Bicycle Rental and Repair Break-Even Revenue: $26K per Month

Fixed costs $22.1K/mo Run-rate base

Contribution margin 89% After variable costs

Break-even revenue $25.0K/mo Revenue target

Break-even timing Month 14 Model break point

Break-even calculator

Test whether monthly rental and repair revenue covers variable costs and the shop's fixed cost base.

Lean Base Full

Monthly revenue Higher revenue leaves more room to cover fixed costs after direct costs. $ Low sales High sales Variable expenses Include direct bike parts, marketing, and payment fees that rise with sales. $ Low direct cost High direct cost

Money available to cover fixed costs $28,870 $34,005 revenue - $5,135 variable expenses

Margin ratio

85%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base break-even sales must cover. $ Lean overhead High overhead

Break-even chart Revenue Total costs

Which bicycle rental and repair expenses are fixed, and which move with sales?

Cost classification

Break-even is only useful if fixed overhead stays separate from sales-linked costs. For this shop, payroll and rent carry the Month 14 break-even burden, while parts, promotions, and card fees rise with revenue.

Expense	Cost	Break-Even Treatment	Common Mistake
Rent Retail & Workshop	Fixed	Include $4,500/month in overhead.	Tying rent to rental count.
Store Manager, Lead Bike Mechanic, Rental Associate, Tour Guide payroll	Semi-fixed	Use Year 1 wages of $185,000/year as staffing capacity.	Treating payroll as a per-job expense.
Utilities	Semi-variable	Start with the $750/month baseline, then watch usage swings.	Ignoring higher summer shop usage.
Business Insurance	Fixed	Include $400/month across all operating months.	Dropping insurance during off-season months.
Rental Fleet Maintenance Parts	Variable	Apply 6% of revenue in the first year.	Treating fleet upkeep as zero after purchase.
Repair Parts Inventory	Variable	Apply 3% of revenue in the first year.	Confusing parts with mechanic payroll.
Marketing & Promotions	Variable	Model at 5% of revenue in the first year.	Setting one flat amount and forgetting seasonality.
Payment Processing Fees	Variable	Apply 2% of revenue to card-based sales.	Excluding card-heavy rental sales.

How do lean, base, and full cases change break-even for this bike shop?

Scenario table

The lean case stays below break-even, the base case clears it with a small cushion, and the full case adds a bigger buffer. More rental, repair, and tour revenue lifts contribution faster than fixed payroll and shop costs.

These scenario figures are planning assumptions, not guarantees.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening case	$22,000	$3,520	$22,067	84.0%	-$3,587	Still below break-even, so demand growth matters first.
Base operating case	$34,005	$5,135	$22,817	84.9%	$6,053	Revenue clears break-even, but the cushion is still modest.
Full throughput case	$47,467	$6,740	$27,067	85.8%	$13,660	Revenue sits well above break-even, so cash risk drops.

What breaks first if sales soften or costs jump for this bike shop?

Stress test

Year 2 has about $34,005 in monthly revenue and roughly a $6,003 cushion, so the plan works, but not by much. A 15% sales dip, 10% higher overhead, or a 5-point margin slip can erase most of that buffer.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$28,002	$6,003 cushion	Works now, but the buffer is not wide.
Revenue shortfall	Monthly sales fall 15% from the base case.	$27,232	$1,672 cushion	Slow rental days and off-season traffic cut the room to breathe.
Fixed-cost pressure	Fixed overhead rises 10% from the base case.	$29,627	$4,378 cushion	Rent or payroll inflation tightens the monthly buffer.
Margin pressure	Variable costs rise 5 points from the base case.	$28,619	$4,303 cushion	Parts inflation and fee creep eat into contribution fast.
Combined pressure	Sales fall 15%, variable costs rise 5 points, and overhead rises 10%.	$30,963	$2,059 gap	Weak demand plus cost pressure pushes the shop into a monthly deficit.

Can this bike shop clear break-even before you sign the lease and buy the fleet?

Founder checklist

Test the lease, fleet, and staffing plan against the model’s $26.3K monthly break-even. Year 1 revenue lands below that line, so the shop needs enough reserve to absorb the Month 25 cash trough.

1Demand Base3,000 / 1,500

Check that Year 1 rentals and repairs are real local demand, because this volume sets the launch-month cash plan.

2Break-Even Load$26.3K/mo

Verify the location can carry rent, payroll, and overhead in slow months, or the Month 14 break-even target slips.

3Pricing Margin88.6% CM

Make sure $45 rentals and $80 repairs still leave the model’s 88.6% contribution margin after 6% fleet upkeep, 3% repair parts, 5% marketing, and 2% payment fees.

4Buildout Capex$192.5K

Validate storage, workshop flow, and setup timing before you spend the $80K fleet and $30K tools.

5Cash Cushion$668K

Plan enough runway for the $668K cash trough plus the $192.5K buildout, because Year 1 EBITDA is -$72K and the model stays under pressure early on.

6Staffing RampYear 3

Do not add the junior mechanic until Year 3 volume supports the step, or payroll will outrun repair tickets.