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Knowing your total burn rate is not enough — understanding which departments are consuming runway allows founders to make targeted cuts or investments.
Gross burn vs. net burn
Gross burn = total monthly cash out (all departments) Net burn = gross burn − monthly revenue Runway = cash balance / net burn
Typical department spend ratios (Series A–B SaaS)
| Department | % of Total Headcount Cost |
|---|---|
| Engineering / Product | 40–50% |
| Sales | 20–30% |
| Marketing | 10–20% |
| G&A (Finance, HR, Ops) | 10–15% |
Pre-product-market-fit companies are typically engineering-heavy (60%+). Post-PMF, sales and marketing grow as a share.
Red flags in burn composition
- G&A > 20%: overhead-heavy; trim ops costs before cutting product
- Sales/Marketing > 60% combined: high CAC pressure; check payback period
- Engineering < 25% post-PMF: underinvesting in product at the wrong time
Burn multiples by stage
| Stage | Healthy burn multiple (net burn / net new ARR) |
|---|---|
| Pre-revenue | N/A |
| $0–1M ARR | 2–4× |
| $1–5M ARR | 1.5–3× |
| $5–20M ARR | 1–2× |
| $20M+ ARR | <1× |