Burn Rate Calculator

Burn rate is the rate at which a company spends its cash reserves, typically measured monthly. For startups, it indicates how quickly you are consuming capital before becoming profitable. There are two types: gross burn rate (total monthly spending) and net burn rate (monthly spending minus revenue). For a deeper dive into calculating and optimizing your burn rate, read our detailed burn rate guide.

Gross burn rate is your total monthly expenses regardless of revenue. Net burn rate is your gross burn minus monthly revenue, representing your actual cash consumption. For example, if you spend $100,000/month and earn $40,000 in revenue, your gross burn is $100,000 and net burn is $60,000.

Gross Burn Rate = Total Monthly Operating Expenses. Net Burn Rate = Monthly Expenses - Monthly Revenue. Runway = Cash Balance / Net Burn Rate. For example, with $500,000 cash and $50,000 net burn, your runway is 10 months.

A "good" burn rate depends on your stage and runway. Generally, aim for 18-24 months of runway. Early-stage startups might have higher relative burn as they build product. Growth-stage companies should have burn aligned with clear milestones. The "burn multiple" (net burn / net new ARR) should ideally be under 2x for efficient growth. See how your numbers compare with our SaaS burn rate benchmarks.

Reduce burn rate by: (1) Cutting non-essential expenses and subscriptions, (2) Renegotiating vendor contracts, (3) Optimizing headcount and hiring pace, (4) Delaying major capital expenditures, (5) Increasing revenue or pricing, (6) Focusing on profitable customer segments. Prioritize cuts that least impact growth potential.

Runway is the number of months your company can operate before running out of cash, calculated as: Runway = Cash Balance / Net Burn Rate. For example, with $1 million in the bank and $100,000 monthly net burn, you have 10 months of runway. Most advisors recommend maintaining 18-24 months of runway.

Be concerned when: (1) Runway drops below 12 months, (2) Net burn is increasing without corresponding growth, (3) Burn multiple exceeds 3x, (4) Cash decreases faster than projected, (5) Market conditions make fundraising difficult. Start addressing burn rate issues early - cutting costs when you have 6 months runway is often too late.

A burn multiple under 2x is considered healthy for growth-stage SaaS in 2026. This means for every $1 of net new ARR, you're spending less than $2. Under 1.5x is capital-efficient. Above 3x signals that growth is too expensive relative to the revenue it generates. The formula is: Burn Multiple = Net Burn / Net New ARR. Investors increasingly use this metric alongside growth rate when evaluating fundraising readiness.

Gross burn rate is your total monthly spending regardless of revenue. Net burn rate subtracts revenue from expenses, showing your actual cash consumption. For example, if you spend $100K/month and earn $30K in revenue, your gross burn is $100K and your net burn is $70K. Investors focus on net burn because it reflects how fast you're actually depleting cash reserves.

Focus on the 80/20: cut the 20% of expenses that contribute least to growth. Common high-impact cuts include renegotiating vendor contracts (15-30% savings), moving to remote-first (20-30% infrastructure savings), and consolidating overlapping software tools. Avoid cutting headcount in revenue-generating roles. Instead, delay planned hires by 1-2 months and freeze non-critical projects. The goal is extending runway without slowing the metrics that matter for your next raise.