Free Burn Rate & Runway Calculator
How to Calculate Burn Rate
Burn rate is one of the most critical metrics for any startup founder to track. It tells you how fast your company is spending money and, combined with your cash on hand, exactly how long you have before the lights go out. Understanding your burn rate is essential for making smart decisions about hiring, marketing spend, product investment, and when to fundraise.
There are two types of burn rate every founder should know. Gross burn rate is the total amount of money your company spends each month, including salaries, rent, software subscriptions, marketing, and all other operating expenses. It gives you a clear picture of your total cost structure regardless of how much revenue you bring in.
Net burn rate is the more actionable number. It subtracts your monthly revenue from your gross burn to show you the actual cash you are losing each month. If you spend $50,000/month and earn $20,000/month, your net burn is $30,000/month. This is the number that directly determines your runway.
Your runway is simply how many months you can operate before running out of cash. Divide your current cash on hand by your net burn rate, and you get your runway in months. A startup with $600,000 in the bank and $30,000 net burn has 20 months of runway.
Tracking burn rate monthly is a best practice. Revenue fluctuates, unexpected expenses arise, and your runway can shrink faster than you expect. Many founders review burn rate during weekly finance reviews and report it to their board quarterly. Use this calculator regularly to stay on top of your financial health.
Burn Rate Formula
The formulas are straightforward:
- Gross Burn Rate = Total Monthly Expenses
- Net Burn Rate = Monthly Expenses − Monthly Revenue
- Runway (months) = Cash on Hand ÷ Net Burn Rate
If your net burn rate is zero or negative (you are profitable), congratulations — you have infinite runway. If your net burn is positive, divide your cash by that number to see how many months remain.
Example: $300,000 cash ÷ $25,000 net burn = 12 months of runway
When factoring in revenue growth, the calculation becomes iterative. Each month, revenue increases by the growth percentage, reducing net burn. The calculator above simulates this month-by-month to give you an accurate growth-adjusted runway.
Startup Runway Benchmarks
How much runway is enough? Here are the widely accepted benchmarks:
18+ Months: Healthy
You have plenty of time to iterate on product-market fit, experiment with growth channels, and fundraise from a position of strength. Investors prefer backing startups with ample runway because it signals financial discipline.
12–18 Months: Manageable
You are in a reasonable position but should start planning your next funding round or path to profitability. Begin investor conversations, tighten non-essential spending, and focus on metrics that matter for your next raise.
Under 12 Months: Raise Soon
This is the danger zone. Since fundraising typically takes 3–6 months, having less than 12 months of runway means you should be actively raising or making significant cuts immediately. Below 6 months without a raise in progress, consider emergency measures: layoffs, pivots, or bridge financing.
Find a co-founder to share the burn →Frequently Asked Questions
What is burn rate?
Burn rate is the rate at which a startup spends its cash reserves. Gross burn rate is total monthly expenses, while net burn rate subtracts monthly revenue from expenses to show the actual cash loss per month.
How do you calculate startup runway?
Runway = Cash on Hand / Net Burn Rate. For example, if you have $500,000 in the bank and your net burn is $25,000/month, your runway is 20 months.
What is a good burn rate for a startup?
A good burn rate gives you at least 18–24 months of runway. Early-stage startups should aim for 18+ months to allow time for product-market fit. If you have less than 12 months of runway, you should start fundraising or cutting expenses immediately.
What is the difference between gross and net burn rate?
Gross burn rate is your total monthly expenses regardless of revenue. Net burn rate is gross burn minus monthly revenue. If you spend $50,000/month and earn $20,000/month, your gross burn is $50,000 and net burn is $30,000.
How does revenue growth affect runway?
Revenue growth extends your runway because it reduces your net burn rate over time. A startup with 10% monthly revenue growth will have significantly more runway than the same startup with flat revenue, as each month the gap between revenue and expenses shrinks.
When should a startup start fundraising based on runway?
Start fundraising when you have 9–12 months of runway left. Fundraising typically takes 3–6 months, so starting at 12 months gives you a buffer. If your runway drops below 6 months without a fundraise in progress, consider drastic cost cuts.