Burn rate is how fast a company spends cash. Gross burn = total expenses. Net burn = expenses minus revenue. It is the key metric for startups tracking how long their funding lasts.

What is a healthy burn rate?

There is no universal answer. Early-stage startups may have high burn if they are investing in growth. The key is having enough runway (12-18+ months) and a clear path to reducing burn through revenue growth.

Burn Rate Calculator

Calculate your monthly burn rate — how fast your startup or business spends cash. See gross burn, net burn, and how changes in revenue or spending affect your cash position.

What Is Burn Rate?

Burn rate is the speed at which a company spends its cash reserves, typically measured monthly. It is the most closely watched financial metric for startups and pre-profit businesses. Gross burn rate is total monthly spending regardless of income. Net burn rate subtracts monthly revenue from expenses, showing the actual cash drain. Tracking both helps founders understand total cost structure and how close they are to covering expenses with revenue.

Burn Rate Formulas

Gross Burn Rate = Total Monthly Expenses

Net Burn Rate = Monthly Expenses − Monthly Revenue

Runway = Cash Balance / Net Burn Rate

Gross Burn vs Net Burn

Gross burn shows your total operating cost and is useful for understanding fixed obligations like salaries, rent, and infrastructure. Net burn reflects the real cash drain after revenue and is the number investors focus on. A company with high gross burn but strong revenue may have a low net burn and long runway. Always report both numbers in board meetings and investor updates for full transparency.

Managing and Reducing Burn

Reducing burn extends runway and gives you more time to reach profitability. Start with the largest expense categories, typically headcount and infrastructure. Consider contractors over full-time hires for non-core functions. Negotiate annual payment discounts for SaaS tools. Avoid premature scaling by keeping team size lean until product-market fit is proven. Monitor burn monthly and set alerts if spending trends above budget.