Burn Rate Calculator — Gross + Net Monthly Cash Burn

Gross burn and net burn are not the same number

A company with $200,000 of monthly operating expenses and $150,000 of revenue has a gross burn of $200,000 and a net burn of $50,000. Both are correct, they describe different things, and reporting only one hides half the position.

Why both matter

Net burn is the rate the bank balance actually shrinks — expenses minus revenue. This is what runway is computed from and what tells you how long you have.

Gross burn is the total cash leaving each month regardless of revenue, and it is your exposure if revenue stops. That distinction is the substance of this page: a company with low net burn but very high gross burn is fragile rather than efficient, because its survival depends entirely on revenue continuing to arrive. Lose a large customer and net burn jumps toward gross burn overnight — the cost base does not adjust at the same speed the revenue disappeared.

In the example above, losing the entire $150,000 of revenue would quadruple the net burn. Quoting only the $50,000 makes that company look four times safer than it is.

Note one behaviour of the tool: net burn is floored at zero. If revenue exceeds expenses it shows $0 rather than a negative figure, so a cash-generating month reads as zero burn rather than as a surplus.

This is a cash tool, not an accrual tool

Burn does not match your income statement, and the gap is often large. Annual insurance paid upfront, deferred revenue on prepaid contracts, prepaid expenses and the timing of payables all mean a month that looks profitable on an accrual basis can drain cash, while a loss-making month can generate it.

So feed this real cash movements — what actually left and entered the bank account — rather than revenue recognition or expense accrual dates. The output is only as honest as that input.

Single months are distorted by lumpy costs

Annual audits, insurance renewals, hardware purchases and tax payments land in one month, making it look catastrophic while flattering every other month. A single month is rarely a burn rate. Average over three months, or separate one-off items from the baseline explicitly, before planning against the number.

Two things tend to push burn up without anyone deciding to increase it. Headcount is usually the dominant line and it grows in steps rather than smoothly, so each hire arrives as a discrete jump. And software subscriptions accumulate quietly — nobody approves a 20% rise in tooling spend, it simply happens one seat at a time.

To turn a burn figure into months of cash, see the runway calculator. This is general business information rather than financial advice.