Burn Rate Calculator
Get your real monthly burn — gross and net, from a trailing average instead of one month — and the runway it leaves you.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
Burn rate comes in two flavors that owners routinely conflate: gross burn is everything going out the door each month, while net burn is what your cash balance actually loses after revenue comes in — and lenders and investors mean net unless they say otherwise. This tool computes both from a trailing 3–6 month average instead of a single month, shows whether burn is rising or falling, and converts net burn into runway.
The formulas
- Gross burn
- average of monthly cash out across the months entered
- Net burn
- average of (cash out − cash in) across the months enteredZero or negative means you are cash-flow positive — no runway math applies.
- Runway
- current cash ÷ net burnOnly when net burn is positive.
- Net-burn trend
- compare the first and last month’s net burn; growth per month = (last ÷ first) ^ (1 ÷ (months − 1)) − 1Growth above 10% per month triggers a rising-burn warning — the trailing average understates where you are headed.
Worked example
- Say your last three months of cash out were $40,000, $42,000, and $44,000, cash in was $25,000 each month, and you hold $60,000 today.
- Gross burn = ($40,000 + $42,000 + $44,000) ÷ 3 = $42,000 per month.
- Net burn = the average of $15,000, $17,000, and $19,000 = $17,000 per month — the number your bank balance actually loses.
- Runway = $60,000 ÷ $17,000 ≈ 3.5 months, which lands in the 3–6 month "urgent" band of the rule-of-thumb runway scale.
- Net burn also grew from $15,000 to $19,000 — about 12.5% per month — so the tool warns that the trend makes real runway shorter than the 3.5-month average suggests.
Rates, benchmarks & sources
- Runway urgency bands: under 3 months critical, 3–6 urgent, 6–12 adequate, over 12 comfortable (shared with the Cash Runway calculator). — Industry rule of thumb
- Rising-burn warning threshold: net burn growing more than 10% per month, measured first-to-last across the months entered. — Industry rule of thumb
- Gross burn = total cash out per month; net burn = cash out minus cash in. Lenders and investors mean net unless stated otherwise. — Standard startup-finance definitions
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- A trailing average smooths one-off spikes but also lags reality — if you just signed a lease or lost a customer, the average still reflects the old cost structure.
- The trend check compares only the first and last months entered; a spike in the middle of the window will not register as a trend.
- Runway math assumes burn holds constant, which the tool’s own trend warning may contradict — a rising burn means cash runs out sooner than the average-based runway shows.
- Months are averaged as entered, so an annual payment (insurance, taxes) landing inside the window inflates burn; landing just outside, it hides entirely. Consider spreading known annual items mentally across the year.
Frequently asked questions
What is the difference between gross burn and net burn?
Gross burn is everything going out — payroll, rent, inventory, all of it — regardless of what comes in. Net burn subtracts your cash inflows: it is what the bank balance actually loses each month. A business can have a scary gross burn and a healthy net burn if revenue covers most of it. When a lender or investor asks about burn, they mean net unless they say otherwise.
Why does the tool average 3–6 months instead of using last month?
A single month is noisy: one annual insurance bill, a big receivable landing, or a slow invoice can swing it wildly in either direction. A trailing average of three to six months smooths those one-offs into a number that better represents your true run rate — and the separate trend arrow tells you whether that run rate is drifting up or down.
My net burn is negative — what does that mean?
It means cash in exceeded cash out over the window: you are cash-flow positive, your balance is growing, and there is no runway countdown to run. Gross burn is still worth watching in that case, because it shows how much monthly cost you would need to cover if revenue stumbled — the cushion between the two is your margin for error.
Why does rising burn matter if I still have months of runway?
Because runway is computed from the average burn, and a rising burn means every future month is worse than that average. If net burn is growing more than about 10% per month (the tool’s rule-of-thumb trigger), the real zero-cash date arrives noticeably sooner than the simple division suggests — and financing takes time to arrange, so the trend is the earlier warning of the two numbers.
Do loan payments and owner draws count in burn?
Yes — burn is a cash measure, so anything that leaves the bank account counts: loan principal, owner draws, equipment purchases, tax deposits. That is also why burn can differ sharply from your profit-and-loss statement, which excludes principal and draws but includes non-cash items like depreciation. Measure burn from the bank account, not the P&L.