— Business & Valuation
Burn Rate Calculator
Measure gross burn, net burn, runway, and burn multiple from cash, revenue, and expenses. See how efficiently cash turns into growth, what runway current cash implies, and how revenue and spending scenarios change the zero-cash date.
Net burn rate
$200,000
- Gross burn rate
- $350,000
- Burn multiple
- 1.33
- Monthly cash flow
- $-200,000
- Implied runway
- 12 months
Try: By category, From cash balances, Concerning burn multiple, Cash-flow positive
— The burn breakdown
| Item | Monthly amount | % of gross |
|---|---|---|
| Payroll & headcount | $250,000 | 71.43% |
| Sales & marketing | $60,000 | 17.14% |
| Software & tools | $25,000 | 7.14% |
| Other | $15,000 | 4.29% |
| Gross burn | $350,000 | 100% |
| Revenue offset | $-150,000 | -42.86% |
| Net burn | $200,000 | 57.14% |
— Projected burn (expenses +3%/mo, revenue +8%/mo)
| Month | Gross burn | Revenue | Net burn | Cumulative burned |
|---|---|---|---|---|
| Month 1 | $350,000 | $150,000 | $200,000 | $200,000 |
| Month 2 | $360,500 | $162,000 | $198,500 | $398,500 |
| Month 3 | $371,315 | $174,960 | $196,355 | $594,855 |
| Month 4 | $382,454 | $188,957 | $193,498 | $788,353 |
| Month 5 | $393,928 | $204,073 | $189,855 | $978,207 |
| Month 6 | $405,746 | $220,399 | $185,347 | $1,163,554 |
— Gross versus net burn
Download— How it works
Gross burn = total monthly cash expenses. Net burn = monthly cash expenses − monthly revenue. Net burn (from balances) = (Cash at start − Cash at end) ÷ months. Burn multiple = Net burn ÷ Net new ARR. Implied runway = Cash on hand ÷ Net burn.
Gross burn, net burn and cash flow
Gross burn is simply the total cash a company spends in a month — payroll, marketing, software, rent, everything. Net burn subtracts the revenue coming in, so it’s the cash genuinely consumed: a company spending 350,000 a month with 150,000 of revenue has a net burn of 200,000. Net burn is the number that matters for survival, because it’s what actually drains the bank account. You can compute it two ways — bottom-up from expenses and revenue, or top-down from the change in your cash balance over a period (cash at start minus cash at end, divided by the months), which is a useful cross-check because it captures every cash movement, not just the ones in your expense model. Monthly cash flow is just net burn with the sign flipped: a 200,000 net burn is a −200,000 monthly cash flow, and when revenue exceeds expenses the company is cash-flow positive and isn’t burning at all.
Worked example — by category: Gross burn = 250,000 payroll + 60,000 marketing + 25,000 software + 15,000 other = 350,000. Net burn = 350,000 − 150,000 revenue = 200,000 per month. With 2,400,000 in the bank, the implied runway is 2,400,000 ÷ 200,000 = 12 months.
The burn multiple — capital efficiency
Spending fast isn’t inherently bad; spending fast without generating growth is. The burn multiple captures this directly: net burn divided by the net new ARR you added over the same period. It answers “how many dollars did we burn for each dollar of new recurring revenue?” The widely-used bands are clear — under 1× is excellent (you’re adding more ARR than you burn), 1–1.5× is good, 1.5–2× is acceptable but worth watching, and above 2× is concerning. A company with a 200,000 net burn that added 150,000 of net new ARR has a 1.33× burn multiple — good. The same burn adding only 75,000 of ARR would be 2.67× — a sign that growth is getting expensive. The burn multiple has largely replaced older efficiency metrics because it ties spending directly to the thing that creates enterprise value: durable recurring revenue.
Runway, headcount and projecting forward
Burn rate’s most important consequence is runway — cash on hand divided by net burn, the number of months before the company runs out of money (this calculator previews it; model fundraises and hiring ramps for a full picture). Because payroll is almost always the dominant cost, headcount decisions move burn more than anything else, which is why the composition chart calls it out. And burn isn’t static: as a company grows, both expenses and revenue scale. Projecting them forward shows whether net burn is heading down (revenue growing faster than costs — approaching profitability) or up (the opposite). The healthiest pattern is net burn that shrinks even as gross burn rises, because revenue is compounding faster. Educational tool only, not investment advice.
— Reader questions
What is the difference between gross and net burn?
Gross burn is total monthly cash expenses — everything going out. Net burn subtracts monthly revenue, so it’s the cash actually consumed: gross burn of 350,000 against 150,000 of revenue is a net burn of 200,000. Net burn is what drains the bank account and drives runway, so it’s usually the headline figure.
How do you calculate burn rate from a cash balance?
Take the cash at the start of the period, subtract the cash at the end, and divide by the number of months: net burn = (cash at start − cash at end) ÷ months. For example, going from 3,000,000 to 2,400,000 over three months is a net burn of 200,000 a month. This top-down method captures every cash movement, which makes it a good cross-check on a bottom-up expense model.
What is the burn multiple?
The burn multiple is net burn divided by net new ARR over the same period — how many dollars you burn for each dollar of new recurring revenue you add. The benchmark bands are: under 1× excellent, 1–1.5× good, 1.5–2× acceptable, and over 2× concerning. It’s become the leading capital-efficiency metric because it ties spending directly to durable growth.
What is a good burn rate?
There’s no single number — it depends on cash in the bank and growth. The right lens is the burn multiple (is spending producing growth efficiently?) and runway (how many months of cash remain). A high burn is fine with a low burn multiple and plenty of runway; a modest burn can be dangerous with little cash and weak growth. Aim for a burn multiple under 1.5× and runway comfortably beyond your next milestone.
How does burn rate relate to runway?
Runway = cash on hand ÷ net burn — the number of months before the cash runs out at the current rate. A company with 2,400,000 and a 200,000 net burn has roughly 12 months of runway. This calculator previews that figure; a full runway analysis also factors in expected fundraises and how burn changes as you hire or cut.
Why is headcount so important to burn rate?
Because for most companies — especially software businesses — payroll, benefits and contractors are by far the largest cash expense, often well over half of gross burn. That makes hiring and headcount the single biggest lever on burn: adding or pausing hiring moves the runway more than any other decision. The cost-composition chart here highlights how dominant it usually is.