Burn Rate Calculator
The formula
What the burn rate tells you
Cash out per month as boards want it — gross versus net, and the efficiency ratio that says what the burn is actually buying.
Calculation: Burn = (start − end) ÷ months; efficiency = annualized new MRR ÷ burn. Enter your inputs and every substitution is shown below the result.
Reading the result
Post-2022 the burn multiple is the headline metric: under 1.5 reads as earned growth, above 2.5 as purchased growth.
Rules of thumb: Good burn multiples: <1.5 growth stage, <2.5 early traction
Limitations and best practice
One month of receivables timing distorts cash-based burn — always use a trailing average reconciled to the P&L.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
Gross or net burn for runway?
Can burn be too low?
Source & methodology
Bessemer / a16z metrics conventions.
Burn Rate: what this tool answers
This page was written for one job: turning your own inputs into a defensible figure, with the working shown. There are plenty of pages about Burn Rate; almost none of them show the working. This one does: the formula, every input, a fully computed example, and a sensitivity analysis calculated live from this engine’s own defaults.
The discipline Burn Rate enforces is naming your assumptions. Starting cash balance ($) and Ending cash balance ($) are guesses dressed as inputs; once they are on paper, the argument stops being about vibes and starts being about whether the guesses are defensible — which is how good decisions get made.
The useful way to hold Burn Rate is as a ratio with a story attached: Burn = (start − end) ÷ months; efficiency = annualized new MRR ÷ burn says how the parts combine, and the $178,750 figure above is simply that sentence written in numbers. Everything that follows unpacks one clause of the sentence at a time.
Nothing below is stock text pasted around a number: the worked example computes monthly burn = $178,750 from this tool’s own defaults, and the sensitivity section ranks the inputs that move the result — Starting cash balance first, at ≈37.8 % of the headline for a ten-percent error either way in that input. Read the sections in order and you will be able to reproduce every figure by hand.
How Burn Rate is computed, line by line
One formula, published in full: Burn = (start − end) ÷ months; efficiency = annualized new MRR ÷ burn. Anything you can read, you can reproduce in a spreadsheet, and that reproducibility is the whole point of printing it rather than hiding it behind a button.
Starting cash balance ($) (example value 1,350,000) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. If your source quotes a figure before and after some deduction, decide which one the formula wants and be consistent for every field.
Ending cash balance ($) (example value 992,500) is a quantity rather than a category — precision here is cheap and worth having. Use the figure exactly as the source document states it, not a rounded memory of it — an omitted line is the classic silent error.
Months in the period (example value 2) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Use the value as of today, not as of the last time you looked — time fields drift silently.
New MRR added in the period ($) (example value 12,000) is a quantity rather than a category — precision here is cheap and worth having. If you are unsure what belongs in this field, look at the printed steps: the substitution shows exactly how the engine uses it.
The default Burn Rate calculation, written out in full
Abstract formulas are hard to trust, so here is the complete substitution using the default inputs, written the way an examiner would want it. Starting figures: Starting cash balance ($), Ending cash balance ($), Months in the period, New MRR added in the period ($). The endpoint of that chain is $178,750 of monthly burn, sitting in the “Buying $72,000 of ARR per month at $178,750 burn — burn multiple 2.48” band.
- Burn = ($1,350,000 − $992,500) ÷ 2 = $178,750
- New ARR run-rate added ≈ $72,000 per month
Months of cash remaining — 5.6. If your inputs change, this is usually the first companion figure to move.
Net new ARR per burn dollar — 0.40. This is the number experienced users quote when the headline alone would mislead.
Runway if burn trimmed 10% — 6.2 months. Read next to the headline, this is the figure that shows the shape of the trade-off.
Re-running with your own figures is instant; re-running by hand once is the best way to know the tool is telling you the truth.
The Burn Rate corridor: your result across a realistic band
The honest version of any estimate is a corridor, and this one is cheap to produce: Burn Rate was recomputed at 5 points along the dominant input, with every other field left untouched.
| Starting cash balance setting | Monthly burn |
|---|---|
| 80 % of the example value | $43,750 |
| 90 % of the example value | $111,250 |
| example inputs | $178,750 |
| 110 % of the example value | $246,250 |
| 120 % of the example value | $313,750 |
That spread — $43,750 at the low end, $313,750 at the high — is what a careful read of Burn Rate looks like: a band you can state out loud, with the reason for each edge. Reproduce it in the form above by editing Starting cash balance alone; the substitution steps will follow your figures exactly.
What actually moves your Burn Rate
This list was computed for this specific engine just now: each numeric input was nudged ±10 % while every other field held its example value, and the monthly burn was recalculated from scratch. Read it as a map of where Burn Rate is fragile — drawn for the example inputs, which is the map you want when deciding what to measure carefully.
