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SaaS Burn Rate & Runway Calculator

Monthly Net Burn

$0

Cash Runway

0 Months

function calculateSaaSMetrics() { var cash = parseFloat(document.getElementById('cashBalance').value); var mrr = parseFloat(document.getElementById('monthlyMRR').value) || 0; var expenses = parseFloat(document.getElementById('monthlyExpenses').value); var growth = parseFloat(document.getElementById('growthRate').value) || 0; var resultsDiv = document.getElementById('resultsArea'); var netBurnDisplay = document.getElementById('netBurnDisplay'); var runwayDisplay = document.getElementById('runwayDisplay'); var statusMessage = document.getElementById('statusMessage'); if (isNaN(cash) || isNaN(expenses)) { alert("Please enter at least your Current Cash and Monthly Expenses."); return; } resultsDiv.style.display = "block"; var netBurn = expenses – mrr; netBurnDisplay.innerText = "$" + netBurn.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); if (netBurn <= 0) { runwayDisplay.innerText = "Infinite"; runwayDisplay.style.color = "#2e7d32"; statusMessage.innerText = "Congratulations! You are Default Alive. Your revenue covers your expenses."; statusMessage.style.backgroundColor = "#e8f5e9"; statusMessage.style.color = "#2e7d32"; } else { var months = cash / netBurn; runwayDisplay.innerText = months.toFixed(1) + " Months"; if (months < 6) { runwayDisplay.style.color = "#d32f2f"; statusMessage.innerText = "Warning: Critical Runway. You have less than 6 months to reach profitability or raise capital."; statusMessage.style.backgroundColor = "#ffebee"; statusMessage.style.color = "#c62828"; } else if (months < 12) { runwayDisplay.style.color = "#f57c00"; statusMessage.innerText = "Moderate Runway. Start planning your next funding round or optimization phase soon."; statusMessage.style.backgroundColor = "#fff3e0"; statusMessage.style.color = "#ef6c00"; } else { runwayDisplay.style.color = "#2e7d32"; statusMessage.innerText = "Healthy Runway. You have over a year to iterate and grow your MRR."; statusMessage.style.backgroundColor = "#e8f5e9"; statusMessage.style.color = "#2e7d32"; } } }

Understanding SaaS Burn Rate & Runway

In the world of Software as a Service (SaaS), "Burn Rate" and "Runway" are the two most critical pulse-checks for any startup. Whether you are bootstrapped or venture-backed, knowing exactly how much time you have before the bank account hits zero is the difference between strategic growth and sudden closure.

What is Gross Burn vs. Net Burn?

• Gross Burn: The total amount of cash your company spends every month (salaries, servers, rent, marketing).
• Net Burn: The actual amount of money you are losing each month (Total Expenses minus Total Revenue). This is the figure used to calculate runway.

The "Default Alive" vs. "Default Dead" Concept

Coined by Paul Graham, being Default Alive means that if your expenses stay constant and your revenue continues to grow at its current rate, you will reach profitability before running out of cash. If you are Default Dead, you will run out of money unless you raise more capital or make drastic changes to your unit economics.

Calculation Example

Imagine your SaaS startup has $500,000 in the bank. Your monthly office, server, and payroll costs (Gross Burn) are $50,000, and you are generating $20,000 in Monthly Recurring Revenue (MRR).

Net Burn: $50,000 – $20,000 = $30,000 per month.
Runway: $500,000 / $30,000 = 16.6 Months.

How to Extend Your SaaS Runway

1. Reduce Churn: It is significantly cheaper to keep a customer than to acquire a new one. High churn "burns" through your CAC (Customer Acquisition Cost).
2. Optimize CAC: Analyze which marketing channels provide the highest ROI and cut the underperforming ones.
3. Adjust Pricing: Often, a small increase in subscription price can move a company from "Default Dead" to "Default Alive" without increasing expenses.
4. Manage Headcount: Payroll is usually the largest expense in SaaS. Delaying a "nice-to-have" hire by 3 months can add weeks to your runway.

Frequently Asked Questions

Q: What is a healthy runway for a SaaS startup?
A: Most experts recommend having 18–24 months of runway after a funding round. For bootstrapped companies, the goal should be achieving a 0 or negative burn rate as quickly as possible.

Q: Should I include one-time annual payments in my monthly burn?
A: For an accurate monthly view, you should "amortize" these costs. Divide annual costs (like software renewals) by 12 to see your true average monthly burn.