Burn Rate Calculator

Burn rate is how fast a startup consumes its cash. In SaaS, it's the metric that tells you how long you can keep operating before the money runs out. There are two versions and they measure different things.

Gross burn rate is your total monthly operating expenses. Payroll, hosting, tools, rent, marketing. Everything that leaves your bank account each month. If you spend $80,000/month, your gross burn is $80,000.

Net burn rate is gross burn minus revenue. It's the actual cash you consume. An $80,000 gross burn with $50,000 in revenue means you're burning $30,000/month net. This is the number that determines your runway.

The standard benchmark is 18 months or more. That gives you room to hit milestones, adjust course, and raise your next round without desperation pricing your equity.

Paul Graham's "default alive or default dead" framing is useful here. If you maintain your current revenue growth and current expenses, will you reach profitability before the cash runs out? If yes, you're default alive. If no, something needs to change: cut expenses, accelerate growth, or raise capital.

Below 12 months, you should be actively fundraising or cutting costs. Below 6 months is crisis territory where decisions get forced rather than chosen.

High churn reduces your revenue, which increases your net burn rate and shortens runway. A SaaS company losing 5% of customers monthly needs to replace nearly half its base annually just to stay flat. That's acquisition spend that could otherwise extend your runway.

The fastest fix is involuntary churn. Failed payments drain revenue without the customer choosing to leave. Recovering those payments through dunning directly preserves revenue and extends runway. No additional acquisition spend required.

Check your growth and profitability balance with the Rule of 40, or model your recurring revenue with the ARR calculator.