- Starting cash balance +10 % → Burn Rate = $246,250 · −10 % → $111,250 (the monthly burn shifts ≈37.8 %)
- Ending cash balance +10 % → Burn Rate = $129,125 · −10 % → $228,375 (the monthly burn shifts ≈27.8 %)
- Months in the period: ten percent up gives $162,500, ten percent down gives $198,611 — ≈11.1 % of the monthly burn either way
Starting cash balance is the dominant lever here: ten percent either way moves the result by about 37.8 %, from $111,250 to $246,250. That is where a careless figure does the most damage, so check it against a source, and treat Ending cash balance as the second priority (≈27.8 % per ten percent). The remaining fields can sit at safe defaults without materially changing the answer — knowing which is which is what separates a careful calculation from an anxious one.
Reading the result: bands, zones and thresholds
A number on its own is trivia; a number against a range is intelligence. The default case lands in the “Buying $72,000 of ARR per month at $178,750 burn — burn multiple 2.48” band, and bands are deliberately wide because real situations overlap. Before treating the band as fact, note its width: ten percent either way on Starting cash balance already spans $111,250 to $246,250. The practical reading rules: read the band as a starting hypothesis, then test it: change the two dominant inputs by ten percent and see whether the verdict survives. Verdicts that survive stress are the ones worth acting on.
Placing this figure in context: calculators of this kind differ less in arithmetic than in what they choose to ignore. This one keeps Starting cash balance ($) explicit so that the omissions are visible rather than hidden in a preset.
How people get Burn Rate wrong
One month of receivables timing distorts cash-based burn — always use a trailing average reconciled to the P&L. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Confusing a large number with an important one. Burn Rate can be dominated by one input whose absolute value looks unimpressive, which is why this page ranks influence separately from magnitude.
One mistake is specific to this engine: assuming every input matters equally. The computation above shows Starting cash balance dominating — a careful figure there beats false precision everywhere else.
The subtlest error is answering the wrong question precisely. Confirm that monthly burn is actually the quantity your decision needs — the arithmetic is flawless either way, which is what makes the mistake invisible.
A quick check for any Burn Rate figure
- Confirm the example values are plausible for your own situation before replacing them.
- Recompute once with the dominant input deliberately set low, and see whether the decision changes.
- Re-verify Starting cash balance against a source document — ten percent of error there moves the headline by ≈37.8 %.
- State, in one sentence, which convention each rate, unit or period in the form is using.
- Note the date and the inputs beside the number so the figure can be audited later.
- Run the ±10 % stress on the top two levers and check that your conclusion survives both.
Step by step: getting a trustworthy Burn Rate out of this tool
Using a calculator well sounds trivial, but the difference between a decision-grade figure and a throwaway one lives entirely in the routine. The routine for Burn Rate takes a minute to learn and applies to every input above.
Step 1 — collect, then type. Everything this tool asks for is listed above (starting cash balance ($), ending cash balance ($), months in the period, new mrr added in the period ($)). Pull each figure from something you can point at — paperwork, a dashboard, a label — before touching a field. Guesswork at the input stage cannot be repaired at the interpretation stage. A calculation you cannot explain to somebody else is a calculation you cannot defend.
Step 2 — enter the conservative case first. Resist the flattering scenario. Type the inputs you would defend in front of a sceptical reader, read the Monthly burn ($178,750 for the example values), and note the verdict band. Compare the calculation to the rough guess you arrived with, and ask why they differ.
Step 3 — play with the inputs on purpose. Ten percent up, ten percent down, one field at a time. Within a few minutes you will know this calculation better than most people who quote its results. The point of transparency is that a reader can disagree with a specific line rather than with you.
Step 4 — ask what would have to be true. Take the result you want and work backwards through the inputs until you find the assumption that produces it; then decide honestly whether that assumption is defensible. The test of a good estimate is not that it feels right but that it changes what you do.
Step 5 — save the story with the figure. A number without its inputs and its date is unusable within a quarter. Record $178,750, the assumptions behind it, and today’s date; your future self will be auditing a stranger’s arithmetic. One decimal place more than your data supports is one decimal place of fiction.
The real-world conversations Burn Rate settles
In Startup Metrics the figure computed here is usually the first one somebody asks to see. Having it — with the formula behind it — changes your position in the conversation from participant to reference. Most surprises in numbers are surprises about inputs, not about formulas.
Used properly this is a five-minute filter that saves weeks. Compute Burn Rate, reject what fails, and only then bring in the expensive analysis for the survivors. When two sources disagree, it is almost never the arithmetic that differs.
