Cash Runway Calculator
Model monthly burn rate, net burn, gross burn, and cost-cut scenarios to see how many months your cash runway extends — with Paul Graham's default alive check and a 6-dimension grade. No signup.
Last reviewed: April 2026
What is cash runway?
Cash runway is the number of months a startup can keep operating at its current monthly burn rate before cash hits zero. Formula: cash runway = current cash ÷ monthly net burn, where net burn equals monthly expenses minus (MRR × gross margin). For $1.2M cash, $220K/mo expenses, $40K MRR, and 75% gross margin: runway = $1.2M ÷ ($220K − $30K) = 6.3 months.
This cash runway calculator models how seven cost-cut levers — layoffs, SaaS audits, marketing reductions, growth pauses — extend the months you have before cash hits zero. Unlike a simple burn-rate scenario planner, it shows both the runway extension and the revenue damage: a marketing cut might add 3 months of cash but cost $340K in annual recurring revenue.
Monthly burn rate: net burn vs gross burn
Gross burn is total monthly expenses regardless of revenue. Net burn subtracts MRR × gross margin from gross burn — it's what actually drains your bank account each month. A startup with $200K gross burn and $50K of gross-margin-adjusted MRR has $150K net burn, which is 25% lower and produces 33% more runway.
The monthly burn rate breakdown in this tool splits expenses across salaries, SaaS subscriptions, marketing, office/travel, contractors, and other. Accurate breakdowns produce accurate lever impact analysis — you can only audit SaaS waste if you know your SaaS line, and only calibrate layoff math if you know salary share of burn. Startup burn rate improvements start with a correct accounting of where the money goes.
Default Alive vs Default Dead: Paul Graham's framework
Paul Graham's 2015 essay Default Alive or Default Dead? argues that most founders miscalculate their survival odds because they extrapolate linearly instead of geometrically. The Default Alive test asks: projecting MRR forward at your current monthly growth rate, will you reach profitability (MRR × gross margin ≥ burn) before cash runs out?
Our implementation projects MRR geometrically at your growth rate, then applies a damage coefficient for cuts that hurt growth (marketing cuts = 60% damage, growth pause = 80% damage). You're flagged Default Alive only if months-to-profitability is less than runway-months-after-cuts. If the gap is positive, you're Default Dead — and the tool surfaces exactly how many months short you are.
The confidence rating reflects growth-rate stability: ≥10%/mo is high confidence, ≥5%/mo is medium, under 5%/mo is low. Low confidence doesn't mean you're dead — it means your Default Alive verdict is sensitive to growth assumptions.
How to extend SaaS runway by cutting costs
There are seven structural levers a SaaS founder can pull to extend runway, ranked by typical efficiency (runway months per $10K cut):
- SaaS audit — usually high-leverage with near-zero revenue damage (5% coefficient). The lowest-risk runway extension.
- Office & travel — low revenue damage, modest savings, easy to execute.
- Contractor freeze — moderate damage (20%) because contractors often build features, but fast to reverse.
- Salary reduction (across-the-board) — 15% damage, morale risk, but preserves team continuity.
- Layoffs — 30% damage coefficient, highest absolute savings, hardest to reverse.
- Marketing cut — 60% damage to growth rate; extends runway at cost of future MRR.
- Growth pause — 80% damage; only used in crisis mode or path-to-profitability.
Levers are ranked by efficiency — months-gained per $10K cut — so you can see which ones are high-leverage versus cosmetic. The SaaS audit consistently wins on efficiency because software waste is invisible until you look: dormant Slack seats, duplicate observability tools, annual contracts auto-renewed for products nobody uses.
Burn rate scenario planner: modeling multi-lever cuts
Multi-lever modeling combines several cuts into a single outcome: total monthly savings, new runway months, and total revenue damage. Under the hood we run an efficiency-ranked greedy optimizer — given a target runway (default 18 months), it finds the lever mix that hits the target with minimum revenue damage. Four scenario modes — Fire Drill, Efficient, Growth-Preserving, and Profitability — weight the optimization differently.
