Please enter valid positive numbers for all fields.
Estimated Runway
–
Time until cash depletion
Net Burn Rate
–
Cash lost per month
Gross Burn Rate
–
Total monthly spending
function calculateSaaSMetrics() {
// Get input values
var cashInput = document.getElementById('saas-cash');
var revenueInput = document.getElementById('saas-revenue');
var expensesInput = document.getElementById('saas-expenses');
var errorMsg = document.getElementById('error-message');
var resultsArea = document.getElementById('results-area');
// Parse values
var cash = parseFloat(cashInput.value);
var revenue = parseFloat(revenueInput.value);
var expenses = parseFloat(expensesInput.value);
// Validation
if (isNaN(cash) || isNaN(revenue) || isNaN(expenses) || cash < 0 || revenue < 0 || expenses < 0) {
errorMsg.style.display = 'block';
resultsArea.style.display = 'none';
return;
}
errorMsg.style.display = 'none';
resultsArea.style.display = 'block';
// Calculations
var grossBurn = expenses;
var netBurn = expenses – revenue;
// Format Currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
// Display Gross Burn
document.getElementById('res-gross-burn').innerHTML = formatter.format(grossBurn);
// Logic for Net Burn and Runway
var netBurnDisplay = document.getElementById('res-net-burn');
var runwayDisplay = document.getElementById('res-runway');
var runwayBox = document.getElementById('runway-box');
if (netBurn 0) {
runwayMonths = cash / netBurn;
}
if (runwayMonths < 1) {
runwayDisplay.innerHTML = "< 1 Month";
runwayDisplay.style.color = "#dc3545";
} else {
runwayDisplay.innerHTML = runwayMonths.toFixed(1) + " Months";
// Color coding runway
if (runwayMonths < 6) {
runwayDisplay.style.color = "#dc3545"; // Danger
} else if (runwayMonths < 12) {
runwayDisplay.style.color = "#ffc107"; // Warning
} else {
runwayDisplay.style.color = "#28a745"; // Good
}
}
runwayBox.className = "result-box"; // Reset class
runwayBox.style.borderLeftColor = "#007bff";
}
}
Understanding SaaS Burn Rate
For SaaS (Software as a Service) startups, calculating burn rate is arguably the most critical financial exercise. It tells you exactly how fast you are spending your venture capital or initial investment and, consequently, determines your "Runway"—the amount of time you have left before you run out of cash.
Unlike traditional loan calculators, a Burn Rate calculator focuses on operational efficiency and survival metrics. It answers the fundamental question: "Given my current spending and revenue, when will the money run out?"
Gross Burn vs. Net Burn
Understanding the distinction between these two metrics is vital for accurate financial planning:
Gross Burn Rate: This is the total amount of operating capital your company spends each month. It includes salaries, server costs (AWS/Azure), rent, software subscriptions, and marketing spend. It does not account for any incoming revenue.
Net Burn Rate: This is the actual amount of cash your company loses each month. It is calculated by subtracting your monthly revenue from your gross burn. This is the metric used to calculate your runway.
Formulas
Net Burn = Total Monthly Expenses – Monthly Recurring Revenue (MRR)
Runway (Months) = Current Cash Balance / Net Burn Rate
Why Runway Matters for SaaS
In the SaaS model, upfront development and customer acquisition costs are high, while revenue accumulates slowly over time via subscriptions. This creates a "cash trough" that companies must survive.
Investors typically look for a runway of 18 to 24 months following a funding round. This provides enough time to hit the next set of milestones (e.g., specific ARR targets) required to raise the next round or achieve profitability.
Example Calculation
Let's look at a hypothetical Series A SaaS company:
Metric
Value
Current Cash in Bank
$2,000,000
Monthly Expenses (Gross Burn)
$150,000
Monthly Revenue (MRR)
$50,000
Net Burn
$100,000 ($150k – $50k)
Runway
20 Months ($2M / $100k)
How to Reduce Burn Rate
If your runway is less than 12 months, you generally need to take immediate action to either raise more capital or reduce burn. Common strategies include:
Audit SaaS Subscriptions: Startups often overpay for unused seats in tools like Slack, Jira, or HubSpot.
Optimize Cloud Costs: Review AWS/GCP bills for unutilized instances or reserved instance opportunities.
Review Headcount: Ensure that every role is contributing directly to product development or revenue generation.
Focus on Churn: Reducing churn increases Net Revenue Retention (NRR), which effectively lowers Net Burn by keeping revenue high.
Frequently Asked Questions (FAQ)
What is a good burn rate for a SaaS startup?
There is no single "good" number, as it depends on your stage and cash balance. However, a common rule of thumb is the "Bessemer Efficiency Score," where Net New ARR divided by Net Burn should be greater than 1.0. Early-stage startups should aim for a burn rate that allows for at least 18-24 months of runway.
Should I include COGS in Gross Burn?
Yes. Gross Burn should encompass all money leaving your bank account. This includes Cost of Goods Sold (COGS) like server hosting fees and customer support costs, as well as Operating Expenses (OpEx) like R&D and Sales/Marketing.
What happens if my Net Burn is negative?
If your Net Burn is negative, it means your Revenue exceeds your Expenses. You are "cash flow positive" or "profitable." In this scenario, your runway is theoretically infinite because you are generating cash rather than consuming it. You are "default alive."