How this calculator works

A startup’s burn rate is basically a “cash speedometer.” It tells you how fast you’re consuming cash to keep the company running. The core idea is simple: every month you collect some revenue and you pay some expenses. If expenses are bigger than revenue, the difference is your net burn — and that difference eats your cash reserve.

We compute monthly revenue as: Revenue = MRR + Other monthly revenue. MRR is your predictable subscription base. Other revenue can include one‑off services, pilots, usage charges, or anything else that reliably shows up in a “typical month.”

We compute monthly expenses as: Expenses = Payroll + Facilities + Tools/Cloud + Marketing + Other operating costs. This total expense number is your gross burn — the amount of cash leaving your bank account each month to operate.

Net burn is the gap between expenses and revenue: Net Burn = Expenses − Revenue. If this number is positive, you are burning cash. If it’s zero, you are break‑even. If it’s negative, you’re generating cash (congrats — you’re “cash‑flow positive”).

Runway answers: “If nothing changes, how long do we have?” When net burn is positive, we estimate: Runway = Cash on hand ÷ Net Burn. Example: if you have $240,000 cash and burn $20,000 per month, your runway is 12 months. If net burn is zero or negative, runway is effectively “infinite” in this simplified view (because you’re not draining cash).

Real startups don’t stay constant. Revenue often grows month‑to‑month, and expenses can creep up as you hire or scale. That’s why this calculator includes two sliders: Revenue growth and Expense growth (monthly rates).

We simulate up to 120 months using a month‑by‑month loop: each month, revenue is multiplied by (1 + revGrowth) and expenses by (1 + costGrowth). We subtract net burn from cash and stop when cash hits zero. The month count at that point is your scenario runway.

Burn multiple is a popular efficiency metric (especially for SaaS). At a high level it asks: “How much net burn am I spending to generate one unit of annual recurring revenue (ARR) growth?”

In this calculator, you can enter a monthly estimate of net new ARR added. We convert that into a “monthly ARR-equivalent” by dividing by 12. Then: Burn Multiple = Net Burn ÷ (Net New ARR / 12). If net new ARR is 0, the burn multiple is not defined (we show a dash) because you can’t divide by zero.

Three quick scenarios

• Cash: $150k
• Revenue: $10k/mo
• Expenses: $40k/mo
• Net burn: $30k/mo → Runway ≈ 5 months
• Decision signal: either reduce cost or raise before month 2–3 to avoid cliff risk.

• Cash: $1.2M
• Revenue: $80k/mo
• Expenses: $150k/mo
• Net burn: $70k/mo → Static runway ≈ 17 months
• But: with +6% revenue growth and +1% expense growth, runway can extend meaningfully.

• Cash: $400k
• Revenue: $120k/mo
• Expenses: $125k/mo
• Net burn: $5k/mo → Runway ≈ 80 months
• Decision signal: you can prioritize growth experiments because the downside is buffered.

Notice the pattern: runway is extremely sensitive when you’re close to break‑even. A small pricing change, a small churn improvement, or a small cost cut can move runway by months. That’s why burn calculators are useful: they convert “small changes” into a concrete timeline.

What’s “good” burn and runway?

There is no universal perfect burn rate. Context matters: category, growth stage, and whether you’re intentionally investing ahead of revenue. That said, runway and efficiency metrics can give you a sanity check.

• 0–6 months: critical zone. You’re forced into fundraising, hard cuts, or a major growth spike — fast.
• 6–12 months: watch zone. You can operate, but your options narrow quickly if plans slip.
• 12–24 months: generally healthy. You can iterate, hire selectively, and recover from mistakes.
• 24+ months: strong buffer. Be careful: long runway can also hide inefficiency — keep measuring ROI.

• < 1.0: very efficient (rare). You’re adding ARR faster than you burn cash.
• 1.0–2.0: strong/healthy for many SaaS companies.
• 2.0–4.0: acceptable in some growth phases (especially early), but watch retention and payback.
• > 4.0: inefficient. Either growth is too slow or spending is too high relative to ARR added.

Treat these as conversation starters, not verdicts. Use the calculator to compare scenarios and choose the set of tradeoffs you’re willing to accept.

• Pricing: even a small ARPA increase can change net burn quickly when you have meaningful MRR.
• Churn: reducing churn boosts MRR compounding — often the highest ROI “growth lever.”
• Hiring pace: payroll dominates most startups. One hire delayed can buy weeks.
• Marketing discipline: cut channels with long payback; double down on those with short, proven payback.
• Cloud/tool hygiene: stop paying for redundant SaaS tools, idle instances, or unused seats.

Frequently Asked Questions

• What’s the difference between gross burn and net burn?

  Gross burn is your total monthly expenses (cash out). Net burn subtracts your revenue (cash in). If you spend $120k and earn $70k, gross burn is $120k, net burn is $50k.

• Should I use accrual accounting or cash accounting numbers?

  Burn and runway are usually discussed as cash metrics. Use the cash reality: what you actually collect and pay each month. If you have annual prepayments or delayed collections, adjust “Other revenue” to reflect the monthly cash view.

• Why does the runway change when I change growth rates?

  Because your burn is not constant. If revenue grows faster than expenses, your net burn shrinks over time and runway extends. If expenses grow faster, runway shortens.

• What if net burn is negative (cash‑flow positive)?

  Then you’re not burning cash. The calculator will show runway as “∞” (infinite) in the simplified model. In real life, you may still want a cash buffer for seasonality or shocks.

• How should I estimate net new ARR for burn multiple?

  Use the ARR you added in the last month after churn and contraction (net), or a realistic average across the last 3 months. If you’re pre‑revenue or not tracking ARR, leave it at 0 — the burn multiple won’t be shown.

• Is a higher burn always bad?

  Not necessarily. Burn is a tool: you might burn more to move faster. The key is whether burn buys durable progress: product quality, retention, and repeatable acquisition. That’s why runway and burn multiple are useful together.

Make it decision‑ready

If you want this calculator to match your books more closely, consider adding:

• Cost of goods sold (COGS) separately (to compute contribution margin).
• One‑time expenses (legal, hardware, recruiting fees) as “lumpy burn.”
• Collections timing (invoicing vs cash received).
• Deferred revenue for annual prepayments.

For virality, the share buttons copy a clean “burn + runway” line that founders can post in a channel or send to cofounders without exposing every line item.