FREE STARTUP FINANCE TOOL
Burn Rate Calculator
Calculate gross burn, net burn, cost mix, and reduction targets.
GROSS BURN, NET BURN, AND COST MIX
Calculate your startup burn rate
Planning estimate only. Burn rate can vary with collections, annual contracts, taxes, debt payments, capital purchases, and one-time costs. Currency selection changes formatting, not values.
THE BASICS
What is a burn rate calculator?
A burn rate calculator shows how quickly a startup consumes cash. A detailed expense breakdown helps founders see both the total monthly cost base and the categories driving it.
Carry net burn into the Startup Runway Calculator to estimate how long the current cash balance can fund operations.
Gross and net burn rate formulas
Gross monthly burn = total monthly cash operating expensesNet monthly burn = gross monthly burn − monthly operating revenueAnnualized net burn = monthly net burn × 12When operating revenue is higher than expenses, net burn becomes negative. This represents net cash generation, not a spending error.
What to include in startup burn
Include payroll and benefits, contractors, rent, software, sales and marketing, infrastructure, and other recurring operating cash costs. Use actual cash outflows from one consistent month or a normalized recent average.
Keep financing, founder deposits, asset sales, and other capital inflows out of operating revenue. Exclude non-cash accounting expenses, and document how you handle annual contracts and one-time costs.
Startup burn rate example
The default example has $82,000 gross monthly burn and $30,000 of operating revenue, producing $52,000 monthly net burn.
| Result | Metric | Result |
|---|---|---|
| Gross monthly burn | $82,000.00 | |
| Monthly operating revenue | $30,000.00 | |
| Monthly net burn | $52,000.00 | |
| Annualized net burn | $624,000.00 | |
| Revenue coverage | 36.59% | |
| Largest expense | Payroll & benefits | |
| Savings at 15% reduction | $12,300.00 | |
| Net burn after reduction | $39,700.00 |
How founders should manage burn
Track gross burn, net burn, cash collections, and runway together. Revenue can improve net burn while the underlying expense base continues to grow, so neither gross nor net burn should be viewed alone.
Use the planned Break Even Calculator to understand the sales level needed to cover costs. SaaS founders can also compare pricing assumptions with the SaaS Pricing Calculator and recurring revenue with the MRR Calculator.
COMMON QUESTIONS
Burn rate questions
What is burn rate?
Burn rate measures how quickly a company spends cash. Gross burn is total monthly operating cash expense, while net burn subtracts operating revenue.
Should I use gross burn or net burn for runway?
Use net burn for cash runway because operating revenue offsets expenses. Track gross burn alongside it so revenue growth does not hide an expanding cost base.
Should fundraising count as operating revenue?
No. Equity financing, loans, and other capital inflows change cash balance but are not operating revenue. Including them would understate recurring net burn.
Should depreciation be included in burn rate?
Burn rate is a cash metric, so non-cash depreciation and amortization are generally excluded. Include the actual cash purchase or financing payment when it occurs.
What does a negative net burn mean?
It means operating revenue exceeds cash operating expenses. The business is generating cash under the entered assumptions rather than consuming it.
How often should I calculate burn rate?
Review burn monthly using actual cash activity. A trailing three-month average can be useful when collections, annual bills, or project expenses make individual months volatile.