Quick Answer (TL;DR)
Monthly Burn Rate measures net cash spent per month. The formula is Monthly expenses - Monthly revenue. Industry benchmarks: Depends on funding stage. Track this metric for startups managing runway.
What Is Monthly Burn Rate?
Net cash spent per month. This is one of the core metrics in the revenue metrics category and is essential for any product team serious about data-driven decision making.
Monthly Burn Rate connects product performance to business sustainability. Revenue metrics translate user behavior into financial outcomes, making them essential for board reporting, investor communication, and strategic planning.
Understanding monthly burn rate in context --- alongside related metrics --- gives you a more complete picture than tracking it in isolation. Use it as part of a balanced metrics dashboard.
The Formula
Monthly expenses - Monthly revenue
How to Calculate It
Apply the formula Monthly expenses - Monthly revenue using data from a consistent time period. Pull the values from your analytics platform or data warehouse, compute the result, and compare against the benchmarks below.
Benchmarks
Depends on funding stage
Benchmarks vary significantly by industry, company stage, business model, and customer segment. Use these ranges as starting points and calibrate to your own historical data over 2-3 quarters. Your trend matters more than any absolute number --- consistent improvement is the goal.
When to Track Monthly Burn Rate
For startups managing runway. Specifically, prioritize this metric when:
You are building or reviewing your metrics dashboard and need revenue indicators
Leadership or investors ask about revenue performance
You suspect a change in product, pricing, or go-to-market strategy has affected this area
You are running experiments that could impact monthly burn rate
You need a quantitative baseline before making a strategic decision
How to Improve
Optimize pricing regularly. Most companies set pricing once and forget it. Review pricing quarterly, test willingness to pay, and ensure your pricing reflects the value you deliver.
Focus on expansion revenue. Growing revenue from existing customers is 5-7x cheaper than acquiring new ones. Build upgrade paths, usage-based pricing tiers, and cross-sell opportunities.
Reduce involuntary churn. Failed payments account for 20-40% of SaaS churn. Implement dunning flows, card update reminders, and retry logic to recover revenue automatically.
Common Pitfalls
Excluding hidden costs. Many teams forget to include salaries, tool subscriptions, overhead, and opportunity costs. Under-reporting costs creates a false sense of efficiency.
Ignoring revenue quality. Not all revenue is equal. Revenue from customers likely to churn, deeply discounted deals, or one-time contracts should be weighted differently than high-quality recurring revenue.
Measuring without acting. Tracking this metric is only valuable if you have a process for reviewing it regularly and a playbook for responding when it moves outside acceptable ranges.
Related Metrics
Average Selling Price (ASP) --- average price at which your product is sold
Runway --- months of operation remaining at current burn
Average Contract Value (ACV) --- average annualized value of a customer contract
Rule of 40 --- combined growth rate and profit margin
Product Metrics Cheat Sheet --- complete reference of 100+ metrics