.burn-rate-calculator-container {
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
max-width: 800px;
margin: 0 auto;
padding: 20px;
background: #f9f9f9;
border: 1px solid #e0e0e0;
border-radius: 8px;
}
.br-calc-header {
text-align: center;
margin-bottom: 30px;
}
.br-calc-header h2 {
margin: 0;
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display: block;
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margin-top: 5px;
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display: block;
width: 100%;
padding: 15px;
background-color: #e74c3c;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
font-weight: bold;
cursor: pointer;
transition: background 0.3s;
}
.br-btn:hover {
background-color: #c0392b;
}
.br-results {
margin-top: 30px;
padding: 20px;
background: #fff;
border: 1px solid #ddd;
border-radius: 4px;
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}
.br-result-row {
display: flex;
justify-content: space-between;
align-items: center;
padding: 10px 0;
border-bottom: 1px solid #eee;
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border-bottom: none;
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color: #d35400;
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.br-content-section p {
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.br-content-section ul {
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.formula-box {
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function calculateBurnRate() {
var cashInput = document.getElementById('current_cash');
var expensesInput = document.getElementById('monthly_expenses');
var revenueInput = document.getElementById('monthly_revenue');
var cash = parseFloat(cashInput.value);
var expenses = parseFloat(expensesInput.value);
var revenue = parseFloat(revenueInput.value);
if (isNaN(cash) || isNaN(expenses)) {
alert("Please enter valid numbers for Cash Balance and Expenses.");
return;
}
if (isNaN(revenue)) {
revenue = 0;
}
// Calculations
var grossBurn = expenses;
var netBurn = expenses – revenue;
var runway = 0;
var runwayText = "";
var statusHtml = "";
// Determine Runway
if (netBurn <= 0) {
// Profitable or break-even
runwayText = "Infinite";
statusHtml = "
";
} else {
if (cash <= 0) {
runwayText = "0 Months";
statusHtml = "
";
} else {
runway = cash / netBurn;
runwayText = runway.toFixed(1) + " Months";
if (runway < 6) {
statusHtml = "
";
} else if (runway < 12) {
statusHtml = "
";
}
}
}
// Format Currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
// Display Results
document.getElementById('display_gross_burn').innerText = formatter.format(grossBurn) + " / mo";
document.getElementById('display_net_burn').innerText = (netBurn <= 0 ? "+ " + formatter.format(Math.abs(netBurn)) + " (Profit)" : formatter.format(netBurn) + " / mo");
document.getElementById('display_runway').innerText = runwayText;
document.getElementById('runway_status').innerHTML = statusHtml;
document.getElementById('br_results_area').style.display = "block";
}
How is a Burn Rate Calculated?
Understanding how is a burn rate calculated is essential for startup founders, CFOs, and investors. Burn rate refers to the rate at which a company consumes its cash reserves before generating positive cash flow from operations. It is essentially the speed limit of your startup—dictating how fast you can drive before you run out of fuel.
The Two Types of Burn Rate
When asking how burn rate is calculated, it is important to distinguish between Gross Burn and Net Burn:
- Gross Burn Rate: This represents the total amount of money your company spends each month. It does not take revenue into account. It answers the question: "How much cash leaves the bank account every month?"
- Net Burn Rate: This is the most critical metric for determining runway. It represents the total amount of money your company loses each month after accounting for incoming revenue.
Formulas: How to Calculate Burn Rate
1. Gross Burn Rate Formula
Gross Burn = Total Monthly Operating Expenses
This includes salaries, rent, software subscriptions, server costs, marketing spend, and administrative costs.
2. Net Burn Rate Formula
Net Burn = Total Monthly Operating Expenses – Total Monthly Revenue
If your expenses are $50,000 and your revenue is $10,000, your Net Burn is $40,000.
3. Runway Calculation
Once you know your Net Burn Rate, you can calculate your Runway, which is the amount of time (usually in months) you have until your cash balance hits zero.
Runway (Months) = Current Cash Balance / Net Burn Rate
Example Calculation
Let's look at a practical example of how a burn rate is calculated for a tech startup:
- Starting Cash: $1,000,000
- Monthly Salaries: $80,000
- Rent & Overhead: $10,000
- Marketing: $10,000
- Total Expenses (Gross Burn): $100,000
- Monthly Revenue: $20,000
Using the logic above:
- Net Burn Rate: $100,000 (Expenses) – $20,000 (Revenue) = $80,000 / month.
- Runway: $1,000,000 / $80,000 = 12.5 Months.
Why Monitoring Burn Rate is Critical
Investors scrutinize burn rate to gauge efficiency and risk. A high burn rate relative to growth can be a red flag. Conversely, a burn rate that is too low might indicate a lack of investment in growth. By using the calculator above, you can perform scenario planning—seeing how hiring new employees (increasing Gross Burn) or increasing sales (reducing Net Burn) impacts your survival timeline.