How to Calculate Burn Rate (And Find Your Exact Runway)

Q: What is the difference between gross burn and net burn?

Gross burn is your total monthly spending with no revenue offset. Net burn subtracts your monthly revenue from expenses. A company spending €3,000/mo with €1,000 MRR has a gross burn of €3,000 and a net burn of €2,000. Net burn is more useful for calculating runway because it reflects how fast cash actually depletes.

Q: How often should I recalculate burn rate?

Monthly, at minimum. If you're below 6 months of runway, recalculate weekly. The number shifts when you add a tool, lose a customer, or land a new subscription. Treat it as a living metric, not a quarterly exercise.

Q: What is a good burn rate for a bootstrapped SaaS?

There's no universal answer, but the goal is to keep net burn as close to zero as possible. Many successful bootstrapped founders operate at under €2,000/mo net burn in the early stages ( SaaS Capital, 2024 ). The real question is whether your runway gives you enough time to reach profitability.

Q: Is burn rate the same as cash flow?

No. Burn rate measures how fast you spend cash. Cash flow measures the net movement of cash in and out of your business, including non-operating items like loan repayments or investment income. A company can have negative cash flow and a manageable burn rate if the outflows are one-time investments rather than recurring expenses. --- > Track your burn rate from live Stripe data — NoNoiseMetrics shows net burn updated every session, [free up to €10k MRR →](https://app.nonoisemetrics.com) --- Free Tool Try the MRR Dashboard Template → Interactive template — no signup required.

Three numbers decide whether your startup survives: what you spend, what you earn, and how long the difference keeps you alive. Here are the formulas for all three — gross burn, net burn, and runway — with a worked example you can copy right now.

Gross Burn Rate = Total monthly operating expenses
Net Burn Rate   = Monthly expenses − Monthly revenue (MRR)
Runway (months) = Cash on hand / Net Burn Rate

Gross Burn Rate Formula

Gross burn rate is your total monthly spending before any revenue is subtracted.

If you spend €2,400 per month on hosting, tools, contractors, and subscriptions, your gross burn is €2,400. Revenue doesn’t factor in. This number answers a simple question: how much cash leaves the account every month regardless of what comes back?

Gross burn matters most at the pre-revenue stage. When MRR is zero, gross burn and net burn are identical. Once you start generating revenue, net burn becomes the number that actually predicts your timeline.

Net Burn Rate Formula

Net burn rate is how much cash you lose each month after accounting for revenue.

Net Burn Rate = Monthly Expenses − Monthly Revenue

This is the number that tells you how fast your bank account is actually shrinking. If you spend €2,400/mo and bring in €800/mo in MRR, your net burn is €1,600/mo. That €800 in revenue buys you real time.

For bootstrapped founders, net burn is the metric that matters. It connects directly to how many months you have left — which is the next formula.

Runway Formula

Runway is how many months of operation you can sustain at your current net burn rate.

Runway (months) = Cash on Hand / Net Burn Rate

Runway is the deadline you set for yourself, whether you realize it or not. Every founder should know this number, recalculate it monthly, and treat anything under 6 months as an alarm.

If your burn rate concept guide feels hazy, read that first. This article is the pure math.

Step-by-Step Calculation

Step 1 — List every monthly expense. Include hosting, SaaS tools, domain fees, contractor invoices, payment processing fees, and any salary you pay yourself. If you pay annually for something (like a domain or insurance), divide by 12.

Step 2 — Sum them up. That total is your gross burn rate.

Step 3 — Subtract your MRR. Take gross burn minus your monthly recurring revenue. The result is your net burn rate. If the number is negative, congratulations — you’re cash-flow positive and don’t have a burn problem.

Step 4 — Divide your cash balance by net burn. Open your bank account, note the balance, and divide. The result is your runway in months.

Worked Example

Here’s a real scenario for an early-stage SaaS founder:

Item	Amount
Cash in bank	€18,000
Hosting (Vercel + Supabase)	€85/mo
SaaS tools (analytics, email, monitoring)	€215/mo
Contractor (part-time dev)	€1,800/mo
Domain + misc	€50/mo
Payment processing (Stripe fees)	€250/mo
Total expenses	€2,400/mo
MRR	€800/mo

Gross burn rate: €2,400/mo

Net burn rate: €2,400 − €800 = €1,600/mo

Runway: €18,000 / €1,600 = 11.25 months

That’s 11 months and one week before the account hits zero, assuming nothing changes. If MRR grows (or expenses drop), runway extends. If a big annual bill lands, runway contracts. Recalculate every month.

What to Include in Burn Rate

Getting the inputs wrong makes the whole calculation useless. Here’s what belongs in your burn rate — and what doesn’t.

Include: Hosting and infrastructure, SaaS subscriptions (every tool you pay for), contractor and freelancer invoices, payment processing fees, marketing spend, any salary or draw you take, insurance, legal or accounting fees (divided by 12 if annual).

Exclude: One-time purchases like a laptop or conference ticket — these distort the monthly average. If you want to factor them in, amortize them over 12 months. Also exclude equity-based compensation; it doesn’t consume cash.

A common mistake is forgetting annual charges. That €600/year accounting software is €50/mo of burn you’re not counting. Another mistake: ignoring Stripe fees. At €800 MRR, you’re paying roughly €25–30/mo in processing fees. It adds up.

You can reduce burn rate by cutting costs — the fastest way to extend runway without selling a single new subscription.

When to Worry

According to Y Combinator’s guidance (2024), founders should start making changes when runway drops below 6 months. Below 3 months is emergency territory.

Runway	Status
12+ months	Comfortable — focus on growth
6–12 months	Healthy — monitor monthly
3–6 months	Warning — cut costs or accelerate revenue
<3 months	Emergency — make hard decisions now

The SaaS Capital 2024 survey found that bootstrapped SaaS companies with under €50k MRR had a median gross burn rate between €2,000–€5,000/mo. If your gross burn is significantly above that range without corresponding revenue, something needs trimming.

FAQ

What is the difference between gross burn and net burn?

Gross burn is your total monthly spending with no revenue offset. Net burn subtracts your monthly revenue from expenses. A company spending €3,000/mo with €1,000 MRR has a gross burn of €3,000 and a net burn of €2,000. Net burn is more useful for calculating runway because it reflects how fast cash actually depletes.

How often should I recalculate burn rate?

Monthly, at minimum. If you’re below 6 months of runway, recalculate weekly. The number shifts when you add a tool, lose a customer, or land a new subscription. Treat it as a living metric, not a quarterly exercise.

What is a good burn rate for a bootstrapped SaaS?

There’s no universal answer, but the goal is to keep net burn as close to zero as possible. Many successful bootstrapped founders operate at under €2,000/mo net burn in the early stages (SaaS Capital, 2024). The real question is whether your runway gives you enough time to reach profitability.

Is burn rate the same as cash flow?

No. Burn rate measures how fast you spend cash. Cash flow measures the net movement of cash in and out of your business, including non-operating items like loan repayments or investment income. A company can have negative cash flow and a manageable burn rate if the outflows are one-time investments rather than recurring expenses.

Track your burn rate from live Stripe data — NoNoiseMetrics shows net burn updated every session, free up to €10k MRR →

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