Quick Answer (TL;DR)
Runway measures months of operation remaining at current burn. The formula is Cash on hand / Monthly burn rate. Industry benchmarks: 12-18 months minimum. Track this metric when planning fundraising timing.
What Is Runway?
Months of operation remaining at current burn. This is one of the core metrics in the revenue metrics category and is essential for any product team serious about data-driven decision making.
Runway connects product performance to business sustainability. Revenue metrics translate user behavior into financial outcomes, making them essential for board reporting, investor communication, and strategic planning.
Understanding runway in context --- alongside related metrics --- gives you a more complete picture than tracking it in isolation. Use it as part of a balanced metrics dashboard.
The Formula
Cash on hand / Monthly burn rate
How to Calculate It
Track timestamps for each event. If you measure five cases with durations of 2, 4, 5, 8, and 11 hours, the median is 5 hours. Use the median rather than the mean to avoid skew from outliers.
Benchmarks
12-18 months minimum
Benchmarks vary significantly by industry, company stage, business model, and customer segment. Use these ranges as starting points and calibrate to your own historical data over 2-3 quarters. Your trend matters more than any absolute number --- consistent improvement is the goal.
When to Track Runway
When planning fundraising timing. Specifically, prioritize this metric when:
You are building or reviewing your metrics dashboard and need revenue indicators
Leadership or investors ask about revenue performance
You suspect a change in product, pricing, or go-to-market strategy has affected this area
You are running experiments that could impact runway
You need a quantitative baseline before making a strategic decision
How to Improve
Reduce unnecessary steps. Map the process from start to finish and eliminate anything that does not directly contribute to the outcome. Fewer steps means faster completion.
Optimize pricing regularly. Most companies set pricing once and forget it. Review pricing quarterly, test willingness to pay, and ensure your pricing reflects the value you deliver.
Focus on expansion revenue. Growing revenue from existing customers is 5-7x cheaper than acquiring new ones. Build upgrade paths, usage-based pricing tiers, and cross-sell opportunities.
Reduce involuntary churn. Failed payments account for 20-40% of SaaS churn. Implement dunning flows, card update reminders, and retry logic to recover revenue automatically.
Common Pitfalls
Using averages instead of medians. Time-based metrics are often skewed by outliers. A few extremely slow cases can inflate the average and mask the typical experience. Use medians for a more accurate picture.
Ignoring revenue quality. Not all revenue is equal. Revenue from customers likely to churn, deeply discounted deals, or one-time contracts should be weighted differently than high-quality recurring revenue.
Measuring without acting. Tracking this metric is only valuable if you have a process for reviewing it regularly and a playbook for responding when it moves outside acceptable ranges.
Related Metrics
Monthly Burn Rate --- net cash spent per month
Rule of 40 --- combined growth rate and profit margin
Average Selling Price (ASP) --- average price at which your product is sold
Average Contract Value (ACV) --- average annualized value of a customer contract
Product Metrics Cheat Sheet --- complete reference of 100+ metrics