Burn Rate
Net burn is the monthly cash outflow minus inflow. Formula: Net burn = Outflow − Inflow. Use this calculator to understand monthly cash usage and its impact on runway. Provide monthly inflows and outflows to see net burn in dollars per month.
What is burn rate?
Burn rate is the net cash outflow each month. Net burn = cash outflow − cash inflow. Some teams also track gross burn (outflow only), but net burn is more informative.
Why it matters
- Determines runway and how quickly you must grow or raise.
- Helps spot unsustainable spend before it becomes a crisis.
- Aligns the team on cost discipline and efficiency initiatives.
How to calculate
Net burn = Monthly cash outflow − Monthly cash inflow. Report in absolute dollars per month.
Example
Outflow $150,000.00/mo, inflow $100,000.00/mo ⇒ Net burn $50,000.00 / month.
Tips to reduce burn
- Focus spend on high‑ROI channels; trim low‑impact projects.
- Improve margins by renegotiating vendors and optimizing infra.
- Increase cash collections (billing cadence, dunning, discounts for prepay).
FAQ
Which burn should I report—gross or net? Report net; it captures inflows and reflects actual cash usage.
Is high burn always bad? Not if ROI is compelling and cash runway is sufficient; monitor carefully.
How often should burn be tracked? Weekly for ops, monthly for reporting; alert on large spikes.