# Burn Rate and Runway Calculator

URL: https://www.paydude.io/resources/tools/burn-rate-and-runway-calculator
Type: Free interactive calculator
Summary: Calculate net burn and runway, modelled both flat and with revenue growth. See whether you reach break-even before the cash runs out.

Fourteen months is abstract. A date is a deadline — and a growing business often reaches break-even before it reaches zero, which flat-burn arithmetic never shows.

## Summary

Net burn is expenses minus revenue, not total expenses. Growth extends runway, sometimes to infinity. Start raising at 9–12 months of runway, not 3. Expenses rarely stay flat while revenue grows.

## Gross burn versus net burn

**The distinction that matters**

|  | Formula | At $75k expenses, $40k revenue |
| --- | --- | --- |
| Gross burn | Total expenses | $75,000/mo |
| Net burn | Expenses − revenue | $35,000/mo |
| Runway on $500k | Cash ÷ net burn | 14.3 months |

Runway is always calculated on net burn. Using gross burn understates it dramatically for any company with meaningful revenue — and overstates the panic accordingly.

## Growth changes the answer

Flat-burn arithmetic assumes revenue never moves. If revenue grows even modestly, the burn shrinks every month and the runway extends — sometimes past the point where revenue overtakes expenses entirely.

> **The optimistic assumption:** This model holds expenses flat while revenue grows. In practice hosting, support and payment fees all rise with revenue. Treat the growth-adjusted figure as a ceiling and the flat figure as a floor — reality sits between them.

## When to start raising

A raise takes three to six months from first conversation to money in the bank, and it takes longer when you are visibly desperate. The conventional advice is to start at nine to twelve months of runway.

Below six months, terms deteriorate sharply because investors can see the deadline as clearly as you can.

## Extending it

- **Cut fixed costs.** Every $5,000 of monthly expense removed extends runway proportionally and permanently.
- **Move customers to annual billing.** Twelve months of cash up front is the fastest legitimate runway extension available.
- **Raise prices.** It lands in net burn immediately, with no acquisition work.
- **Reduce cost to serve.** Hosting and payment fees both scale with revenue and both are negotiable.

**One cost you can lower this week** Payment fees scale with revenue and come straight out of net burn. — [See pricing](https://www.paydude.io/pricing)

## Frequently asked questions

### What is the difference between gross burn and net burn?

Gross burn is total monthly expenses. Net burn subtracts revenue. Runway is always calculated on net burn — using gross burn understates runway badly for any company with meaningful revenue.

### How much runway should I have before raising?

Start the process at nine to twelve months. Raising takes three to six months, and it takes longer when investors can see you are running out. Below six months your negotiating position deteriorates quickly.

### Does revenue growth really extend runway?

Yes, and often substantially. If revenue grows while expenses stay flat, net burn shrinks every month. A business growing 8% monthly can reach break-even before the cash runs out — which flat-burn arithmetic never reveals.

### What is the fastest way to extend runway?

Moving customers to annual billing, since it pulls twelve months of cash forward without changing anything about the business. After that, cutting fixed costs — every dollar removed extends runway permanently rather than once.