What is burn rate and how do I calculate it?

Burn rate is how quickly a startup spends its cash reserves. Gross burn rate equals total monthly expenses. Net burn rate equals monthly expenses minus monthly revenue. For example, if you spend $80,000/month and earn $20,000/month, your gross burn is $80K and net burn is $60K. Runway is your cash balance divided by net burn rate — with $500K cash and $60K net burn, you have about 8.3 months of runway.

How much runway should a startup have?

Most investors and advisers recommend 12 to 18 months of runway. Less than 6 months is considered dangerous — you should be actively fundraising or cutting costs. Between 6 and 12 months is manageable but requires close monitoring. More than 18 months gives you comfortable room to iterate on product-market fit and grow revenue.

How does revenue growth affect startup runway?

Growing revenue reduces your net burn each month, extending your runway beyond the simple cash-divided-by-burn calculation. For example, with $500K cash, $80K expenses, and $20K revenue growing at 15% per month, your revenue reaches $80K (breakeven) around month 10 — and your cash never runs out. Without growth, the same startup runs out of money in 8.3 months. Use the Revenue Path tab to model your specific growth scenario.

What is the difference between gross and net burn rate?

Gross burn rate is your total monthly spending — all operating expenses including salaries, rent, software, marketing, and overhead. Net burn rate subtracts your revenue from expenses, showing how much cash you actually lose each month. A company with $80K gross burn and $50K revenue has a net burn of $30K. Net burn is what determines how long your cash lasts.

How can I extend my startup's runway?

There are two levers: increase revenue or decrease expenses. On the revenue side, focus on sales, pricing optimisation, and reducing churn. On the expense side, consider reducing headcount, renegotiating contracts, cutting non-essential tools, or moving to cheaper office space. The Break-Even Date tab shows exactly how much revenue growth or expense reduction you need to survive a target number of months.

Burn Rate & Runway Calculator

How long will your cash last? Calculate your startup's burn rate and runway, model revenue growth paths to profitability, or find the growth rate and expense cuts needed to survive. Works with any currency.

Currency

All amounts displayed in selected currency

Cash balance

Total cash on hand (bank + investments you can liquidate)

Monthly expenses

Total monthly operating costs (salaries, rent, tools, etc.)

Monthly revenue

Current monthly recurring revenue

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Estimates only. No taxes applied. Consult a financial adviser for personalised guidance.

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How to Use This Calculator

Tab "Runway"

Enter your cash balance, monthly expenses (total operating costs), and monthly revenue. The calculator shows your gross burn rate, net burn rate, runway in months, and the date your cash runs out. If revenue exceeds expenses, you are already cash-flow positive with infinite runway.

Tab "Revenue Path"

Enter the same inputs plus a monthly revenue growth rate. The calculator projects month-by-month: as revenue grows, net burn shrinks, and your actual runway extends beyond the simple calculation. It shows the month you reach profitability (revenue ≥ expenses) and a table of key months with revenue, net burn, and remaining cash.

Tab "Break-Even Date"

Enter your cash, expenses, revenue, and a target survival period in months. The calculator finds two options: (A) the minimum monthly revenue growth rate needed to survive that long, and (B) the expense cut needed to survive with no revenue growth. Use both to plan your strategy.

The Formulas

Gross burn rate:
Gross Burn = Monthly Expenses

Net burn rate:
Net Burn = Monthly Expenses − Monthly Revenue

Runway (static):
Runway = Cash Balance / Net Burn

Revenue path (iterative):
Each month: Revenue(m) = Revenue(m-1) × (1 + Growth Rate)
Cash(m) = Cash(m-1) − (Expenses − Revenue(m))
Profitability month = first month where Revenue ≥ Expenses

Required growth rate (binary search):
Find minimum Growth Rate such that Cash > 0 for all Target Months

Required expense cut:
Max Expenses = Revenue + (Cash / Target Months)
Cut = Current Expenses − Max Expenses

All calculations are universal and pre-tax. No country-specific tax rates are applied. Results are estimates based on simplified models.

Worked Examples

Example 1 — Basic runway: $500K cash, $80K expenses, $20K revenue

A startup has $500,000 in the bank, spends $80,000 per month on operations, and earns $20,000 per month in revenue.

