Red Queen Burn Rate Calculator
A financial metric that reveals whether competitive investments are escalating sustainably or driving toward exhaustion.
A financial metric that reveals whether competitive investments are escalating sustainably or driving toward exhaustion. Measures the rate at which competitive investments grow relative to revenue.
When to Use Red Queen Burn Rate Calculator
When evaluating whether to match competitor investments, when assessing strategic sustainability, during board/investor discussions about competitive spending, or when experiencing rapid cost escalation.
How to Apply
Define Competitive Investment
Identify spending directly driven by competitive pressure.
Questions to Ask
- What R&D is for competitive features vs. basic maintenance?
- What sales & marketing matches/exceeds competitor spend?
- What customer acquisition costs are driven by winner-take-most dynamics?
- What capital expenditures are for competitive positioning?
Outputs
- Total competitive investment figure
Calculate Growth Rates
Compute year-over-year growth for both investment and revenue.
Questions to Ask
- What was competitive investment this period vs. last period?
- What was revenue this period vs. last period?
Outputs
- Investment growth rate percentage
- Revenue growth rate percentage
Compute Burn Rate
Subtract revenue growth from investment growth to get Red Queen Burn Rate.
Outputs
- Red Queen Burn Rate = Investment Growth - Revenue Growth
Interpret Results
Classify burn rate and determine appropriate action.
Outputs
- Zone classification (Sustainable Growth / Healthy / Escalating / Unsustainable / Crisis)
- Recommended action