Burn Rate and Runway Calculator
Burn rate is how much cash your startup spends each month; runway is how many months that cash will last. Enter three numbers to see both, and how revenue growth changes the answer.
By Suren, Founder & Growth Strategist at Gufy · Last updated
The formulas
| Measure | Formula |
|---|---|
| Gross burn | Total cash spent in a month |
| Net burn | Gross burn − cash received from customers |
| Runway (months) | Cash in the bank ÷ net burn |
Worked example: a startup with $500,000 in the bank spends $60,000 a month and collects $15,000 from customers. Net burn is $45,000, so runway is $500,000 ÷ $45,000 = 11.1 months.
What to count
- Costs: salaries and their on-costs, contractors, rent, software, advertising, agency fees and loan repayments. Use the average of the last three months rather than one unusual month.
- Revenue: cash actually received, not invoices sent or contracts signed. An annual plan paid upfront is cash in that month, which flatters one month and not the next eleven.
- Cash: money you can spend today. Leave out funding that is promised but not yet in the account.
How to extend runway without stalling growth
Cutting costs buys months; making acquisition cheaper buys months and keeps growth. Start with the spend that does not produce customers.
- Find the cost of each customer by channel. The CAC and payback calculator shows which channels pay back and which do not.
- Fix the steps after the click. If most sign-ups never reach value, every acquisition dollar works harder once onboarding is fixed.
- Check that each customer is worth more than they cost. Unit economics for startups has the sums.
Common questions
What is a good burn rate for a startup?
There is no single good number. A burn rate is only as good as what it buys: the months of runway it leaves and the growth it pays for. A high burn is easier to defend when revenue is growing quickly; a high burn with flat revenue is the one to cut.
What is the difference between gross burn and net burn?
Gross burn is everything you spend in a month. Net burn is what you spend minus the cash that comes in from customers. Runway is worked out from net burn, because revenue offsets part of your costs.
How many months of runway should a startup have?
We suggest at least 12 months after a raise, and starting the next raise while you still have six months or more, because fundraising usually takes several months. If you are not raising again, the target is reaching break-even before the cash runs out.
Does runway include revenue growth?
The usual formula does not: it divides cash by today’s net burn, as if revenue stays flat. This calculator also shows runway with monthly revenue growth, which is closer to reality for a growing product but depends on that growth actually happening.
Where Gufy fits
Gufy works on the growth side of runway: lowering what each customer costs to win, and getting more of the people you already pay to acquire to activate and pay. If your runway is shorter than you would like, bring these numbers to a call.