Break-Even Analysis For An Air Conditioning Company: $103K/Month

Fixed costs $70.6K/mo Overhead base

Contribution margin 68.5% After variable costs

Break-even revenue $103.1K/mo Monthly target

Break-even timing Month 30 Model payback point

Break-even calculator

Use this calculator to test whether monthly revenue covers variable costs and fixed overhead for an air conditioning company.

Lean Base Full

Monthly revenue Revenue creates the margin available to cover overhead and profit. $ Lower sales Higher sales Variable expenses These rise with jobs, parts, fuel, and commissions. $ Lower direct costs Higher direct costs

Money available to cover fixed costs $115,500 $165,000 revenue - $49,500 variable expenses

Margin ratio

70%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead your margin has to cover. $ Lean overhead Higher overhead

Break-even chart Revenue Total costs

Which cooling and heating contractor expenses are fixed, variable, or tied to job volume?

Cost classification

Classifying costs right keeps Month 30 break-even from looking better than it is: job-linked parts reduce contribution, while rent and payroll set the monthly hurdle. Service vehicles and initial inventory affect cash runway, not operating contribution margin.

Expense	Cost	Break-Even Treatment	Common Mistake
HVAC Equipment and Parts	Variable	Model at 18.0% of first-year revenue, falling to 16.0% by the mature year.	Burying equipment and parts in overhead.
Technician Materials and Supplies	Variable	Model at 6.0% of first-year revenue, then tighten to 5.0% by Year 5.	Ignoring small parts leakage across jobs.
Fleet Fuel and Maintenance	Semi-variable	Use 4.5% of first-year revenue because dispatch volume drives most usage.	Treating vehicle spend as flat rent.
Commission and Performance Bonuses	Variable	Use 3.0% of first-year revenue because payout follows sales volume.	Counting commissions as fixed payroll.
Office and Warehouse Rent	Fixed	Include $8,500 per month in the break-even hurdle.	Lowering rent in slow months.
Insurance Premiums	Fixed	Include $3,200 per month across Months 1 to 60.	Linking required coverage to monthly jobs.
Technician Payroll	Semi-fixed	Start with $26,500 per month for 5 technician FTE in Year 1, then step up as headcount grows.	Treating every labor hour as variable.
Marketing Budget	Fixed	Plan $48,000 per year, or $4,000 per month, in the first operating year.	Moving planned spend only with closed jobs.

How does break-even change from lean to full staffing in this air conditioning company?

Scenario table

Break-even gets harder as payroll and overhead rise, even when the margin improves. Lean has the lowest sales floor, base is the pivot, and full capacity needs the most steady monthly revenue.

Planning assumptions only; real break-even will move with job mix, labor use, and parts costs.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch setup	$1.03M	$325K	$706K	68.5%	$0	Lowest sales hurdle, so it fits launch risk.
Base scale mix	$1.74M	$507K	$1.24M	71.0%	$0	Good steady-state mix, but payroll lifts the hurdle.
Full-capacity staffing	$2.46M	$651K	$1.81M	73.5%	$0	Best for mature demand, but cash flow must stay strong.

What pushes this air conditioning company past break-even?

Stress test

Fewer emergency calls, pricier parts, and payroll creep are the biggest risks. A 10% revenue miss or a 10% overhead bump can add $81K to $192K of monthly break-even pressure.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1.031M	$0 cushion	Base case needs steady jobs and tight cost control.
Revenue shortfall	Revenue lands 10% below break-even.	$928K	$71K gap	Weaker emergency repair volume can break the plan fast.
Fixed-cost pressure	Fixed overhead rises 10%.	$1.134M	$103K gap	Payroll creep and overhead push break-even higher.
Margin pressure	Variable expense load rises 5 points.	$1.112M	$81K gap	Higher equipment and parts costs cut contribution quickly.
Combined pressure	Variable margin falls to 635% and fixed overhead rises 10%.	$1.223M	$192K gap	Higher CAC and unused technician hours make break-even much harder.

Can the founder verify break-even readiness before signing rent for an air conditioning company?

Founder checklist

Don’t sign rent or lock in fleet spend until the model proves about $103K in monthly revenue can cover the Year 1 fixed load. The plan still shows -$492K EBITDA in Year 1 and a $523K cash trough by Month 30, so this commitment needs proof, not hope.

1Revenue Path$103K/mo

Here’s the quick math: about $847.2K of Year 1 fixed load divided by a 68.5% contribution margin means roughly $103K in monthly revenue just to break even, so don’t sign rent until the service mix can hold that run rate.

2Fixed Load$70.6K/mo

Check that the lease and payroll fit inside a $70.6K monthly fixed base, because that is the spend you carry even when bookings slow.

3Margin Mix68.5% CM

Verify that $125/hour installs, $165/hour repairs, and $95/hour maintenance still clear the 18% equipment, 6% supplies, 4.5% fuel, and 3% bonus load, or the margin will shrink fast.

4Hire RampMonth 13

Delay the Month 13 operations and marketing hires if technician utilization stays soft, because Year 1 only shows 2.5 billable hours per active customer each month and the extra payroll will hit before demand density does.

5Cash Cushion-$523K

Hold enough cash to survive the $523K minimum cash trough in Month 30, since payback does not arrive until Month 57 and the model is still negative in the early ramp.

6Launch Stack$465K staged

Stage the $465K of capex, especially the $180K for service vehicles and $85K for initial inventory, and confirm licenses, insurance, supplier accounts, dispatch software, vans, tools, service area coverage, and the seasonal ramp plan before fixed spend locks in.