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Runway Extension Calculator

Compare the cash-out timeline before and after a recurring cost reduction.

6 min guideTransparent methodologyUSDGo to calculator ↓
01 / UNDERSTAND THE CONCEPT

A lower burn rate has an upfront price.

Cost reductions can extend runway, but severance, contract termination and implementation expenses use cash first. Comparing the old and new monthly rate without deducting those costs overstates the benefit.

The relevant question is the net time purchased. This model holds collections constant and assumes savings begin immediately after the implementation cost is paid. A delayed saving belongs in a monthly cash forecast.

02 / THE MATHEMATICS

The formula, made clear.

Old runway = cash ÷ burn; new runway = (cash − change cost) ÷ (burn − savings)
Change cost
An immediate cash payment, not an amortized accounting expense.
Extension
New runway less old runway, measured in months.
03 / A WORKED EXAMPLE

Put the numbers in context.

$900,000.00 at $75,000.00 burn lasts 12 months. Paying $60,000.00 to save $15,000.00 per month leaves 14 months: an extension of two months.

Illustrative scenario · USD
InputExample value
Available cash$900,000.00
Current monthly net burn$75,000.00
Monthly cash savings$15,000.00
One-off change cost$60,000.00
Runway after the change14 months
MODEL BOUNDARIES

What this calculation assumes

Savings are immediate, permanent and do not reduce cash collections. No financing or later exceptional payments. Savings equal to or above burn mean no steady-state depletion, not unlimited financial security.

FROM UNDERSTANDING TO ACTION

What to consider next.

Check whether revenue or execution would change after the reduction. Model delayed savings and hiring changes in a cash forecast.

How we approach financial models →
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