Gross burn rate$80,000/mo

Net burn rate$80,000 − $20,000 = $60,000/mo

Runway$500,000 / $60,000 = 8.3 months

Cash depletionApproximately December 2026

At 8.3 months of runway, this startup needs to either raise funding, grow revenue significantly, or cut expenses within the next few months.

Example 2 — Revenue growing at 15%/mo

Same startup ($500K cash, $80K expenses, $20K revenue) but revenue grows 15% month-over-month.

Month 1 revenue$20,000

Month 6 revenue$20,000 × 1.15&sup5; = ~$40,200

Month 10 revenue~$80,900 (exceeds expenses)

ProfitabilityMonth 10

Cash never runs outSurvives to profitability

With 15% monthly revenue growth, the startup reaches profitability around month 10 and never runs out of cash. This is why investors focus on growth rate alongside burn rate.

Example 3 — Need to survive 18 months

The same startup wants to ensure 18 months of runway. What growth rate or expense cut is needed?

Target survival18 months

Option A: Required growth~10.5%/mo revenue growth

Option B: Required expense cutCut to $47,778/mo (cut $32,222 or ~40%)

Max affordable expenses$20,000 + ($500,000 / 18) = ~$47,778/mo

The founder can either focus on growing revenue at ~10.5% per month (aggressive but achievable for early-stage SaaS), or cut expenses by roughly 40%, or a combination of both.

Understanding Burn Rate

What Is Burn Rate?

Burn rate measures how fast a company spends cash. It is the single most important metric for startups that are not yet profitable. If you do not know your burn rate, you do not know when you run out of money — and running out of money is the number one reason startups fail.

Gross vs Net Burn

Gross burn is total monthly spending. Net burn subtracts revenue. A startup spending $100K/month with $40K revenue has a gross burn of $100K and a net burn of $60K. Investors typically ask about net burn because it reflects the real cash drain.

Why Runway Matters

Runway is the number of months until your cash hits zero. Less than 6 months is a crisis — you should already be fundraising or making cuts. Between 6 and 12 months is manageable but tight. The ideal is 12 to 18 months, giving you time to find product-market fit, close deals, and raise the next round if needed.

The Power of Revenue Growth

Simple runway calculations (Cash / Net Burn) understate reality when revenue is growing. Even modest monthly growth compounds quickly: 10% monthly growth turns $20K into $62K in 12 months. The Revenue Path tab models this properly, showing your true runway accounting for growth.

When to Cut vs When to Grow

If you have product-market fit and strong unit economics, focus on growth. If you are pre-PMF, cutting burn to extend runway and find your market is usually wiser. The Break-Even Date tab helps you see both options side by side so you can make a data-driven decision.

Frequently Asked Questions

What is a good burn rate for a startup?▼

There is no universal "good" burn rate — it depends on your stage, funding, and growth. As a rule of thumb, your net burn should give you at least 12 to 18 months of runway. If you just raised a seed round, spending 1/18th of your raise per month is a reasonable starting point. The key metric is not the absolute burn but whether your burn is producing growth.

How do I reduce my burn rate quickly?▼

The fastest cuts come from headcount (typically 60-70% of startup costs), followed by office space, software subscriptions, and marketing spend. Before cutting, audit every expense and ask: does this directly contribute to revenue or product? Non-essential hires, unused tools, and excessive perks are common areas to trim. Be decisive — small cuts rarely make enough difference.

What is the difference between burn rate and runway?▼

Burn rate is how much cash you lose each month (net burn = expenses minus revenue). Runway is how many months your cash will last at that burn rate (runway = cash / net burn). They are inversely related: lower burn means longer runway. A startup with $600K cash and $50K net burn has 12 months of runway.

Should I include one-time expenses in burn rate?▼

For ongoing planning, use your recurring monthly expenses (salaries, rent, subscriptions, regular marketing). One-time expenses like equipment purchases, legal fees for incorporation, or security deposits should be tracked separately. If you have a large one-time expense coming, subtract it from your cash balance before calculating runway.

Does this calculator work for non-US startups?▼

Yes. This is a universal calculator that works with any currency. Select your currency from the dropdown and enter your figures. The burn rate and runway formulas are the same regardless of country. No country-specific tax rates or regulations are applied.

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