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Net Burn Rate

The rate at which a company consumes cash after accounting for revenue generated.

Definition

Net Burn Rate measures how much cash a company is losing each month after factoring in revenue. It provides a more accurate picture of cash consumption than gross burn rate because it accounts for the money coming into the business.

How to Calculate

Formula:

Net Burn Rate = Monthly Revenue - Monthly Expenses

or

Net Burn Rate = Gross Burn Rate - Monthly Revenue

Note: A negative net burn rate means the company is profitable and generating more revenue than it's spending.

Real-World Example

SaaS Startup:

  • • Monthly Revenue: $50,000
  • • Monthly Expenses: $80,000
  • • Net Burn Rate: $50,000 - $80,000 = $30,000

The company is burning $30,000 net cash per month.

Related Terms

Show net burn after revenue

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