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Burn Rate Calculator

Monthly spending rate.

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What does Burn Rate mean?

Burn rate — also called cash burn — is the speed at which a company spends its cash reserves, usually measured per month. The two names mean the same thing: “cash burn” is the cash leaving the business, and the “burn rate” is that amount expressed as a monthly rate. It is a critical metric for startups and early-stage businesses that are not yet profitable, because it tells you how quickly you are consuming capital and how much time you have before you need more funding or must reach profitability.

Cash burn comes in two flavours. Gross burn is everything you spend in a month — payroll, rent, software, ads — regardless of what comes in. Net burn subtracts the cash revenue you collect in that month, so it is the amount your bank balance actually falls by. Net burn is the number that sets your runway, and it is what this calculator measures: because it works from your starting and ending cash balances, revenue is already netted out of the result.

How to calculate Burn Rate

Cash burn formula

Net cash burn = (Starting cash − Ending cash) ÷ Number of months. Equivalently, net burn = gross burn − monthly cash revenue collected, where gross burn = total monthly cash spending (payroll + rent + software + marketing + everything else), before any revenue is counted. Once you have the monthly figure, runway = Ending cash ÷ Net cash burn, and total cash burned = Starting cash − Ending cash.

How to calculate cash burn

Take two cash balances and the time between them. Say you start a two-quarter stretch with $500,000 and end it with $200,000, six months later. Total cash burned is $500,000 − $200,000 = $300,000. Divide by the six months and your net cash burn is $300,000 ÷ 6 = $50,000 per month. Runway is the $200,000 you still hold divided by that monthly burn: $200,000 ÷ $50,000 = 4 months of cash left at the current rate. Use bank or closing balance-sheet figures rather than accrual expenses — cash burn is about money that has actually left the account.

FAQ

Subtract your ending cash balance from your starting cash balance, then divide by the number of months in between: (Starting cash − Ending cash) ÷ Months. That gives your net monthly cash burn. For example, going from $500,000 to $200,000 over 6 months is $300,000 burned, or $50,000 per month. Because it is measured from actual cash balances, any revenue you collected in the period is already netted out.

The net cash burn formula is (Starting cash − Ending cash) ÷ Number of months. It can also be written as gross burn − monthly cash revenue, where gross burn is your total monthly cash spending. Runway follows from it: Runway = Ending cash ÷ Net cash burn.

There is no universal "good" burn rate — it depends on your stage, funding, and growth strategy. A common rule of thumb is to maintain at least 12–18 months of runway. If your burn rate leaves you with less than 6 months of cash, it is generally considered risky and you should look to reduce spending or raise capital.

Gross burn rate is your total monthly cash spending regardless of revenue. Net burn rate subtracts any cash revenue you collect from that spending, giving you the actual monthly decrease in your cash balance. This calculator computes net burn, because it derives the figure from your starting and ending cash balances.

Common strategies include renegotiating vendor contracts, reducing headcount or delaying new hires, cutting non-essential expenses, moving to cheaper office space or going remote, and focusing marketing spend on the highest-ROI channels. Growing collected revenue lowers net burn without touching gross burn at all. The goal is to extend runway without significantly hurting growth.

Runway is the amount of time (in months) your company can continue operating at its current burn rate before running out of cash. It is calculated as your current cash balance divided by your monthly net burn. For example, $300,000 in cash with a $50,000/mo burn rate gives you 6 months of runway.

Most startups track burn rate monthly as part of their financial review. During periods of rapid change — such as after a funding round, a major pivot, or significant hiring — it can be useful to review it weekly. Regular tracking helps you spot trends early and make proactive adjustments.

Related calculators

  • Runway— Time before funds deplete.
  • Break-Even— Point where revenue equals cost.
  • Profit Margin— Profit as percentage of revenue.
  • ROI— Return relative to investment cost.