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Find the month you hit break-even and the cash it takes to get there.
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- Claude, via MCP
How do you calculate months to break-even from burn rate?
Break-even comes when gross profit (revenue × gross margin) covers fixed monthly costs. Break-even revenue = fixed burn ÷ gross margin. Grow revenue monthly until it reaches that level; the losses along the way are the cash you need. $80,000 revenue growing 8% a month against $160,000 of costs breaks even in month 14.
At 8% monthly growth you reach break-even in ~14 months, needing about $790,282 of cash to bridge the gap. Raising growth or margin, or trimming fixed burn, all pull that date forward.
Assumes fixed burn holds while revenue compounds. In reality some costs scale with growth, treat the break-even month as a best case.
About this calculator
"We'll grow into profitability" is a plan only if you can say when and how much cash it costs to get there. This forecaster grows your revenue against a fixed cost base month by month until gross profit finally covers burn, turning a vague growth assumption into a specific break-even month and a specific cash number you need to survive until you reach it.
How to use it
- Enter current monthly revenue and the monthly revenue growth rate you expect to sustain.
- Enter your fixed monthly costs as gross burn (total costs before revenue, not net burn), costs that don't scale with revenue, like salaries, rent, and core tooling.
- Enter gross margin, the percentage of revenue left after direct costs of delivering it.
- Read months to break-even, the break-even revenue level, and the cumulative cash needed to bridge the gap until you get there.
Methodology
The model simulates month by month for up to 120 months. Each month, gross profit is revenue × gross margin, and net cash flow is gross profit minus fixed burn. Revenue compounds forward each month at your growth rate.
Break-even month is the first month where gross profit meets or exceeds fixed burn. Break-even revenue is simply fixed burn ÷ gross margin, the revenue level at which gross profit exactly covers costs.
Cumulative cash flow is tracked across every month leading up to break-even, and the cash needed to get there is the size of the deepest cumulative deficit before the business turns cash-flow positive.
Fixed burn is held constant throughout the simulation, in reality some costs, headcount especially, scale with growth, so treat the break-even month and cash figure as a best-case estimate, not a guaranteed floor.
The break-even simulation
Gross profit in month m = Revenue in month m × Gross margin Net cash flow in month m = Gross profit − Fixed monthly burn Revenue in month m + 1 = Revenue in month m × (1 + Monthly growth) Break-even revenue = Fixed monthly burn ÷ Gross margin Cash to get there = largest cumulative deficit before the break-even month
- Current monthly revenue
- Revenue this month (month 1 of the simulation).
- Monthly revenue growth
- Compound month-on-month growth rate. 8% a month is about 152% a year.
- Fixed monthly burn
- Total monthly operating costs that do not scale with revenue: salaries, rent, core tools. This is gross spend, not net burn.
- Gross margin
- Share of revenue left after direct delivery costs such as hosting, payment fees and support.
The tool runs for up to 120 months and shows "10+ yrs" if gross profit never covers costs. Fixed burn stays flat for the whole run, so the result is a best case. Net burn, the figure most investors ask for, is fixed burn minus gross profit; the tool shows it for month 1 as "Current monthly net". To compare with cash in the bank, use the growth runway extension simulator.
Worked example: $80,000 revenue against $160,000 of fixed costs
A SaaS startup earns $80,000 a month at a 75% gross margin, grows 8% a month, and spends $160,000 a month on salaries, rent and tools.
- Month 1: gross profit = $80,000 × 0.75 = $60,000; net = $60,000 − $160,000 = −$100,000.
- Month 2: revenue = $80,000 × 1.08 = $86,400; gross profit $64,800; net −$95,200; cumulative −$195,200.
- Break-even revenue = $160,000 ÷ 0.75 = $213,333 a month.
- Revenue first passes that in month 14 (about $217,600), so break-even is month 14.
- Cumulative deficit through month 13 = about $790,000, the cash needed to get there.
- Same ratios in rupees: ₹40 lakh revenue against ₹80 lakh of costs breaks even in month 14 and needs about ₹3.95 crore.
The company needs roughly $790,000 of cash to reach break-even, so it should hold that plus a buffer. Running the levers one at a time on the same inputs: growth falling to 5% pushes break-even to month 22 and cash needed to about $1.22M; cutting fixed costs by $20,000 a month gives month 13 and about $541,000; lifting margin to 80% gives month 13 and about $705,000; 10% growth gives month 12 and about $648,000. Here the cost cut saves the most cash, and a growth shortfall costs the most. The guide to what marketing to cut when runway is short covers which costs to cut first.
How much private B2B SaaS companies spend relative to ARR (2026 edition)
| Measure | Median % of ARR |
|---|---|
| Total spend, all departments, bootstrapped | 96% |
| Total spend, all departments, equity-backed | 101% |
| Selling costs | 15% |
| Marketing | 8% |
What is a good time to break-even?
