Burn Rate Calculator

Calculate monthly cash burn & runway months instantly

Results

Gross Burn Rate -
Net Burn Rate -
Cash Runway -
Zero-Cash Date -
Burn Multiple -
Cash Flow Status -

What is Burn Rate?

Burn rate is the rate at which a company consumes its cash reserves, typically measured monthly. It's a critical metric for startups and growth-stage companies to understand their financial runway and sustainability.

Why Burn Rate Matters

Understanding burn rate helps you:

  • Plan fundraising: Know when you'll need to raise additional capital
  • Manage cash flow: Identify spending patterns and optimize expenses
  • Measure efficiency: Track how effectively you're using capital to grow
  • Assess risk: Understand how many months of operations remain

Real-World Example

A SaaS startup has:

  • Current Cash: $500,000
  • Monthly Revenue: $20,000
  • Monthly Expenses: $80,000

Calculations:

  • Gross Burn = $80,000/month
  • Net Burn = $80,000 - $20,000 = $60,000/month
  • Runway = $500,000 ÷ $60,000 = 8.3 months
  • Burn Multiple = $60,000 ÷ $20,000 = 3.0x

How to Calculate Burn Rate

Gross Burn Rate Formula

Gross Burn = Total Monthly Operating Expenses

This includes all costs: salaries, rent, software, marketing, etc.

Net Burn Rate Formula

Net Burn = Gross Burn - Monthly Revenue

Net burn shows actual cash loss after accounting for revenue. If revenue exceeds expenses, you're cash flow positive.

Cash Runway Formula

Runway = Current Cash ÷ Net Burn Rate

Runway tells you how many months you can operate before running out of cash.

Burn Multiple Formula

Burn Multiple = Net Burn ÷ New MRR

Burn multiple measures capital efficiency. Lower is better:

  • <1.5x: Highly efficient
  • 1.5-2x: Acceptable
  • >2x: Inefficient, needs improvement

Frequently Asked Questions

What is a good burn rate?

There's no universal "good" burn rate—it depends on your stage, industry, and growth goals. Key benchmarks:

  • Pre-seed/Seed: 18-24 months runway recommended
  • Series A: 12-18 months runway typical
  • Series B+: 12+ months runway standard

Focus on maintaining enough runway to reach your next major milestone (profitability, next funding round, etc.).

How do I reduce burn rate?

Strategies to reduce burn:

  • Cut non-essential expenses: Review all costs and eliminate waste
  • Optimize headcount: Freeze hiring, reduce contractors, or restructure teams
  • Increase revenue: Focus on high-margin products, improve conversion rates
  • Negotiate better terms: Renegotiate vendor contracts, extend payment terms
  • Improve efficiency: Automate processes, improve productivity

What if I'm cash flow positive?

If revenue exceeds expenses, you have negative burn (profitable). Your runway is infinite, and you can:

  • Reinvest profits into growth
  • Build cash reserves for opportunities
  • Consider raising capital from a position of strength
  • Focus on sustainable, profitable growth

How often should I calculate burn rate?

Calculate burn rate monthly as part of regular financial reviews. Track trends over time to identify patterns and make proactive adjustments. Update your runway calculation whenever you close funding or experience significant revenue changes.

Related Tools

Check out our other SaaS calculators:

Related Calculators: MRR Calculator | Churn Rate Calculator | SaaS LTV Calculator

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