Fire Drill mode maximizes savings (useful when runway is under 6 months). Growth-Preserving mode excludes marketing cuts and growth pause, so the runway extension comes at minimum cost to future MRR. Profitability mode enables all levers at full cut. The 6-dimension report card scores each scenario on Runway Safety, Default Alive Probability, Growth vs Survival, Burn Quality, Optionality, and Fundraise Readiness.
Layoff runway impact: calculating the real extension
Layoffs are the highest-absolute-savings lever but also carry real revenue damage — engineering output drops, sales coverage shrinks, customer support slows. We apply a 30% revenue damage coefficient to headcount cuts: a 20% headcount reduction that saves $50K/mo also costs you about $180K in 12-month ARR.
The headcount cut impact on runway depends on where the cut falls. Eng cuts slow product velocity; sales cuts shrink pipeline; GTM cuts eliminate top-of-funnel. Use the per-lever verdict (high-leverage / moderate / cosmetic / counterproductive) to sanity-check whether a layoff is the right move, or whether a lower-damage cut (SaaS audit, office trim) achieves similar runway extension without the morale hit.
Path to profitability: when cuts become permanent strategy
Path-to-profitability modeling rests on two assumptions: cuts are permanent, and growth continues at your effective (post-damage) rate. Under those constraints, we solve for months-to-profitability — the month where MRR × gross margin ≥ post-cut burn. If that number is less than runway-months-after-cuts, you're Default Alive: you can reach profitability on your current trajectory without another raise.
Most path-to-profitability plans combine a 20–40% expense cut with flat-to-moderate growth. The calculator makes this visible in one glance: the amber "current burn" curve vs the purple "with scenario cuts" curve on the cash projection chart, with Default Alive crossover annotated if it occurs.
Bridge round runway: extending to the next milestone
Bridge math answers one question: how much do I need to raise to reach the next priced round? Required raise = (target runway − current runway) × new net burn. Applied cuts reduce both the gap (by extending current runway) and the net burn, which can shrink bridge size by 30–50%.
This matters because bridge rounds are often punitive — existing investors know you need the money and dilution terms reflect that. Going into bridge conversations with a credible Default Alive plan, or with 15+ months of runway after cuts, dramatically changes your leverage.
Growth-preserving cuts: what to protect when trimming
Growth-preserving cuts extend runway with minimum damage to MRR growth rate. In growth-preserving mode, levers with revenue damage coefficients above 40% (marketing cut, growth pause) are excluded. The remaining levers — SaaS audit, office/travel, contractor freeze, moderate headcount, salary reduction — typically produce 6–10 months of runway extension with under 10% ARR damage over 12 months.
The trade-off: growth-preserving cuts rarely get you all the way to Default Alive if your starting runway is under 9 months. In crisis scenarios, marketing and growth pauses become necessary. The calculator's scenario mode selector forces this choice explicit so you don't accidentally kill growth while trying to extend runway.
Reading the runway report card: how to interpret your zone
The five runway zones are calibrated against the industry standard. Safe (≥18 months) means you have time to optimize; Tight (12–17) means start planning; Crisis (6–11) means cut now; Terminal (<6) means emergency. The cash runway what-if simulator lets you model aggressive cuts and see instantly which zone you land in.
The 6-dimension radar — Runway Safety, Default Alive Probability, Growth vs Survival, Burn Quality, Optionality, and Fundraise Readiness — reveals trade-offs a single runway number can't. High Runway Safety with low Growth vs Survival is a funded zombie; high Optionality with low Runway Safety means you still have dry powder but haven't used it. The Runway Gap Detector surfaces these pairwise contradictions automatically.
Frequently Asked Questions
What is cash runway?
Cash runway is the number of months a startup can keep operating before running out of cash, calculated as current cash ÷ monthly net burn. Net burn = monthly expenses − (MRR × gross margin). Zone labels: Safe ≥18 months, Tight 12–17, Crisis 6–11, Terminal <6. Cash runway is the single most important survival metric for a pre-profitable startup.
What is the difference between net burn and gross burn?
Gross burn is your total monthly expenses regardless of revenue. Net burn subtracts MRR × gross margin from gross burn: net burn = expenses − (MRR × GM). Net burn is what drains your cash each month. A company with $200K gross burn and $50K in gross-margin-adjusted MRR has $150K net burn and 8× longer runway than its gross-burn number suggests.
