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⚡ Quick answer

To calculate your monthly burn rate, divide your available cash by your target runway in months.

Burn Rate Calculator

Monthly burn rate from runway and cash.

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📖 What it is

The Burn Rate Calculator is essential for SaaS startups looking to manage their finances effectively. It helps estimate the monthly cash burn based on available cash and your desired runway.

By inputting your current cash reserves and the number of months you want your runway to last, you can calculate how much money your startup is burning through each month. This insight is crucial for making informed financial decisions.

Keep in mind that this tool assumes the current cash balance reflects all recent funding and operational expenses, and it does not account for unexpected costs or changes in hiring that could affect your monthly burn.

How to use

  1. Identify your total available cash.
  2. Determine your desired runway in months.
  3. Divide the available cash by the target runway to find the monthly burn rate.

📐 Formulas

  • Monthly Burn Rate—Monthly Burn Rate = Available Cash / Target Runway

💡 Example

To illustrate:

- You have $500,000 in cash.

- You want a runway of 18 months.

Your monthly burn rate is approximately $27,778.

Real-life examples

  • SaaS Startup A

    With $500,000 in cash and a desired runway of 18 months, the monthly burn rate is $27,778.

  • SaaS Startup B

    If you have $1,200,000 and want a 24-month runway, your monthly burn rate would be $50,000.

Scenario comparison

  • 18 months runway—With $500,000 cash, the monthly burn rate is $27,778.
  • 24 months runway—With $1,200,000 cash, the monthly burn rate is $50,000.

Common use cases

  • SaaS startups estimating cash flow needs.
  • Founders planning for future financing rounds.
  • Investors evaluating startup sustainability.
  • Financial analysts assessing company health.
  • Entrepreneurs deciding on expense cuts.

How it works

The Burn Rate Calculator works by dividing your available cash by the number of months you intend to maintain your operations, providing a clear picture of how quickly you are spending your funds.

What it checks

This tool checks the estimated monthly cash burn implied by your current cash balance and runway target.

Signals & criteria

  • Current cash reserves
  • Target runway months
  • Derived monthly burn rate

Typical errors to avoid

  • Using gross burn when runway assumption is based on net burn.
  • Ignoring near-term one-time expenses or hiring changes.
  • Using stale cash balance values from older periods.

Decision guidance

Low: If your burn rate is low, you may have a healthy buffer to explore growth opportunities.
Medium: A medium burn rate suggests a balanced approach, but adjustments may be necessary to prolong your runway.
High: A high burn rate indicates a need for immediate action to reduce expenses or increase cash inflow.

Trust workflow

Recommended steps after getting a result:

  1. Review your current cash balance regularly.
  2. Update your runway assumptions with any changes in your business plan.
  3. Consider all potential expenses when calculating your burn rate.

FAQ

FAQ

  • Gross burn vs net burn?

    Gross burn is total monthly spend. Net burn subtracts monthly revenue. Use one consistently for planning.

  • How often should I update burn rate?

    Monthly at minimum; weekly during rapid scaling or budget stress.

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