Burn Rate Calculator: Gross Burn, Net Burn & Runway

Burn rate is the amount of cash a company spends each month. Gross burn rate is total monthly cash outflow; net burn rate is that outflow minus monthly cash revenue. Dividing cash in the bank by net burn gives runway — the number of months until the money runs out if nothing changes.

Burn Rate Formula with a Worked Example

Take a startup that spends $80,000 a month on salaries, rent and software, brings in $30,000 a month of revenue, and has $600,000 in the bank. Entering those three numbers into the calculator above gives the results below.

If revenue grew to $45,000 while spending stayed flat, net burn would fall to $35,000 and the same $600,000 would last about 17.1 months — which is why net burn, not gross burn, decides how long the money lasts.

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.

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.

How to Calculate Cash Runway from Burn Rate

1. Add up monthly cash expenses — payroll, rent, software, contractors, marketing. This is gross burn.
2. Subtract monthly cash revenue actually collected, not invoiced. The result is net burn.
3. Divide your cash balance by net burn. $600,000 ÷ $50,000 = 12 months of runway.
4. Check the edge case. If net burn is zero or negative, revenue covers spending, the cash balance is not shrinking, and runway is effectively unlimited — the calculator shows this instead of dividing by zero.
5. Average three months of figures if spending or revenue is lumpy, so one unusual month does not distort the result.

Runway assumes burn stays flat. If you plan to hire or expect revenue growth, recalculate each month or use a month-by-month model.

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.

Tips for Getting Accurate Results

For the most accurate results, use up-to-date numbers from official sources. Double-check your inputs before calculating — small errors in the starting values can lead to significantly different outputs. If you are comparing scenarios, keep all variables the same except the one you are testing. Save or screenshot your results for future reference. This calculator uses standard formulas and is designed to give you a reliable quick estimate, though professional advice may be needed for complex situations.

Last updated: October 2026