Burn Rate Calculator

Understanding the Burn Rate

Burn rate is how fast a company spends its cash reserves, and runway is how long those reserves will last at that pace. For any startup or business not yet profitable, these two numbers are existential — they answer the only question that ultimately matters when you're losing money: how many months until the cash runs out, and is that enough time to fix it.

How it actually works

Enter your starting cash, monthly revenue, and monthly expenses. The calculator finds your net burn (expenses minus revenue) and your runway (cash divided by net burn). With $500,000 in the bank, $40,000 in monthly revenue, and $90,000 in monthly expenses, you're burning $50,000 a month net, giving you 10 months of runway before the account hits zero.

The deeper context most people miss

The relationship between revenue and runway is dramatically non-linear, which is the insight that saves companies. Look at the table: going from $40,000 to $70,000 in monthly revenue doesn't just improve things proportionally — it more than doubles your runway, from 10 months to 25, because you're shrinking the net burn that divides into your cash. As revenue approaches expenses, runway stretches toward infinity. This is why even modest revenue growth is so powerful for a burning company: every dollar of new recurring revenue extends your survival by far more than a dollar of cost cutting does at the same distance from break-even.

Gross burn versus net burn

There are two burn rates, and confusing them can make a company feel safer or more precarious than it is. Gross burn is your total monthly cash outflow — everything you spend, regardless of income. Net burn is that outflow minus your revenue — the actual rate your cash reserves shrink. For a pre-revenue startup, gross and net burn are identical. But once revenue exists, net burn is the number that determines runway, because revenue offsets some of the spending. A company spending $90,000 a month (gross burn) with $40,000 in revenue has a net burn of only $50,000, and its runway is based on that net figure. The distinction matters for two reasons. First, runway calculations must use net burn, or you'll dramatically underestimate how long your cash lasts. Second, investors and founders watch both: gross burn reveals your cost structure and how much you'd need to cut to survive if revenue vanished, while net burn reveals your current trajectory. A company with high gross burn but near-break-even net burn is efficient but fragile to revenue loss; one with modest gross burn is more resilient. Always be clear which burn you're discussing.

A third example: the cost cut versus the revenue win

A startup has $600,000 in cash, $100,000 in monthly expenses, and $60,000 in monthly revenue — a $40,000 net burn and 15 months of runway. The team faces a choice: cut $15,000 of monthly costs, or land a deal adding $15,000 of monthly recurring revenue. Both improve net burn by $15,000, dropping it to $25,000 and extending runway from 15 months to 24 — identical on paper. But they're not equivalent. The cost cut is certain and immediate but finite — you can only cut so much before you damage the business, and it does nothing to prove the company works. The revenue win extends runway equally but also demonstrates traction, makes the next fundraise easier and less dilutive, and can keep growing, whereas costs can't keep falling. This is why disciplined founders pursue both but weight revenue: cutting costs buys time, but growing revenue buys time and builds the case for the company's survival beyond the current cash. The burn calculator shows the runway is the same; judgment recognizes that how you extend runway matters as much as the extension itself.

Timing a fundraise before the cash runs out

A founder has 10 months of runway and needs to decide when to raise the next round. The naive plan is to start fundraising when the cash gets low — but that's a fatal mistake, because raising money takes time and desperation destroys negotiating leverage. Fundraising typically takes 3-6 months from first pitch to money in the bank, and investors can smell a company running on fumes, using it to push down the valuation or the terms. So a founder with 10 months of runway should start raising at around month 4-5, leaving a 5-6 month buffer, so they negotiate from a position of relative strength and have time for the process to close before the account empties. The burn calculator is the planning tool here: it tells you exactly how many months you have, which lets you back-calculate when to start raising, when you'd hit a danger zone, and how much runway a given raise would buy. Running out of cash mid-fundraise is one of the most common ways promising startups die — not because the business failed, but because the founder misjudged the timing. Knowing your runway precisely, and starting the raise with months to spare, is basic survival.

