monthly
Monthly burn rate can mask spending spikes. A large annual payment (insurance, software license) in one month makes that month look terrible while the next 11 months look fine. Track burn rate weekly and use a rolling 3-month average to smooth out anomalies. Weekly tracking also helps you catch expense creep earlier.
Reduce Burn Before You Need To
The worst time to cut costs is when you are running out of cash. Proactively reduce burn rate when you still have runway — negotiate vendor contracts, automate manual processes, and eliminate underperforming marketing channels. Cutting burn early preserves options and gives you more time to find product-market fit or negotiate fundraising from a position of strength.
Distinguish Between Growth Spend and Waste
Not all spending is equal. Marketing spend that generates customers with a positive LTV is an investment, not waste. Hiring engineers to build a feature customers are waiting for is growth spending. The key is to track the return on each spending category. Growth spending with measurable ROI is acceptable; spending without clear returns is waste that should be cut.
Set a Burn Rate Ceiling
Establish a maximum acceptable burn rate and get board or team agreement on it. When expenses approach the ceiling, every new hire or purchase requires explicit approval. This prevents the gradual spending creep that happens when no one is monitoring the overall burn. Review the ceiling quarterly and adjust based on revenue growth and funding status.
FAQ
What is burn rate?
Burn rate is the rate at which a company spends its cash reserves, typically expressed as a monthly dollar amount. It represents the net cash outflow — total expenses minus total revenue. A company that spends $100,000 per month and earns $40,000 has a burn rate of $60,000 per month. Burn rate is a critical metric for startups and pre-profit businesses because it directly determines how long the company can survive before running out of cash.
What is the difference between gross burn and net burn?
Gross burn is the total amount of cash spent per month, regardless of revenue. Net burn is the difference between cash spent and cash earned — the actual rate at which your cash reserves are decreasing. If you spend $100,000 and earn $40,000, your gross burn is $100,000 but your net burn is $60,000. Net burn is the more meaningful metric because it reflects the actual rate of cash depletion.
How do investors evaluate burn rate?
Investors use burn rate to assess how efficiently a startup uses capital and to estimate the company's runway (how long until it needs more funding). A high burn rate relative to revenue growth is a red flag — it suggests the company is spending inefficiently. Investors prefer to see burn rate decreasing over time as revenue grows, approaching profitability. They also compare burn rate to industry benchmarks for similar-stage companies.
Is a high burn rate always bad?
Not necessarily. A high burn rate can be justified if it is funding high-growth activities that are generating proportionally higher revenue growth. A startup spending $500,000 per month but growing revenue by 30% month-over-month is in a very different position than one spending the same amount with flat revenue. The key metric investors look at is the burn multiple — burn rate divided by net new ARR (annual recurring revenue). A burn multiple below 2x is considered efficient.
How often should I calculate burn rate?
Calculate burn rate at least monthly. For early-stage startups, weekly calculation can help catch spending trends before they become problems. Monthly calculation is sufficient for most businesses. Track burn rate alongside revenue growth to see whether the ratio is improving (getting more efficient) or deteriorating (spending more for each dollar of revenue). Plot burn rate over time to identify trends and seasonal patterns.
What costs should be included in burn rate?
Include all cash outflows: salaries and benefits, rent and facilities, cloud hosting and infrastructure, marketing and sales costs, software subscriptions, professional services (legal, accounting), equipment purchases, and any other cash expenses. Do not include non-cash items like depreciation. If you have revenue, subtract it from total expenses to get net burn. Be consistent in what you include — changing the definition over time makes trend comparisons meaningless.
How does burn rate relate to runway?
Runway is your cash balance divided by your net burn rate. It tells you how many months you can continue operating at the current burn rate before running out of cash. If you have $600,000 in the bank and a net burn of $60,000 per month, your runway is 10 months. This is why burn rate and runway are always discussed together — burn rate is the speed of the fire, runway is how much fuel you have left.
Can burn rate be negative?
A negative burn rate means the company is generating more cash than it is spending — it is cash-flow positive. This is the goal for every business. A company with $100,000 in monthly expenses and $120,000 in monthly revenue has a negative burn rate of −$20,000, meaning it is adding $20,000 to its cash reserves each month. Negative burn rate means the company can survive indefinitely without additional funding, assuming the trend continues.