How to Calculate the Burn Rate

Burn Rate and Cash Runway Calculator

Determine your startup's Gross Burn, Net Burn, and estimated survival time (Cash Runway) using the calculator below.

Salaries, rent, software, marketing, etc.

Income generated per month. Enter 0 if none.

function calculateBurnRateMetrics() { var cashBalanceStr = document.getElementById('cashBalance').value; var monthlyExpensesStr = document.getElementById('monthlyExpenses').value; var monthlyRevenueStr = document.getElementById('monthlyRevenue').value; // Parse inputs to floats var cashBalance = parseFloat(cashBalanceStr); var monthlyExpenses = parseFloat(monthlyExpensesStr); var monthlyRevenue = parseFloat(monthlyRevenueStr); // Validation if (isNaN(cashBalance) || isNaN(monthlyExpenses) || isNaN(monthlyRevenue)) { document.getElementById('burnResult').innerHTML = "Error: Please enter valid numerical values for all fields."; return; } if (cashBalance < 0 || monthlyExpenses < 0 || monthlyRevenue < 0) { document.getElementById('burnResult').innerHTML = "Error: Values cannot be negative."; return; } // — Calculations — // 1. Gross Burn Rate = Total Monthly Expenses var grossBurn = monthlyExpenses; // 2. Net Burn Rate = Total Expenses – Total Revenue var netBurn = monthlyExpenses – monthlyRevenue; // 3. Cash Runway = Current Cash / Net Burn Rate var runwayText = ""; var runwayStatusColor = "#333"; // Default color if (netBurn <= 0) { // Company is profitable or break-even runwayText = "Infinite (Cash Flow Positive or Break-Even)"; runwayStatusColor = "green"; } else { // Company is burning cash var runwayMonths = cashBalance / netBurn; // Round to one decimal place for readability runwayMonths = Math.round(runwayMonths * 10) / 10; runwayText = runwayMonths + " Months"; if (runwayMonths < 6) { runwayStatusColor = "#d32f2f"; // Red warning for short runway } else if (runwayMonths < 12) { runwayStatusColor = "#ff9800"; // Orange warning for medium runway } } // Formatting as currency strings var grossBurnFormatted = grossBurn.toLocaleString('en-US', { style: 'currency', currency: 'USD' }); var netBurnFormatted = netBurn.toLocaleString('en-US', { style: 'currency', currency: 'USD' }); var revenueFormatted = monthlyRevenue.toLocaleString('en-US', { style: 'currency', currency: 'USD' }); // Build Output HTML var resultHTML = "

Key Metrics Results:

"; resultHTML += "

"; resultHTML += "

"; resultHTML += "Gross Monthly Burn:" + grossBurnFormatted + ""; resultHTML += "Total amount spent each month before revenue."; resultHTML += "

"; resultHTML += "

"; resultHTML += "Net Monthly Burn: 0 ? "#d32f2f" : "green") + ";'>" + netBurnFormatted + ""; resultHTML += "Actual cash lost each month (Expenses minus Revenue)."; resultHTML += "

"; resultHTML += "

"; resultHTML += "

"; resultHTML += "

Estimated Cash Runway

"; resultHTML += "" + runwayText + ""; resultHTML += "At your current Net Burn rate of " + netBurnFormatted + "/month against your cash balance."; resultHTML += "

"; document.getElementById('burnResult').innerHTML = resultHTML; }

Understanding Burn Rate and Runway for Startups

For startups and early-stage businesses, "cash is oxygen." Understanding how fast you are using that oxygen is critical to survival. Burn rate is the metric that tells you the rate at which a company is spending its venture capital or cash reserves to finance overhead before generating positive cash flow from operations.

Gross Burn vs. Net Burn: What's the Difference?

It is vital to distinguish between the two types of burn rates, as they tell different stories about your business health.

1. Gross Burn Rate

Gross Burn is simply the total amount of money your company spends in a given period (usually a month). It does not take incoming revenue into account. It is a measure of your total operational costs.

• Formula: Total Monthly Operating Expenses
• Example: If your startup spends $20,000 on salaries, $5,000 on rent, and $5,000 on software and marketing per month, your Gross Burn Rate is $30,000.

2. Net Burn Rate

Net Burn is the actual amount of cash your company is losing each month. It is your gross burn minus any incoming revenue. This is the most critical figure for calculating how long you can survive.

• Formula: Total Monthly Expenses – Total Monthly Revenue
• Example: Using the previous example, if your Gross Burn is $30,000 per month, but you are generating $10,000 in monthly revenue, your Net Burn Rate is $20,000 ($30,000 – $10,000). You are losing $20k net cash every month.

What is Cash Runway?

Cash Runway is the most important derivative of the burn rate calculation. It tells you exactly how much time you have left before your company runs out of money, assuming your income and expenses remain constant.

It is calculated by dividing your current total cash reserves by your Net Monthly Burn Rate.

Runway Example:
If you have $200,000 in the bank (Cash Balance) and your Net Burn Rate is $20,000 per month:
$200,000 / $20,000 = 10 Months of Runway.

Why Investors Care

Investors look closely at burn rate to assess capital efficiency. A very high burn rate without corresponding high growth is a red flag. Conversely, a very low burn rate might indicate you aren't investing aggressively enough in growth. Knowing your runway is essential for timing your next fundraising round; you generally want to start raising funds with at least 6-9 months of runway remaining.