Arrowhead Break-Even Analysis: $94K Year 1 Plan, Month 19 Break-Even

Fixed costs $870/mo Core overhead

Contribution margin 94.3% After variable costs

Break-even revenue $5.7K/mo Monthly sales target

Break-even timing Month 19 Model break-even

Break-even calculator

Test monthly revenue against direct costs and fixed burn to see when this workshop clears break-even.

Lean Base Full

Monthly revenue Revenue is the pool that covers direct costs and overhead. $ Lower sales Higher sales Variable expenses These direct costs move with each sale, like materials, shipping, and ads. $ Lower costs Higher costs

Money available to cover fixed costs $7,386 $7,833 revenue - $447 variable expenses

Margin ratio

94%

Covers fixed costs

Yes

Fixed monthly costs These costs stay due each month, even before sales pick up. $ Lower burn Higher burn

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in this handmade point business?

Cost classification

The model reaches break-even in Month 19, but that only holds if monthly commitments stay separate from per-piece expenses. Put rent and salaries above the line, and materials, shipping, and card fees against each sale.

Expense	Cost	Break-Even Treatment	Common Mistake
Workshop rent	Fixed	Use $400 per month as a required operating commitment before any piece is sold.	Spreading rent across units and making low-volume months look too profitable.
Business insurance	Fixed	Use $120 per month in fixed overhead because it does not rise with unit sales in the planning range.	Treating insurance as a per-order charge and overstating contribution margin.
Raw flint	Variable	Apply $0.05 per flint point sold, so material spend rises directly with production volume.	Budgeting one flat monthly amount and missing margin pressure when unit volume grows.
Obsidian nuggets	Variable	Apply $0.30 per obsidian point sold in the unit margin calculation.	Blending obsidian with lower-cost stone and overstating gross margin on that product line.
Payment processing	Variable	Use 1.5% of revenue each year because the fee moves with sales dollars.	Using a flat monthly estimate and undercounting fees as prices and revenue rise.
Shipping costs	Variable	Use 2.0% of revenue in the first year, stepping down to 1.2% by the fifth year.	Ignoring the rate change and making later-year break-even look worse than the model assumes.
Utilities	Semi-variable	Start with the $100 monthly base, then watch usage as production hours and shop activity increase.	Treating power, heat, and shop usage as perfectly flat at higher output.
Production and support wages	Semi-fixed	Model salaries in steps as headcount changes, from the master knapper in Month 1 to added support roles by later years.	Dividing payroll by units and pretending labor flexes smoothly with every sale.

How does break-even change from lean to full output in handcrafted arrowhead sales?

Scenario table

Lean Year 1 covers overhead but leaves little room if sales slip. By Year 3, the model reaches Month 19 break-even, and Year 5 adds more cushion because variable costs stay low versus revenue.

Planning cases only; results will move with mix, pricing, and labor.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean Year 1 plan	$7.8k	$447	$6.6k	94.3%	$833	Thin cushion; one weak month can push break-even back.
Base Year 3 plan	$16.6k	$846	$10.3k	94.9%	$5.4k	Month 19 break-even; best fit is steady direct sales with enough premium and custom orders.
Full Year 5 plan	$26.4k	$1.2k	$15.1k	95.5%	$10.1k	Healthy cushion; premium and custom orders absorb overhead.

What breaks the break-even plan here?

Stress test

Year 1 has about $10K of cushion on $94K of revenue, so a sales miss or a small cost bump can wipe out profit fast. Low-price mix, custom delays, and shipping above 20% of sales are the main warning signs.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$84,000	$10,000 cushion	Year 1 only has a thin cushion.
Revenue shortfall	Year 1 sales land 10% below plan.	$84,000	$600 cushion	A small miss leaves almost no room.
Fixed-cost pressure	Workshop rent, utilities, and insurance each rise by $300 per month.	$94,800	$800 gap	Small overhead creep flips profit negative.
Margin pressure	Shipping, payment processing, and digital ads rise by 5 percentage points.	$88,700	$5,300 cushion	Fee creep eats most of the cushion.
Combined pressure	Sales fall 10%, fixed costs add $900 a month, and variable costs rise 5 points.	$99,500	$14,900 gap	This pushes the plan well past break-even.

Can this workshop break even before you sign the lease and buy bulk stone?

Founder checklist

Don’t sign the lease or buy bulk stone until real orders, throughput, and cash line up with the model. The Year 1 plan only works if pricing, capacity, and the Month 19 break-even all hold.

1Price Test$6.50-$120

Test real orders at each price point, because the Year 1 mix only works if the $6.50 entry piece and the $120 custom piece both sell.

2Fixed Load$5.4K/mo

Make sure the workshop can carry about $5.4K a month in Year 1 fixed load, including the $400 rent and $1,500 ventilation spend.

3Margin Check≈90% CM

Check that blended contribution margin stays near 90%; if waste, discounts, or packing costs push it down, Month 19 break-even slips.

4Capacity Plan479/mo

Verify the master knapper, 0.3 FTE apprentice, and 0.2 FTE shipping clerk can ship about 479 pieces a month from the Year 1 mix.

5Cash CushionMonth 19

Keep enough cash to reach Month 19 break-even and the 43-month payback, so the business does not stall before the model turns.

6Launch Build$12.6K

Stage the $12.6K buildout across tools, workbench, ventilation, storage, website, and photography, line up stone supply, and delay extra labor until orders support it.