Reading the Burn Rate Formula Breakdown
An annotated walkthrough of how AskBiz calculates your daily burn rate — from fixed and variable cost inputs through to the final per-day figure.
Key Takeaways
- Daily burn equals (monthly fixed costs plus monthly variable costs) divided by 30.
- The formula breakdown section in the drill-down panel shows each component and its contribution to the total.
- Understanding the formula helps you identify which cost type has the most leverage for reducing your burn.
The Core Formula
The daily burn rate in AskBiz is calculated using a straightforward formula: Daily Burn equals the sum of total monthly fixed costs and total monthly variable costs, divided by 30. The number 30 is used as a standard month length for simplicity. For example: if your monthly fixed costs total $6,000 and your monthly variable costs total $2,400, your combined monthly cost is $8,400. Dividing by 30 gives a daily burn rate of $280. This daily figure is what the Daily Net Gain/Burn card displays (as a negative number if costs exceed revenue), and it is what divides into your cash balance to produce the Cash Runway figure.
The Formula Breakdown Section in the Panel
The burn rate drill-down panel includes a Formula Breakdown section that visually annotates each step of the calculation. When you open the drill-down by clicking the Daily Net Gain/Burn card, scroll down to the Formula Breakdown. You will see: a row for total fixed costs (drawn from your Fixed Costs tab configuration), a row for total variable costs (drawn from your Variable Costs tab configuration), a combined monthly total row that adds the two together, a daily burn rate row that divides the monthly total by 30, and — if store revenue data is connected — a daily revenue row and a net daily gain/burn row that shows the difference. Each row in the breakdown is labelled clearly so you can follow the logic step by step.
Why the 30-Day Divisor Is Used
Dividing by 30 provides a consistent daily rate regardless of whether the current month has 28, 29, 30, or 31 days. This simplification makes the daily burn figure a reliable operational metric rather than one that varies by calendar month. In practice, the difference between dividing by 30 versus the actual number of days in a month is small (the maximum variation is about 3%), and for planning purposes the consistent 30-day divisor is easier to reason about. If you are doing precise cash flow forecasting for an accountant or investor, note that AskBiz uses 30-day months; for very short runway situations where every day counts, factor in the actual month lengths.
Using the Breakdown to Identify Cost Leverage
Once you can see fixed and variable costs as separate line items in the breakdown, you can identify where you have the most leverage for reducing burn. Fixed costs are generally harder to reduce quickly — breaking a lease, laying off salaried staff, or cancelling a multi-year software contract all have friction and cost implications. Variable costs are more immediately adjustable: pausing an ad campaign, renegotiating a commission rate, or finding a cheaper fulfillment provider can take effect within days. If your formula breakdown shows that variable costs represent 40% or more of your total monthly burn, that is a high-leverage area for immediate cost optimisation.