There is a personal-administration use people overlook: periodic self-checking. Burn Rate quietly drifts as life changes — rates move, bodies change, costs compound — and re-running it a few times a year catches drift while correction is still cheap. Most surprises in numbers are surprises about inputs, not about formulas.
The questions that come up most about Burn Rate
What affects Burn Rate the most?
Measured on this engine, Starting cash balance is the dominant lever: moving it ±10 % shifts the monthly burn across $111,250 to $246,250 — about 37.8 % of the headline, with Ending cash balance next at ≈27.8 %. The ranked list in the sensitivity section is computed live, not asserted from a template.
Which matters more: ending cash balance or starting cash balance?
For Burn Rate, Starting cash balance wins the head-to-head (≈37.8 % against ≈27.8 % per ten-percent change). Knowing which input dominates is the difference between careful work and merely slow work.
What is a typical Burn Rate?
With the example inputs on this page the result is $178,750, labelled “Buying $72,000 of ARR per month at $178,750 burn — burn multiple 2.48”. “Typical” varies with situation, which is why every result here ships with its verdict band and its sensitivity list: they turn one figure into a range you can locate yourself inside.
How do I calculate Burn Rate by hand?
Three steps: write the formula (Burn = (start − end) ÷ months; efficiency = annualized new MRR ÷ burn), insert your values, and simplify. The worked example section shows exactly that chain for the default inputs; replicating it once on paper teaches you more about Burn Rate than any number of calculator runs.
What happens to Burn Rate if starting cash balance changes by 10 %?
Try it in the form above and the printed substitution will follow you; the pre-computed answer for the defaults is $111,250 to $246,250 across the ten-percent probe, i.e. ≈37.8 % sensitivity on the monthly burn.
Is the Burn Rate result of $178,750 good or bad?
Good and bad are comparisons, so the honest test is three questions: where does your own Burn Rate sit against the $178,750 reference above, how far would a plausible input error move it (≈37.8 % per ten percent on Starting cash balance), and what does the alternative option compute to?
Is Burn Rate accurate?
The arithmetic is exact: Burn = (start − end) ÷ months; efficiency = annualized new MRR ÷ burn is evaluated with full floating-point precision and every substitution is printed in the worked example. What limits accuracy is input quality and the model’s assumptions, so treat the $178,750 result as the correct answer to the question you typed — and check the assumptions section before acting on it.
What does $178,750 tell me about the business?
It answers the narrow question mechanically and the broad question only in context: Burn Rate is one dashboard light, and it pairs with unit economics and cash timing before any bet the business size.
Gross or net burn for runway?
Net — runway tracks how fast the balance falls, not how fast money churns.
Can burn be too low?
Starving hiring to flatter runway is the classic pre-raise vanity that compounds into competitive loss.
Is my data private on this page?
Yes — computation happens locally in your browser, with no account, no tracking of your inputs and nothing sent to a server. The printed formula is the whole story of what happens to your figures.
What the labels on this page mean
- Months of cash remaining
- 5.6 in the default Burn Rate calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Net new ARR per burn dollar
- 0.40 in the default Burn Rate calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Runway if burn trimmed 10%
- 6.2 months in the default Burn Rate calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Monthly burn
- The primary output of this tool: $178,750 for the default inputs, computed exactly from Burn = (start − end) ÷ months; efficiency = annualized new MRR ÷ burn.
- Worked example
- The calculation written out in full so that nothing on this page has to be taken on trust.
- Verdict band
- The plain-language label — here “Buying $72,000 of ARR per month at $178,750 burn — burn multiple 2.48” — mapping the computed figure onto experience-based ranges for Business & Entrepreneurship.
- Sensitivity (±10 %)
- How far the Burn Rate moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Method, sources and what this tool cannot tell you
There is no black box on this page — the engine evaluates Burn = (start − end) ÷ months; efficiency = annualized new MRR ÷ burn. Source of record: Bessemer / a16z metrics conventions. Any other implementation of this model should return the same figure for the same inputs. If one does not, the difference is in its assumptions — which this page prints and that one probably does not.
Nothing here replaces a qualified professional, and nothing here is approximate either — the arithmetic is exact, and the honesty is in the inputs you supply. The sensitivity table above is part of that promise rather than a bonus: it lets you see how much of the result depends on how carefully you measured.
After the number: what to do with it
Save the number together with its inputs and today’s date; a Burn Rate figure without context is unusable the moment an input changes.
Whoever you are (people who need one trustworthy number before their next decision), the next step is the same: replace the example inputs with your own, note the date, and re-run whenever a figure moves. In Business & Entrepreneurship, a dated figure is a trend, and an undated one is a rumour.