Discount Store Break-Even Analysis: About $34K Monthly Revenue

Fixed costs $7.2K/mo Base monthly overhead

Contribution margin 80% After variable costs

Break-even revenue $9.0K/mo Monthly sales target

Break-even timing Month 27 Model breakeven

Break-even calculator

Test how monthly revenue, variable expenses, and fixed costs shape break-even for a discount store.

Lean Base Full

Monthly revenue Revenue is the top line that funds fixed overhead after direct costs. $ Low sales High sales Variable expenses These are the costs that rise with sales, like product cost, freight, and card fees. $ Low costs High costs

Money available to cover fixed costs $34,100 $42,000 revenue - $7,900 variable expenses

Margin ratio

81%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead the store has to cover before profit starts. $ Low overhead High overhead

Break-even chart Revenue Total costs

Which discount store expenses are fixed, and which move with sales?

Cost classification

Break-even is only useful if fixed costs stay fixed and variable costs move with each sale. Here, payroll steps up with FTE, while product costs, freight, marketing, and card fees should be modeled as sales-linked percentages.

Expense	Cost	Break-Even Treatment	Common Mistake
Commercial Rent	Fixed	Use $5,000 per month as baseline overhead from Month 1 through Month 60.	Spreading rent per item and missing the real monthly hurdle.
Utilities	Semi-variable	Start with the $800 monthly base, then watch usage as traffic and store hours rise.	Treating power, water, and climate control as flat forever.
Software and Analytics Subscriptions	Fixed	Use $1,300 per month for the data analytics platform and point-of-sale software license.	Leaving subscriptions out because each invoice feels small.
Product Acquisition Cost	Variable	Model as 15.0% of sales in the first year, declining to 14.0% by the fifth year.	Using sales price as margin and forgetting product buy cost.
Inbound Freight & Handling	Variable	Model as 2.0% of sales in the first year, declining to 1.5% by the fifth year.	Burying freight in inventory and overstating contribution margin.
Marketing and Advertising Expenses	Variable	Model as 2.0% of sales in the first year, easing to 1.5% by the fifth year.	Calling all marketing fixed instead of tying traffic spend to sales.
Payment Processing Fees	Variable	Model as 1.0% of sales in the first year, then 0.8% by the fourth and fifth years.	Treating card fees as harmless because each swipe looks small.
Payroll	Semi-fixed	Step expense up as FTE rises, including store associates, buyer, marketing, analyst, and admin roles.	Modeling payroll as fully variable when staffing changes in chunks.

How does break-even change across lean, base, and full discount store setups?

Scenario table

Break-even moves up as traffic, staff, and inventory depth grow, so the store needs more sales to cover a bigger fixed base. The lean setup is the most exposed; the full build has the biggest cushion if conversion and basket size hold.

Planning assumptions only; actual break-even will move with traffic, mix, and wage levels.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch	$59k	$12k	$272k	80.0%	-$225k	About $340k is needed, so launch traffic alone does not cover overhead.
Base case	$520k	$98k	$341k	81.1%	$81k	About $420k is needed, so steady conversion creates a workable cushion.
Full build-out	$2.12m	$377k	$412k	82.2%	$1.33m	About $501k is needed, but the larger staff base still needs strong cash support.

What breaks this discount store’s break-even plan?

Stress test

Year 3 has about a $100k monthly cushion on $520k of revenue, but it is thin. A 20% traffic drop or a 3-point hit to contribution margin can wipe out most of the profit.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change from the Year 3 base case.	$420k	$100k cushion	Healthy, but the cushion is not wide.
Revenue shortfall	Sales fall 20% from the Year 3 base case.	$420k	$4k gap	Weak conversion turns into a quick loss.
Fixed-cost increase	Fixed overhead rises by $5k per month.	$427k	$93k cushion	Rent pressure shows up before traffic proves out.
Margin pressure	Contribution margin falls 3 points.	$437k	$83k cushion	Shrink or forced markdowns push break-even up.
Combined pressure	Sales fall 20%, margin falls 3 points, and overhead rises $5k per month.	$443k	$27k gap	Weak traffic, shrink, and rent can stack into a loss.

Can this discount store support break-even before you sign the lease?

Founder checklist

Don’t sign the lease until the site and operating plan can support about $340K in first-year break-even revenue. The model doesn’t reach break-even until Month 27, and payback runs 53 months, so the cash load has to work before you commit.

1Site Demand$340K Yr 1

Verify the location can produce enough traffic and conversion to clear first-year break-even revenue before you lock the lease.

2Fixed Load$27.2K/mo

Check that rent plus Year 1 payroll and overhead fit the store’s cash flow, because this monthly load sets the floor for survival.

3Margin Check80% CM

Confirm product acquisition, freight, marketing, and payment fees still leave enough contribution margin, or the break-even point moves out fast.

4Staffing Ramp1+2 core team

Hold staffing to the Year 1 plan of 1 manager, 2 associates, and partial support roles until traffic proves you need more labor.

5Cash Buffer$170K Month 30

Keep the minimum cash cushion in place through Month 30, since break-even lands in Month 27 and the payback test is still long after that.

6Launch Stack$223K

Verify the full launch spend is funded across build-out, inventory, fixtures, hardware, security, the van, office equipment, and opening marketing before you add nice-to-have spend.