Overhead $18k/mo, contribution $65/hr
After variable labor/material cost on T&M.
Break-even ~277 billable hr/mo — about 69 hr/week for one tech shop.
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Break-Even Calculator
Find the revenue and billable hours required to cover fixed and variable costs.
Break-even revenue
$40,047per month
At a 41.0% contribution margin, every revenue dollar leaves $0.41 to cover $16,400 of fixed cost.
- Jobs per monthAt $2,100 per job
- 20
- Billable hours per month9.0 hrs per job
- 172 hrs
- Break-even revenue per year
- $480,558
- Margin of safety$1,953 above break-even
- 4.7%
- Profit at current revenue
- $800
| Fixed cost | Monthly | Annual | Share | Revenue it demands |
|---|---|---|---|---|
| Shop rent & utilities | $1,800 | $21,600 | 11.0% | $4,395 |
| Insurance — liability, comp, vehicle | $950 | $11,400 | 5.8% | $2,320 |
| Office & admin payroll | $3,800 | $45,600 | 23.2% | $9,279 |
| Owner's salary | $7,000 | $84,000 | 42.7% | $17,093 |
| Vehicles — payments, fuel, maintenance | $1,450 | $17,400 | 8.8% | $3,541 |
| Software & subscriptions | $380 | $4,560 | 2.3% | $928 |
| Loan & equipment payments | $620 | $7,440 | 3.8% | $1,514 |
| Other fixed costs | $400 | $4,800 | 2.4% | $977 |
| Total fixed cost | $16,400 | $196,800 | 100.0% | $40,047 |
You clear break-even by $1,953 a month
Revenue can drop 4.7% before the business stops covering its fixed costs, and the $1,953 above break-even converts to $800 of profit at your contribution margin. That is 0.9 jobs a month of cushion — one slow week, in most shops.
| Measure | Today | After the hire | Change |
|---|---|---|---|
| Fixed cost per month | $16,400 | $26,200 | +$9,800 |
| Break-even revenue per month | $40,047 | $63,977 | +$23,930 |
| Break-even jobs per month | 20 | 31 | +11 |
| Break-even billable hours per month | 172 | 274 | +103 |
| Profit at today's revenue | $800 | -$9,000 | −$9,800 |
| Revenue needed to hold today's profit | $42,000 | $65,930 | +$23,930 |
Growth raises fixed cost today and revenue later
A truck and a technician cost $9,800 a month from the day they start, and the revenue follows months behind. To stand still on profit you need $23,930 more revenue a month — 12 more jobs and 103 more billable hours. Multiply the shortfall by the months it takes to fill that schedule and you have the cash the expansion actually requires. That number, not the payroll cost, is what sinks growing contractors.
Quick answer
Break-even monthly revenue is fixed overhead divided by (1 minus variable cost as a percent of revenue). Until you bill above that number, the business loses money on every job even if field crews stay busy. Knowing break-even separates “busy” from “profitable.” Enter rent, insurance, admin, debt service, and your typical variable cost rate below to see the monthly and daily revenue you must hit before profit exists.
What this assumes
- Fixed costs are those incurred whether or not you sell a job — rent, insurance, salaries, loan payments, software.
- Contribution margin is the share of each revenue dollar remaining after direct job cost.
- Owner's salary is treated as a fixed cost, because it is a real cost of the business.
Understanding the result
Growth can bankrupt you
Adding a truck and a technician raises fixed costs immediately and revenue only later. Knowing the new break-even before you hire tells you how many months of runway the expansion requires, which is the difference between growth and a cash flow crisis.
Fixed costs are everything you pay regardless
Rent, insurance, truck payments, software subscriptions, owner salary, and office staff are fixed — they hit every month whether you sell zero jobs or twenty. Variable costs (materials, fuel, per-job subcontractor) scale with revenue. Break-even is where total revenue covers fixed plus variable.
Contribution margin is the key ratio
Contribution margin is the percentage of each revenue dollar left after direct job cost. A 45% contribution margin means each $1,000 job contributes $450 toward fixed costs. With $15,000/month fixed costs, you need $33,333 in monthly revenue to break even.
Seasonal businesses need a cash buffer
A landscaping or HVAC shop that breaks even at $40,000/month annualized may do $70,000 in summer and $15,000 in winter. Break-even calculated on annual averages hides months of cash burn. Model monthly break-even for seasonal trades.
How the math works
Fixed overhead per month divided by contribution margin per billable hour (or per job) yields hours or revenue needed to cover overhead before profit. Add target profit as second break-even line.
Where to find each input
- Monthly overhead — rent, insurance, admin, vehicle fixed
- Average contribution per hour — shop rate minus variable cost per hour
- Or average job contribution from job-profitability history
Worked examples
Add $4k profit target
Same contribution.
Need ~338 hr/mo — shows gap between survival and goal.
Mixed remodel avg job $3k contribution
Overhead $22k/mo.
Need ~7.3 jobs/mo at that contribution — sanity-check pipeline.
