Bed and Breakfast Break-Even Analysis: $266K Monthly Revenue

Fixed costs $17.3K/mo Core monthly base

Contribution margin 83% After variable costs

Break-even revenue $20.8K/mo Monthly target

Break-even timing Month 13 Payback point

Break-even calculator

Use this to test monthly room revenue, direct costs, and overhead against break-even.

Lean Base Full

Monthly revenue Room nights plus add-on sales drive the top line. $ Lower sales Higher sales Variable expenses Food, OTA fees, housekeeping, and marketing move with sales. $ Lower costs Higher costs

Money available to cover fixed costs $41,824 $49,263 revenue - $7,439 variable expenses

Margin ratio

85%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead profit has to cover. $ Tight overhead Heavy overhead

Break-even chart Revenue Total costs

Which bed and breakfast expenses stay fixed, and which move with room sales?

Cost classification

At Month 13 break-even, the model only holds if guest-servicing spend stays variable and fixed overhead stays fixed. Treating breakfast, cleaning, or commissions like overhead overstates margin and makes the room-revenue target look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Lease/Mortgage	Fixed	Include the $5,000 monthly amount before contribution margin. It does not move with occupancy in the planning range.	Spreading it per occupied room and hiding the true monthly hurdle.
Property Taxes and Insurance	Fixed	Include $1,200 per month together: $800 for taxes and $400 for insurance.	Reducing these when occupancy dips, even though the bills still arrive.
Website & Booking System	Fixed	Include the $250 monthly platform amount as fixed operating overhead.	Treating it like a booking commission instead of a monthly commitment.
Food & Beverage Ingredients	Variable	Model at 7.0% of revenue in the first year, then lower per the forecast.	Treating breakfast as overhead instead of guest-servicing spend.
Online Travel Agency Commissions	Variable	Model at 4.0% of revenue in the first year, falling to 3.0% by the fifth year.	Ignoring channel mix and overstating room-level margin.
Housekeeping Supplies	Variable	Model at 2.5% of revenue in the first year, then use the annual forecast percentages.	Bundling cleaning supplies into overhead and missing the per-stay drag.
Utilities Above Base	Semi-variable	Keep the $600 monthly base fixed, then add usage-driven amounts as occupancy rises.	Using one flat utilities number when filled rooms drive extra usage.
Housekeeping Staff	Semi-fixed	Step labor from 1.5 FTE to 2.0 FTE as room count and occupancy rise.	Assuming labor scales smoothly per booking instead of jumping in staffing steps.

How do lean, base, and full occupancy change break-even for this bed and breakfast?

Scenario table

When occupancy and room rates rise, room revenue grows faster than variable costs, so the fixed-cost load gets easier to carry. That’s why Year 1 is barely above break-even and Year 5 has a wide cushion.

Planning assumption only; actual break-even will shift with season mix, rate changes, and cost control.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening year	$269k	$45k	$221k	83%	$3k	Thin cushion; a soft week can wipe it out.
Base Year 2	$339k	$54k	$237k	84%	$47k	Coverage improves, so normal swings are easier to absorb.
Full stabilized year	$592k	$77k	$277k	87%	$238k	Strong cushion; fixed costs are well covered.

What breaks the break-even plan if bookings slow or costs rise?

Stress test

The base plan has a thin cushion, so small hits to occupancy or costs matter fast. A 50% occupancy drop, a 10% rise in fixed costs, or a jump in guest-service expenses can wipe out profit and push the model into a material monthly gap.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	55% occupancy with an 83% contribution margin and $221k fixed costs.	$266k	$3k cushion	Thin cushion; weak midweek demand can erase it.
Revenue shortfall	Occupancy falls to 50%, cutting room revenue to about $245k.	$266k	$17k gap	Lower bookings push the model below break-even.
Fixed-cost pressure	Fixed costs rise 10% to about $243k.	$293k	$19k gap	Higher overhead needs more room revenue just to hold even.
Margin pressure	Variable guest-service costs rise from 17% to 20%.	$276k	$5k gap	Breakfast and housekeeping cost creep eats the cushion.
Combined pressure	Occupancy drops to 50%, variable costs rise to 20%, and fixed costs rise 10%.	$304k	$47k gap	This is the cliff-edge case; losses widen fast.

What should you verify before you commit to the property and remodel?

Founder checklist

Do not sign the lease or start the remodel until the room-night, rate, payroll, and cash math still works. This plan needs about 132 occupied room nights a month, a $204 blended ADR, and $574k of minimum cash at Month 24 to make the 13-month payback believable.

1Demand floor55% occ.

Test whether the local off-season can hold about 54% to 55% occupancy at the $204 blended ADR target, because that is the base needed to reach 132 occupied room nights a month.

2Direct book4% OTA

Prove enough direct booking demand before launch so you are not leaning on the 4% online travel agency commission in Year 1.

3Unit margin83% CM

Keep the combined variable cost load near 17 percent from food ingredients, OTA commissions, housekeeping supplies, and marketing, which leaves about 83 percent contribution before fixed costs.

4Housekeeping1.5 FTE

Build the cleaning schedule around 132 occupied room nights a month and confirm 1.5 housekeeping FTE can handle room turns without service slipping.

5Fixed burn$7.7K/mo

Check that non-payroll fixed overhead stays at $7.7k a month before debt service, since lease, taxes, insurance, utilities, the booking system, maintenance, and accounting all sit there.

6Cash runway$574K

Protect the runway because startup projects total $378k and minimum cash still bottoms at $574k in Month 24, so a weak launch can squeeze operating cash fast.