About the Burn Rate Calculator
Burn rate is one of the most fundamental financial metrics for any business operating on a cash runway. It tells you how fast you are spending money — and, more importantly, how long you have before you need to either reach profitability or raise more capital. This calculator lets you compute gross and net burn from your income statement, or derive historical monthly burn directly from your bank balances.
Gross Burn vs. Net Burn
There are two burn rate numbers every founder and finance team should know:
- Gross burn rate — total monthly operating expenses, regardless of revenue. This is everything you spend: payroll, rent, software, cloud infrastructure, COGS. Gross burn shows your total cost base and the minimum revenue you'd need to become cash-flow neutral.
- Net burn rate — the cash actually consumed after subtracting revenue. If expenses are $100,000/month and revenue is $40,000/month, net burn is $60,000/month. This is the number that determines runway length and fundraising timing.
Formula
Gross Burn Rate = Monthly Operating Expenses
Net Burn Rate = Monthly Operating Expenses − Monthly Revenue
Historical Burn = (Beginning Cash − Ending Cash) ÷ Months
When to Use This Calculator
- Cash management — monitor monthly spend and track whether net burn is trending up or down over time
- Runway planning — once you know your net burn, divide cash on hand by net burn to get months of runway
- Fundraising timing — most advisors recommend starting a fundraise 6–9 months before you expect to run out of cash
- Hiring decisions — model how adding headcount changes your monthly burn and compresses runway
- Cost control reviews — use gross burn to identify whether expenses are rising faster than revenue
Cash Balance Mode
If you don't have a detailed expense breakdown, you can calculate historical monthly burn from two bank statements. Simply enter your beginning and ending cash balance and the number of months between them. The calculator divides total cash consumed by the period length to produce a monthly average. Note that this captures all cash movements — revenue, expenses, capital raises, and one-time events — so it may differ from expense-based burn if any non-operating cash flows occurred.
One-time charges, seasonality, and non-operating items can distort any single month's burn rate. For planning purposes, use a rolling 3-month average rather than a single data point. Not financial advice.
Frequently Asked Questions
What is burn rate?
Burn rate is the pace at which a company spends cash — specifically, how much money it consumes per month. Gross burn is total monthly operating expenses regardless of revenue. Net burn is what remains after revenue: if expenses exceed revenue, the business is consuming cash at the net burn rate. Burn rate is one of the most critical metrics for startups, growing companies, and any business managing a cash runway.
What is the difference between gross burn and net burn?
Gross burn is your total monthly operating expenses — every dollar going out the door regardless of what comes in. Net burn is the difference between expenses and revenue: if you spend $80,000/month and earn $30,000/month, your net burn is $50,000/month. Net burn tells you how fast you are actually depleting cash reserves. If revenue exceeds expenses, net burn is zero and the business is cash-flow positive.
How do I calculate burn rate?
Gross Burn = Monthly Operating Expenses. Net Burn = Monthly Operating Expenses − Monthly Revenue. If you don't have an itemized expense list, you can calculate historical monthly burn using beginning and ending cash balance: (Beginning Cash − Ending Cash) ÷ Number of Months. Both approaches are available in this calculator using the mode toggle.
What does a negative burn rate mean?
A negative net burn rate means the business is generating more revenue than it spends — it is cash-flow positive and growing its cash balance rather than depleting it. This is generally a strong sign of financial health, though it depends on context (e.g., a startup may have intentionally high burn early on to grow faster before optimizing for profitability).
Is this different from a runway calculator?
Yes. A runway calculator tells you how many months of cash remain given your current burn rate and cash on hand. This burn rate calculator focuses specifically on measuring the burn itself — gross and net cash consumption per month. Once you know your burn rate, you can apply it to a runway calculation manually: Runway (months) = Cash on Hand ÷ Net Burn Rate.
Can I use beginning and ending cash balances instead?
Yes. The Cash Balance mode lets you enter beginning and ending cash balances and a period in months to back-calculate historical monthly burn. This is useful when you don't have an expense breakdown but do have bank statements. It captures the net effect of all cash movements — revenue, expenses, investments, and one-time events — over the period.
Why does burn rate matter for fundraising?
Investors and lenders use burn rate to assess how long a company can operate before needing additional capital. A high burn rate paired with a short runway signals urgency — either the business must reduce costs, grow revenue quickly, or raise funds soon. Showing a clear, accurate burn rate demonstrates financial discipline and helps founders know exactly when to start a fundraise to avoid running out of cash.
