Monthly Burn Rate Calculator
Calculate your monthly cash burn rate and project runway.
Formula
Gross Burn Rate = Total Monthly Operating Expenses Net Burn Rate = Total Monthly Expenses − Total Monthly Revenue Burn Rate Trend = (Month N Burn − Month 1 Burn) / Number of Months
How to Calculate
Burn rate measures how quickly your company spends cash. Gross burn rate is your total monthly operating expenses—every dollar going out the door. Net burn rate subtracts revenue, showing the net cash consumed each month. Both metrics are essential: gross burn reveals your cost structure, while net burn shows the actual cash drain.
To calculate burn rate accurately, use a trailing average over 3–6 months rather than a single month's data. This smooths out one-time expenses (annual insurance premiums, quarterly tax payments, equipment purchases) and seasonal revenue fluctuations.
Track burn rate trends over time. A declining net burn rate means you are moving toward sustainability. An increasing burn rate requires a clear justification—intentional growth investment or a worrying cost spiral. Break down burn by category (payroll, marketing, infrastructure, G&A) to identify which areas are driving increases.
Worked Example
A startup tracks three months of expenses:
Month 1: Expenses $85,000, Revenue $20,000 Month 2: Expenses $90,000, Revenue $28,000 Month 3: Expenses $88,000, Revenue $35,000
Average Gross Burn: ($85,000 + $90,000 + $88,000) / 3 = $87,667/month Average Net Burn: ($65,000 + $62,000 + $53,000) / 3 = $60,000/month
Net burn is declining ($65K → $53K) as revenue grows faster than expenses. With $480,000 in cash: Runway at current net burn: $480,000 / $53,000 = 9.1 months Runway at average net burn: $480,000 / $60,000 = 8 months
Why It Matters
Burn rate is the pulse of a startup. Investors use it to evaluate capital efficiency and determine how much funding you need. Founders use it to plan hiring, manage runway, and make go/no-go decisions on growth initiatives. An unexplained increase in burn rate is one of the first warning signs board members and investors look for.
Practical Tips
- ✓Track both gross and net burn—gross shows spending discipline, net shows path to sustainability.
- ✓Use a 3-month rolling average to smooth out one-time expenses and seasonal variations.
- ✓Break down burn by department to identify which teams or functions are driving cost increases.
- ✓Benchmark your burn rate against similar-stage companies in your industry for context.
Frequently Asked Questions
What is a normal burn rate for a startup?
How do I reduce burn rate without killing growth?
Should I include one-time expenses in burn rate?
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