Splits your monthly spend into gross burn (every dollar out) and net burn (after subtracting revenue) — the two numbers most founders confuse. Quote net for everyday runway planning. Quote gross when investors are stress-testing what happens if revenue disappears. Knowing which to use, and when, separates founders who survive from founders who get caught off-guard.
Your numbers
Total monthly outflow: salaries, tools, infra, ads. Gross burn.
Total monthly inflow: paid revenue, refunds-in. Excludes raised capital.
The verdict
Gross burn: $30.0K
Burning but earning. Net burn is the real number to plan against — gross overstates what you actually need to cover.
How this is calculated
Gross burn = monthly_cash_out.
Net burn = monthly_cash_out − monthly_cash_in.
The runway calculator uses net, not gross. Quoting gross to investors or to yourself makes the business look more capital-hungry than it is — and double-counts the runway your revenue already covers.
This is the standard convention from Y Combinator's office hours and Brad Feld's Venture Deals. Net burn × 1 month = runway depleted; gross burn × 1 month = wasted self-talk.
What this doesn't tell you
- Whether the burn is the right shape. $30K split 90% on payroll vs 90% on ads has different leverage. Two startups with identical net burn can have very different odds.
- Whether it's accelerating. Net burn this month doesn't tell you the trajectory. If your last 3 months were $5K → $8K → $12K, your runway is shorter than the snapshot suggests.
- Whether it's the right burn. Sometimes the right move is to burn faster (more hires, more growth experiments) and sometimes it's to cut. The number alone doesn't decide.
Use this with
The Lean Startup
Eric Ries's Lean Startup, stripped of consultant fluff. Validated learning, Build-Measure-Learn, MVP, pivot or persevere. What it means and where it gets misapplied.
Pricing Validation
Most founders pick a price by looking at competitors and shaving 20%. That's not pricing strategy, it's matching. Real pricing validation produces a price you can defend against your own ego and your buyer's pushback.
How long does startup validation take?
Two to four weeks of focused work for a single idea. Stage 1 (market verdict) takes a day. Stages 2-3 (buyer + pain) take a week of interviews. Stage 4 (positioning) takes two days. Stage 5 (V1 scope) takes a day. Stages 6-7 (pricing + behavioral evidence) take 1-2 weeks because you need 20+ buyers and a Fake Door Test running. ShipFit compresses the decision time to 30-60 minutes; the gating work is the human conversations between stages.
Frequently asked questions
What's the difference between gross and net burn?
Why does this matter for a pre-revenue startup?
Should I add back deferred revenue?
What burn rate should I target?
Ready to make your next product a success?
9 decisions between your idea and a product worth building.