What Is Burn Rate?
Burn rate is the pace at which a company spends its cash, usually expressed per month. It is a key measure for startups and other businesses that are not yet profitable. Gross burn is total monthly spending; net burn is spending minus incoming cash.
Example
A company spending 80,000 a month and collecting 30,000 in revenue has a gross burn of 80,000 and a net burn of 50,000.
Burn Rate and Runway
Dividing cash on hand by net burn gives the cash runway in months.
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🔗 Related Terms
More Business & Sales Terms
- Accounts Payable
- Accounts Receivable
- Average Order Value (AOV)
- Balance Sheet
- Break-Even Point
- Churn Rate
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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.