Burn Rate Calculator

Gross burn and net burn are different.

Gross burn and net burn are different. Gross burn is what you spend; net burn is what you lose.

Written and maintained by Mohit PatelLast checked August 4, 2026How we build these

Currency

Cash at the start

Cash now

Months between them

Monthly revenue

Monthly costs

Net monthly burn

$16,000

8.3 months of runway

Gross burn$126,000

Revenue$110,000

Implied net burn$16,000

Runway8.3 months

Gross burn is what you spend; net burn is what you lose. Measuring runway on gross burn is unnecessarily pessimistic, and measuring it on net burn in a business with lumpy revenue is unnecessarily optimistic: watch both.

How the Burn Rate Calculator works

Also known as: monthly cash burn · net burn calculator · how fast am I spending cash

Gross burn and net burn

Gross burn is total cash out per month. Net burn is cash out minus cash in, which is what actually depletes the balance. Investors and lenders usually mean net burn, and founders quoting gross burn make the position sound worse than it is.

For a business with revenue, net burn is the number that matters, because it is what the runway calculation runs on. For a pre-revenue business the two are the same.

Calculate it from the bank rather than from the accounts. Profit and loss burn excludes inventory purchases, loan repayments and tax payments, all of which take real cash. The difference between accounting loss and cash burn in a stock-holding business is routinely large and always in the uncomfortable direction.

The lumpy costs that ruin the average

Monthly burn calculated over one month is close to meaningless in a product business, because the large payments do not arrive monthly. Inventory orders, VAT quarters, corporation tax, annual insurance and software renewals all land irregularly and all are large.

Averaging over three to six months smooths this and is the minimum honest basis. Better still is a forward view: a thirteen-week cash forecast listing known payments by week, which shows the troughs rather than averaging them away.

The VAT quarter is the one that catches UK sellers most often. A quarter of accumulated VAT arriving as a single payment, in a month that also has an inventory order, produces a week where an otherwise healthy business cannot pay. Diarising it is trivial and forgetting it is common.

Fixed against variable, and what can actually be cut

Splitting burn into fixed and variable tells you how much of it is under your control at short notice. Rent, salaries, software subscriptions and loan repayments are fixed. Advertising, freelancers, inventory and shipping are variable.

The ratio is the resilience measure. A business with 80% fixed burn has very little room to manoeuvre if revenue falls. One with 30% fixed can cut spending nearly in proportion to income and survive a downturn that would end the first.

For most small ecommerce businesses, advertising is the largest variable line and the first thing cut, which is correct in an emergency and damaging if it becomes permanent. Knowing the fixed floor tells you how long you can survive with advertising at zero, which is a genuinely useful number to have before you need it.

Inventory, which is not an expense

Buying stock does not reduce profit and does reduce cash. This is the single largest source of confusion between the two statements, and it is why a business can show a healthy profit and an empty bank account in the same month.

In accounting terms, inventory purchase moves cash into an asset. The cost hits the profit statement only when the goods sell. A month with a large stock order and normal sales shows normal profit and a large cash outflow, and only the cash flow statement records what happened.

Which means a burn rate that excludes inventory is not a burn rate. Any founder tracking burn from a profit and loss report in a stock business is tracking a number that will not predict when the money runs out.

The burn multiple, for anyone raising

Burn multiple is net burn divided by net new revenue over the same period, and it answers how much cash is consumed to add a pound of revenue. Under 1 is efficient. Above 3 is expensive and usually attracts questions.

It is more informative than burn alone because it accounts for what the burn bought. Burning £40,000 a month while adding £50,000 of new monthly revenue is a different business from burning £40,000 while flat, and burn rate alone does not distinguish them.

For bootstrapped sellers the same ratio is useful without any intention to raise. It tells you whether the money going into growth is producing growth, which is a question that gets asked far less often than it should when the advertising budget is set by habit rather than by measurement.

Where to go next

The Burn Rate question rarely arrives on its own. These are the ones that usually come with it:

Runway Calculator — Growth extends it, if the growth holds.
Operating Cash Flow Calculator — Profitable but broke, quantified.
Break-Even Timeline Calculator — Two break-evens, months apart.
Etsy Fee Calculator — Every Etsy fee on one sale, itemised.

Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.

Frequently asked questions

What is the difference between gross and net burn?

Gross burn is total monthly spend. Net burn is spend less revenue, the actual monthly reduction in cash.

How do I calculate burn rate?

Cash at the start less cash now, divided by the months between them. Deriving it from actual cash movement catches things a budget misses.

Why does lumpy revenue matter?

Because net burn averaged over a good quarter understates the burn in a bad one. Businesses with seasonal or contract revenue should stress-test against their worst months.