Burn Rate Calculator
Track startup cash consumption velocity. Calculate monthly gross burn (total cash disbursements) and net burn rate (disbursements minus cash collections) to monitor capital efficiency and prevent sudden startup insolvency.
Salaries, office rent, software tools, marketing, and legal retainers
Actual cash customer collections and subscription receipts
Total liquid bank deposits and money market funds
Net cash lost each month after accounting for incoming customer revenue
How to Use This Calculator
- Enter total monthly operational cash outflows (payroll, rent, server hosting, marketing).
- Enter total cash receipts collected from paying customers.
- Enter total bank cash reserves.
- Review net monthly burn rate and monitor daily cash consumption pace.
Formula & Calculation Methodology
Subtracts incoming customer cash receipts from total operational outflows to calculate net monthly capital consumption.
Worked Example
$45,000 monthly expenses with $15,000 cash revenue and $360,000 bank reserves
Frequently Asked Questions
What is the difference between Gross Burn and Net Burn?↓
Gross burn is the total cash spent each month on operations (e.g. $45,000). Net burn is the actual cash loss after subtracting customer revenue (e.g. $45,000 expenses - $15,000 revenue = $30,000 net burn).
Why is tracking burn rate essential for venture-backed startups?↓
Startups operate at an intentional loss to capture market share. Knowing exact net burn rate determines how much time remains before capital is exhausted, dictating when fundraising must commence.
What happens if monthly cash revenue exceeds monthly expenses?↓
If revenue exceeds expenses, net burn becomes zero and the startup is "default alive" (cash flow positive), no longer dependent on external venture capital infusions to survive.
What expenses are most commonly cut to reduce startup burn rate?↓
Payroll represents 60% to 80% of tech startup burn. Startups reduce burn by pausing non-essential hiring, renegotiating enterprise SaaS software contracts, and trimming paid marketing spend.
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Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.