What is gross burn vs net burn?

Gross burn is total monthly expenses. Net burn is expenses minus revenue. Runway is typically calculated using net burn, since revenue extends your runway.

How much burn rate is acceptable?

It depends on runway and growth plans. Rule of thumb: have at least 18 months of runway before raising. Avoid burning more than you can sustain until your next milestone.

How do I reduce my burn rate?

Cut non-essential costs, optimize tool spend, consider remote teams, and focus on revenue-generating activities. Extend runway by improving efficiency before cutting core team.

Burn Rate for SaaS Founders

What is Burn Rate?

Burn rate is how much cash your company spends per month beyond what it earns. It is the rate at which you are consuming your runway.

Why Burn Rate matters for SaaS founders

Knowing your burn rate is essential for financial planning. It tells you how long your cash will last and when you need to raise or become profitable. Investors expect you to know this number.

How to calculate Burn Rate

Subtract monthly revenue from monthly expenses. The result is your net burn. (Gross burn is expenses alone; net burn is what matters for runway.)

Burn Rate = Monthly Expenses − Monthly Revenue

Free SaaS Calculator – No Signup Required

We don't store your data. Runs in your browser.

Burn Rate Calculator

Monthly expenses ($)

Monthly revenue ($)

Example calculation

$45,000 expenses − $20,000 revenue
$25,000 per month

Result: $25,000/month

You burn $25,000 per month. With $300k in the bank, you have about 12 months of runway.

Benchmarks & best practices

Early-stage: Early-stage burn varies. Bootstrapped companies aim for minimal or zero burn.
Healthy range: Healthy depends on strategy. Pre-revenue startups may burn more; growth-stage balances burn with growth targets.
Warning range: Burn exceeding runway without a clear path to funding or profitability is risky. Monitor closely.

Frequently Asked Questions

What is gross burn vs net burn?: Gross burn is total monthly expenses. Net burn is expenses minus revenue. Runway is typically calculated using net burn, since revenue extends your runway.
How much burn rate is acceptable?: It depends on runway and growth plans. Rule of thumb: have at least 18 months of runway before raising. Avoid burning more than you can sustain until your next milestone.
How do I reduce my burn rate?: Cut non-essential costs, optimize tool spend, consider remote teams, and focus on revenue-generating activities. Extend runway by improving efficiency before cutting core team.