There is no single target, because it depends on how much cash you have and whether you plan to raise again. Useful reference points:
- Break-even within your cash: the "cash to get there" figure should be smaller than cash in the bank, with a buffer for growth coming in below plan. If it is not, the plan depends on raising before the money runs out.
- Within 24 months: the tool marks this as good. Beyond that, small errors in the growth assumption compound into large cash gaps.
- Spend efficiency: David Sacks of Craft Ventures proposed the burn multiple (net burn ÷ net new ARR). He describes 2x as reasonable for an early-stage startup and 5x as terrible.
The market has moved towards efficiency. SaaS Capital reported that the median profit margin of equity-backed companies at $1–3M ARR improved from −53% to −8% between 2023 and 2025. To see how growth and margin combine in one score, use the Rule of 40 sandbox.
Burn and break-even in India vs the US
A team based in India lowers fixed burn only to the extent its salary costs are lower, and rupee revenue per domestic account may be lower too, so run the tool with your actual numbers rather than assumed savings. If you sell to US customers and pay costs in rupees, exchange-rate moves change gross profit without any change in the business; run the tool in one currency at a planning rate. Exclude GST from revenue, and count GST paid on costs only where you cannot claim input credit. For a lower-cost senior marketing lead while burn is tight, see fractional CMO pricing in India.
For US teams, health insurance, payroll taxes and benefits belong in fixed burn, not only base salaries, and they raise break-even revenue for the same headcount. Investors following the Sacks approach will ask for net burn and burn multiple; the inputs here give you net burn for month 1 directly.
Common burn rate mistakes
- Entering net burn (losses after revenue) in the fixed burn field. The tool expects total fixed costs; it calculates net burn itself.
- Entering an annual growth rate. 8% here means 8% every month.
- Leaving payroll taxes, benefits or annual software contracts out of fixed burn.
- Assuming costs stay flat while revenue more than doubles. Support, sales and infrastructure usually grow with it.
- Planning to the exact break-even cash figure with no buffer for a slower month.
- Counting GST or one-time project revenue in monthly revenue.
Sources
- The Burn Multiple, David Sacks (Craft Ventures). Accessed 2026-10-17.
- 2026 Spending Benchmarks for Private B2B SaaS Companies, SaaS Capital. Accessed 2026-10-17.
- Growth, Profitability, and the "Rule of 40" for Private SaaS Companies, SaaS Capital. Accessed 2026-10-17.
- 2026 Private B2B SaaS Company Growth Rate Benchmarks, SaaS Capital. Accessed 2026-10-17.
FAQ
It means the simulation ran the full 120-month window without gross profit ever catching up to fixed burn at the growth rate entered. That's a signal the growth rate is too low relative to fixed costs to reach break-even on any reasonable timeline, something on the cost, margin, or growth side needs to change.
To isolate the effect of revenue growth and margin on the break-even timeline cleanly. In practice, growing revenue often requires adding headcount or infrastructure that raises fixed burn too, which pushes break-even further out than this simplified model shows, treat this as an optimistic baseline.
It depends on your starting point, but cutting fixed burn has an immediate effect (it directly lowers the break-even revenue threshold), while raising growth rate compounds over time but takes longer to show up. Try adjusting each input separately in the tool to see which one moves your specific break-even month the most.
No, this figure is the cumulative deficit specifically between now and break-even, assuming you hit the modeled growth rate exactly. Compare it against your actual cash in bank and current runway (see the Growth Runway Extension Simulator) to see whether you can realistically survive to the break-even point this model projects.
Gross burn is total monthly cash spending. Net burn is gross burn minus the cash revenue brings in, the amount you actually lose each month. This tool asks for fixed costs (close to gross burn) and works out net burn as gross profit minus fixed burn.
Net burn divided by net new ARR over the same period, a measure introduced by David Sacks of Craft Ventures in 2020. A burn multiple of 2 means you lose $2 of cash for every $1 of new annual recurring revenue. Sacks called 2x reasonable for an early-stage startup.
Divide fixed monthly costs by gross margin. With $160,000 of costs and a 75% margin, break-even revenue is $160,000 ÷ 0.75 = $213,333 a month. A higher margin lowers the break-even point, which is why margin improvements shorten the time to profitability.
It is fast: 8% a month compounds to about 152% a year. SaaS Capital reported a 22% median annual growth rate for private B2B SaaS in 2025. Run the tool with a lower growth rate as well to see how much cash a slower path needs.
It depends on access to capital and how efficiently spend turns into growth. If each dollar of burn produces a healthy amount of new ARR and the next round is realistic, burning to grow can be right. If not, reaching break-even removes dependence on investors.
Numbers looking off?
If the model says one thing and the pipeline says another, that gap is usually where the revenue is. A 30-minute call finds it.
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