Calculating Your Burn Rate as an Indie

Burn rate calculations are easy to make, and the numbers you get are incredibly useful.

Your burn rate is how much money you spend per month. You probably already have some monthly expenses that never change, such as rent, so you can just add those numbers together.

Other expenses might not be monthly, but you can calculate the average you paid per month. For instance, if your car insurance comes twice a year, total those two payments, divide by 12, and you have your monthly car insurance expense.

Add these average monthly expenses to your actual monthly expenses, and you should have your total monthly expenses, or your burn rate.

Using that burn rate, you can determine how much time you have before you're out of money. Take the total of your savings and divide by your burn rate (your total monthly expenses), and you'll have the number of months you'll be able to survive without making any money.

You can use this information to not only inform the kind of projects you'll take on (a six month burn rate might mean you can't hope to work on that 5-year MMO), but to also help you figure out where to cut unnecessary expenses to help make your savings last longer.

I'm Gianfranco, and I run GBGames at http://www.gbgames.com/
Twitter: @GBGames

Category:

Gaming

Tags:

• indie