How SaaS runway is calculated
Runway = cash on hand ÷ net monthly burn. Net burn is monthly burn minus MRR (gross-revenue, not gross-profit, for the back-of-envelope). The number that matters is months until cash hits zero — not break-even, not Rule of 40, just the wall. This calculator models the wall under compounding MRR growth and the burn cost of planned hires, which static spreadsheets miss.
Why the standard 18-month rule exists
The bootstrapped / pre-seed bench is 12 months minimum, the venture bar is 18 months, and the seasoned operator bar is 24+ months. Why 18: a competitive raise (pre-seed or seed) takes 4–9 months end-to-end. Starting with under 12 months of runway means you're fundraising from desperation, which compresses valuation 30–50%. Starting with 18+ means you can walk away — which is the only leverage you have.
The compounding-hire trap
A $8K/month engineer hired at month 2 doesn't cost $8K — they cost $8K × (24 − 2) = $176K over the projection window, plus tooling, plus the opportunity cost of the runway months they consume. Every planned hire in this model should reduce runway visibly. If it doesn't, the projection assumptions are too generous (probably overstated MRR growth).
When this calculation breaks
Constant MRR growth rates are a fiction past 12 months — early-stage growth is typically lumpy (launch spikes, seasonal SaaS dips, channel saturation). Treat the 24-month projection as a planning ceiling, not a forecast. The useful number is the first negative month, not the curve shape. If the calculator shows you running out of cash at month 14 under your best-case growth rate, the real runway is shorter.
Companion tools
Pair runway with the MRR Health Snapshot to grade the recurring-revenue quality that drives growth, the Cohort Visualizer to validate the retention assumption baked into your growth rate, the CAC Payback Calculator to confirm acquisition spend is paying back inside the runway window, and the Fundability Scorecard to map your runway number against the investor stage band you're aiming at.
Related reading
The full operator-grade thesis behind the 18-month target: The SaaS Runway Playbook for Bootstrapped Founders. The four-input walk-through with a worked example: How to Calculate SaaS Runway in 4 Inputs. Why MRR is the operator's number (and ARR is the storyteller's): MRR vs ARR for bootstrapped founders.