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Burn rate 101: how fixed costs decide survival

The startups that survive long enough to win are usually the ones that kept fixed costs embarrassingly low at the start.

By the Launch My Office team · Updated 2026-06-22 · 6 min read

Burn rate is how much cash you spend each month beyond what you bring in. It's the clock every startup races. The lower your fixed costs, the slower that clock ticks — and the more chances you get to figure things out.

Fixed vs variable costs

Office rent is the archetypal fixed cost — large, recurring and inflexible. That's exactly what you don't want a lot of when revenue is unpredictable.

Why low fixed costs win

Low fixed costs mean a longer runway on the same cash, more tolerance for slow months, and the freedom to pivot without a lease anchoring you. It's not glamorous, but survival rarely is.

Replacing an office lease with a virtual office converts one of your biggest fixed costs into a rounding error — without losing the legal address you need.

A simple rule for early teams

Before committing to any recurring cost, ask: "Does this directly help me find product-market fit or reach customers?" An office usually doesn't — an address does, and that's cheap. Keep the rest variable for as long as you can.

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Frequently asked questions

What is a healthy burn rate for an early startup?

There's no universal number, but the goal is enough runway (often 12–18 months) to hit your next milestone. Low fixed costs are the easiest lever to extend it.

Is office rent a fixed or variable cost?

Fixed. It's due regardless of revenue, which is why it's risky for pre-revenue teams.

How does a virtual office help burn rate?

It removes a large fixed cost (rent + deposit) while keeping the legal address you need, directly lowering monthly burn.

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