What this does not include
- Seasonal overhead smoothing
- Line of credit interest
- Owner draw above market wage
Regional adjustment
Overhead dollars differ by rent market; break-even hours depend on your pricing, not geography directly.
Accuracy and references
Classic contribution margin break-even from managerial accounting texts; overhead categories from PHCC chart of accounts.
Counterpart bridge
What homeowners see for the same decision
Homeowners use the paired tool for benchmarks and questions before they hire. Align your numbers with what they are already comparing against.
Open True Cost of Home Ownership CalculatorHomeowner counterpart
We publish True Cost of Home Ownership Calculator for the same decision from the customer side — use it to sanity-check how your bid will read against national ranges.
View Ownership CostCommon questions
How do you calculate break-even for a contractor?
Fixed costs ÷ contribution margin percentage = break-even revenue. Example: $180,000 annual fixed costs ÷ 0.45 contribution margin = $400,000 break-even revenue. At an average job value of $1,200, that is 334 jobs per year, or roughly 28 jobs per month.
How many jobs do I need to break even?
Divide annual break-even revenue by average job value. At $400,000 break-even and $1,500 average job: 267 jobs per year, or 22 per month. At $800 average service call: 500 jobs per year, or 42 per month. Higher average job value means fewer jobs needed.
What are fixed costs for a one-truck contractor?
Typical fixed costs for a one-truck electrical or plumbing shop: $3,000 to $5,000/month — truck payment ($600), insurance ($800), owner salary ($5,000/month allocated), rent ($500), phone/software ($200), and miscellaneous ($400). Total: $36,000 to $60,000 per year.
What is contribution margin for a trade business?
Contribution margin is (revenue minus direct job cost) ÷ revenue. A $2,000 job with $900 in labor and materials has 55% contribution margin. Most service contractors run 40 to 55%. Below 35%, fixed costs consume too much of each dollar and break-even revenue climbs sharply.
How many billable hours to break even?
Fixed costs ÷ (shop rate × contribution margin as decimal). At $180,000 fixed costs, $130/hour shop rate, and 50% contribution margin: $180,000 ÷ ($130 × 0.50) = 2,769 billable hours per year, or 1,385 per technician on a two-person crew.
What happens if I price below break-even?
Every job below break-even loses money on a fully loaded basis. Winning more work at below-break-even pricing accelerates the loss. A contractor doing 40 jobs/month at $50 below break-even per job loses $2,000/month — $24,000 per year — while feeling busy.
How much revenue does a one-man shop need?
A solo electrician or plumber with $48,000 annual fixed costs and 55% contribution margin needs $87,273 in annual revenue to break even before owner income. Add $70,000 owner income and the target rises to $214,545 — roughly $18,000 per month.
Does break-even change when I hire?
Yes, immediately. Adding a technician adds $40,000 to $60,000 in annual fixed cost (salary, taxes, truck, tools, insurance) before they generate revenue. The new break-even is higher, and the technician needs 3 to 6 months to reach productive utilization.
What is a good break-even point for HVAC company?
A two-truck HVAC service company with $300,000 fixed costs and 48% contribution margin breaks even at $625,000 annual revenue — roughly $52,000 per month. At $2,500 average ticket, that is 250 jobs per year across two technicians.
How do I lower my break-even point?
Three levers: reduce fixed costs (renegotiate insurance, delay hiring), increase contribution margin (raise prices or reduce direct costs), or increase billable utilization (better routing, fewer callbacks). Raising utilization from 60% to 70% is often the fastest lever with no price increase needed.
Fixed vs variable?
Variable moves with jobs (materials, commission); fixed is paid if revenue is zero.
Include owner salary?
In overhead if treated as fixed draw.
Billable hours in denominator?
Use contribution per hour × expected billable hours for revenue break-even.
What if under break-even?
Raise rate, cut overhead, or increase utilization — math has only those levers.
Seasonal business?
Use annual overhead ÷ 12 or peak-month overhead for conservative view.
Jobs vs hours model?
Pick one consistent with how you sell.
Include material markup in contribution?
Yes — contribution is all gross profit per hour or job.
Break-even vs cash runway?
Break-even is operational; runway is bank balance — use both.
How often recalc?
When rent, insurance, or fleet costs change.
Target profit line?
Second threshold — survival vs thriving.
You may also need
The next decision usually follows directly from this one.
- CalculatorShop Rate CalculatorDetermine the shop rate you must charge per billable hour to cover overhead and hit your income target.
- CalculatorJob Pricing CalculatorBuild a defensible price from labor, materials, overhead and your target profit margin.
- CalculatorJob Profitability AnalyzerCompare quoted price against actual hours and material to see what a job really earned.
- CalculatorMarkup vs. Margin ConverterConvert between markup and gross margin so you stop pricing below your intended profit.
- CalculatorCash Runway CalculatorSee how many months of cash you have at current burn — and what revenue change keeps you solvent.
- CalculatorPrice Increase Impact CalculatorModel what happens to revenue and profit when you raise prices — and how many customers you can afford to lose.
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