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Gross Burn Rate

The total amount of cash a company spends each month, excluding revenue.

Definition

Gross Burn Rate represents the total monthly operating expenses of a company without considering any revenue coming in. It shows the raw cost of running the business and helps founders understand their total monthly cash requirements.

How to Calculate

Formula:

Gross Burn Rate = Total Monthly Operating Expenses

Includes:

  • • Salaries and benefits
  • • Office rent and utilities
  • • Software subscriptions
  • • Marketing expenses
  • • Equipment and supplies

Real-World Example

Tech Startup Monthly Expenses:

  • • Salaries: $60,000
  • • Office rent: $8,000
  • • Software tools: $3,000
  • • Marketing: $5,000
  • • Other expenses: $4,000

Gross Burn Rate = $80,000/month

Related Terms

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