Why runway drives every startup decision

For a company burning cash, runway isn't just a metric — it's the master constraint that shapes every major decision, and founders who internalize this make better choices. Runway determines hiring: each new salary shortens your runway, so a hire is really a bet that the person will extend runway (through revenue or efficiency) faster than they consume it. Runway determines fundraising timing, since you must raise well before the cash runs out. Runway determines strategy: a company with 18 months can pursue a patient, build-it-right approach, while one with 6 months must focus ruthlessly on whatever proves the business or generates revenue fastest. Runway even determines risk appetite — plenty of runway allows experiments, while short runway forces conservative, survival-focused choices. The dangerous trap is treating runway as static when it's constantly changing: every new expense shortens it, every revenue gain lengthens it, and founders must track it continuously rather than checking occasionally. The best founders know their runway to the month at all times and treat every spending and hiring decision as a runway decision, because in a pre-profit company, running out of cash is the one failure from which there's no recovery. The burn calculator turns this abstract pressure into a specific number you can plan around.

Variations: pre-revenue, post-revenue, and the path to default alive

Burn and runway look different at different company stages, and the goal shifts accordingly. A pre-revenue startup has gross burn equal to net burn and a runway determined entirely by how fast it spends its raised capital — the focus is reaching a milestone (a product, traction, a metric) that justifies the next raise before the cash runs out. A post-revenue but unprofitable company has net burn below gross burn, and the critical question becomes whether revenue is growing fast enough to reach break-even before the money runs out — a state investors call being 'default alive' (you'll reach profitability on current cash and trajectory) versus 'default dead' (you won't, and must raise or change course). This distinction, popularized in startup circles, is one of the most important a founder can assess: plot your revenue growth against your burn and see whether the lines cross before the cash hits zero. A profitable company has no burn — revenue exceeds expenses — and runway becomes irrelevant, replaced by cash-flow management. Some companies deliberately choose to burn to grow faster, trading runway for market share, which can be smart or fatal depending on whether the growth materializes. The calculator handles the core burn-and-runway math; understanding which stage you're in tells you whether your goal is hitting a fundraising milestone, reaching default-alive, or managing profitable cash flow.

Managing burn and runway deliberately

Track your net burn and runway continuously, not occasionally, because both change with every financial decision and running out of cash is unrecoverable. Know your runway to the month at all times. Use it to time your fundraise: because raising takes 3-6 months and desperation weakens your terms, start well before the cash gets low — aim to begin with at least 5-6 months of buffer remaining. When you consider any new expense — a hire, a bigger office, a marketing push — calculate exactly how much it shortens your runway and whether the expected return arrives before the runway does. Weigh cost cuts against revenue growth: both extend runway, but revenue growth also builds the case for the company and can keep growing, while cost cuts are finite, so pursue revenue as the primary lever and use cost discipline to buy time. Watch both gross and net burn — gross reveals how exposed you are if revenue disappears, net reveals your current trajectory. Build scenarios: model what happens if revenue grows slower than hoped or a key deal falls through, so you know your true worst-case runway, not just the optimistic one. Runway is the constraint that governs a pre-profit company, so treat every major decision as, in part, a decision about how many months of life it adds or subtracts.

What people get wrong

• Using gross burn instead of net burn for runway — revenue offsets spending, so net burn is what depletes cash.
• Starting a fundraise when cash is already low, when it takes months and desperation weakens your terms.
• Treating runway as static; every new hire or expense shortens it and must be tracked continuously.
• Modeling only the optimistic revenue case and missing the true worst-case runway if growth stalls.

Where the math comes from

Net burn = monthly expenses − monthly revenue. Runway (months) = starting cash / net burn. If revenue equals or exceeds expenses, net burn is zero or negative and runway is effectively infinite — the company is at or beyond break-even. Gross burn (total monthly spending) is a separate figure used to assess exposure if revenue disappears.

Questions and answers

Related calculators

Profit Loss · Payroll Tax · Freelancer Rate · Amazon FBA Fee · Stripe Fees