What is the Burn Rate Calculator?
The Burn Rate Calculator computes your startup's monthly net cash burn. It subtracts revenue from expenses to show how much cash you are consuming each month. This is the core metric every founder and investor tracks to understand runway and spending discipline.
How does it work?
Enter your total monthly operating expenses including salaries, rent, software, and marketing. Then enter your monthly recurring revenue. The calculator subtracts revenue from expenses. A positive result is your net burn the amount of cash you consume each month.
Formula
monthly expenses - monthly revenue
How the calculation works
How the calculation works
- 1Start with total monthly operating expenses including salaries, rent, and software.
- 2Enter monthly revenue from all sources.
- 3Subtract revenue from expenses.
- 4The positive result is your net burn: cash consumed each month.
Worked example
Worked Example
Driftline AI, a fictional seed-stage startup, spends $85,000 per month on its team, cloud infrastructure, and marketing while generating $22,000 in monthly recurring revenue. The team wants to know its net burn.
- 1Subtract revenue from expenses: 85000 - 22000 = 63000
- 2Driftline AI consumes $63,000 of cash each month
- 3Against $750,000 in the bank, that is roughly 750000 / 63000 = 11.9 months of runway
Result
Driftline AI has a net burn of $63,000 per month, meaning it spends $63,000 more than it earns each month and needs that pace covered by its cash balance.
Interpretation guide
How to read your result
A typical burn for pre-seed companies building an MVP with a small team.
Keep burn lean and extend runway; defer hires and spend until product-market fit signals are clear.
A normal pace for seed-stage startups scaling go-to-market after a raise.
Make sure every dollar funds growth that moves a core metric, and keep at least 12-18 months of runway.
The range for Series A companies with real teams and expansion budgets.
Align burn with funded milestones; a Series A typically covers 18-24 months at this pace.
Cash consumption is high relative to the balance, implying under 12 months of runway.
Cut spend, accelerate revenue, and start fundraising conversations before the cash position becomes urgent.
Benchmarks
Typical monthly net burn by funding stage
| Metric | Typical | Strong |
|---|---|---|
| Pre-seed | $30,000-80,000 | Under $50,000 |
| Seed | $80,000-150,000 | Under $100,000 |
| Series A | $150,000-350,000 | Under $200,000 |
| Health check | Burn under 1/12 of capital per month | Burn under 1/18 of capital per month |
Common mistakes
- - Using gross burn instead of net burn, which overstates cash consumption
- - Forgetting to include irregular expenses like annual software licenses
- - Not separating one-time costs from recurring operating expenses
Practical tips
Practical tips
Track net burn (expenses minus revenue), not gross burn, so revenue growth shows up in your cash picture.
Include irregular costs like annual licenses and one-time purchases by amortizing them into a monthly average.
Watch for creeping burn after hiring waves; headcount is usually 70-80% of a startup's expense base.
Model burn under two scenarios, plan and stretch, so a slowdown or missed milestone does not break the plan.
Separate one-time costs (equipment, legal) from recurring operating expenses when deciding where to cut.
Review burn weekly in the final months before a raise, since investors will scrutinize the burn-down curve.
When should you use it?
- - Monthly financial reviews with the founding team
- - Preparing burn-down projections for board meetings
- - Evaluating the impact of cost-cutting or hiring decisions
- - Determining how much funding to raise in the next round
Benefits
- - Provides the single most important cash health metric for startups
- - Enables data-driven decisions about spending and hiring
- - Helps set fundraising targets based on actual consumption
Step-by-step example
Gather all monthly operating costs from your accounting software or P&L statement. Sum your monthly revenue from all sources. Subtract revenue from expenses to find your net burn. Use this number with your cash balance to calculate runway.
Real-world example
A SaaS startup spends $85,000 per month on team salaries, cloud infrastructure, and marketing, but generates $22,000 in monthly recurring revenue. Their net burn is $63,000 per month, meaning they consume $63,000 more than they earn.