How do you calculate startup runway under different scenarios?
Startup runway = current cash ÷ monthly net burn. Net burn = total expenses − (MRR × gross margin). Under a scenario, each cut lever reduces monthly expenses by its cut percentage of its current cost; the combined runway is current cash ÷ new net burn. A good cash runway calculator also tracks revenue damage from cuts like marketing and growth pauses, because these extend runway today but shrink MRR tomorrow.
What is Paul Graham's Default Alive calculator?
Paul Graham's Default Alive / Default Dead framework asks: at your current growth rate and expense level, will you become profitable before you run out of cash? Default Alive means yes — your MRR × gross margin reaches monthly burn before cash hits zero. Default Dead means you need a raise (or cuts) to survive. This calculator projects MRR forward at your growth rate minus revenue damage from cuts, then compares months-to-profitability against runway months-after-cuts.
How do you extend SaaS runway by cutting costs?
The highest-leverage cuts for SaaS startups are usually headcount (largest line item), SaaS vendor audits (often 20–40% waste), and pausing paid marketing (short-term ROI only). The key question is runway-months-per-dollar-cut, not dollars saved. A $8K/mo SaaS audit may add 1.2 months of runway with zero revenue damage — often a higher-leverage cut than a $40K marketing reduction that costs $240K ARR.
What is the impact of layoffs on runway?
Layoffs typically have the largest absolute impact on runway because salaries are usually 50–70% of burn. A 20% headcount cut at a 20-person company with $220K/mo burn can extend runway by 3–4 months. But layoffs carry revenue damage — engineers and sales reps produce output that drives MRR. This tool models a 30% revenue-damage coefficient on headcount cuts so you see both the cash extension and the MRR drag.
How do you plan a path to profitability?
Path to profitability means getting net burn to zero via some combination of MRR growth, cost cuts, or both. In the planner, set scenario mode to "profitability" and enable growth-pause: the tool calculates months-to-profitability at your effective growth rate (accounting for revenue damage). If months-to-profitability ≤ runway months, you're Default Alive. Most path-to-profitability plans combine a ~30% expense cut with flat-to-moderate growth.
How do you plan a bridge round runway?
A bridge round extends runway to the next priced milestone (Series A, Series B, or profitability). The math: raise = (target runway − current runway) × current net burn. With cuts, you can raise less: raise = (target runway − current runway) × new net burn. This calculator shows exactly how cuts reduce the bridge size — often by 30–50%, making the round easier to close on founder-friendly terms.
What cuts preserve growth while extending runway?
Growth-preserving cuts are those with low revenue-damage coefficients: SaaS audit (5% damage), office & travel (5% damage), contractor freeze (20% damage). These extend runway without gutting the metrics VCs care about. In contrast, growth-pause (80% damage) and marketing cuts (60% damage) can double runway but also kill the growth rate — useful in crisis mode but devastating to fundraise readiness.
How do you model burn rate scenarios?
Start with your current burn breakdown (salaries, SaaS, marketing, office, contractors, other). Then apply cut levers — each lever reduces its category's monthly cost by its cut percentage. The planner computes four outputs per scenario: runway months, monthly savings, revenue damage over 12 months, and net impact (savings minus damage). Compare scenarios side-by-side to find the efficient frontier of cuts.
How long will my startup last at current burn?
Runway in months = current cash ÷ (monthly expenses − MRR × gross margin). For $1.2M cash, $220K/mo expenses, $40K MRR, and 75% gross margin, that's 1,200,000 ÷ (220,000 − 40,000 × 0.75) = 1,200,000 ÷ 190,000 = 6.3 months. The zone labels in this calculator map runway to action: Safe (18+), Tight (12–17), Crisis (6–11), Terminal (<6).
What is the difference between Default Alive and Default Dead?
Default Alive: your growth rate × runway will get you to profitability before you run out of cash. Default Dead: it won't, and you need a raise or cuts to survive. Paul Graham's essay argues most founders miscalculate this because they extrapolate linearly; in reality MRR grows geometrically at (1 + growth rate) per month. This calculator projects geometrically and applies revenue damage from cuts to give you a realistic Default Alive verdict.