Build-to-Order Manufacturing Break-Even Analysis: ~$93K/Month

Fixed costs $24.0K/mo Monthly overhead

Contribution margin 75% After variable costs

Break-even revenue $32.0K/mo Revenue target

Break-even timing Month 2 Launch ramp

Break-even calculator

Test monthly revenue, variable costs, and fixed costs against break-even for a build-to-order manufacturer.

Lean Base Full

Monthly revenue Revenue sets the pool that can cover direct costs and overhead. $ Lower sales Higher sales Variable expenses Direct costs move with each order, so they eat into cash fast. $ Lower cost Higher cost

Money available to cover fixed costs $509,497 $638,250 revenue - $128,753 variable expenses

Margin ratio

80%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base break-even must absorb. $ Lower cost Higher cost

Break-even chart Revenue Total costs

Which build-to-order manufacturing expenses stay fixed, and which move with sales?

Cost classification

Break-even is reliable only when each expense follows the right volume driver. Treat fixed overhead, unit materials, usage costs, and capacity hires differently, or Month 2 break-even can look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Main Production Facility Rent at $12,000/month	Fixed	Include the full monthly rent in fixed overhead from Month 1 through Month 60.	Allocating rent per unit and hiding the cash floor.
Software Licenses and ERP Subscription at $1,500/month	Fixed	Keep it in monthly fixed overhead for the relevant planning range.	Moving it with order volume without a usage driver.
Raw Timber Material at $25/unit	Variable	Apply the unit cost only when a custom wood desk is produced.	Treating ordered material as fixed inventory spend.
Direct Assembly Labor at $15/unit	Variable	Model it per unit because it rises with production volume.	Treating custom labor, setup time, rush work, and rework as fixed.
Outbound Freight Subsidy at 4.0% of first-year revenue	Variable	Calculate it as a revenue-linked selling expense, not a plant overhead line.	Using a flat monthly freight estimate despite sales mix changes.
Machine Power Consumption at 0.5% of revenue	Semi-variable	Track it as usage-linked factory overhead tied to machine activity.	Leaving utilities in fixed overhead when production hours rise.
Maintenance Consumables at 0.5% of revenue	Semi-variable	Scale the expense with operating intensity and equipment use.	Budgeting one flat maintenance amount while output grows.
Quality Control Specialist headcount at $60,000 annual salary per FTE	Semi-fixed	Add headcount in steps as the plan grows from 1.0 FTE in the first year to 4.0 FTE in Year 5.	Spreading quality headcount smoothly across every unit.

How does break-even change from lean ramp to full build-out?

Scenario table

Break-even improves as the mix moves from lean to full because revenue rises faster than fixed overhead, and the contribution margin edges up from 75.0% to 77.1%. The base case is the cleanest staffing and backlog check.

Planning case only; custom mix, scrap, and labor swings can shift break-even faster than this table shows.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean ramp (Year 1 mix)	$148k	$37k	$70k	75.0%	$41k	Still above break-even, but the cushion is thin if orders slip.
Base case (Year 2 mix)	$351k	$84k	$97k	76.0%	$170k	Backlog starts to absorb payroll and fixed cost load.
Full build-out (Year 3 mix)	$638k	$146k	$130k	77.1%	$363k	Higher throughput gives a wider cushion, though mix changes can move the margin fast.

What breaks first if demand slips or costs rise?

Stress test

The base case clears break-even, but the cushion shrinks fast if orders slow, margins slip, or overhead creeps up. The tightest risk is the combo case: softer revenue, lower margin, and a higher fixed-cost base.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change from the base case.	$93K	$55K cushion	Base case clears break-even, but the buffer is not wide.
Revenue shortfall	Monthly revenue falls 20% to about $118K.	$93K	$25K cushion	Long quote cycles or slower closes cut the buffer fast.
Fixed-cost pressure	Fixed costs rise by $10K per month.	$106K	$42K cushion	Overhead creep from rent, software, or labor raises the floor.
Margin pressure	Contribution margin slips to 70%.	$99K	$49K cushion	Rework, overtime, or expedite freight make each sale work less.
Combined pressure	Revenue falls 20%, margin slips to 70%, and fixed costs rise $10K.	$114K	$4K cushion	Small misses stack and leave almost no room for delay.

Can this build-to-order shop clear break-even before you lock in the lease, equipment, and hiring plan?

Founder checklist

Don't commit yet. The model needs about $93K a month of break-even revenue, $24K of fixed overhead, and $780K of minimum cash in Month 6, so the order book has to prove up first.

1Break-Even Sales$93K/mo

Verify quote flow and confirmed orders can clear this monthly line before you sign a lease, because overhead can outrun early demand.

2Fixed Costs$24K/mo

Count the recurring factory, hosting, insurance, marketing, legal, and software costs first, then prove quotes turn into orders before you spend on ads or inventory and lock supplier lead times and deposit terms.

3Unit Margin78%-85%

Check that direct timber, resin, metal, labor, packaging, and variable fees still leave enough room for fixed costs; the lamp frame is the tightest case in the model.

4Equipment Spend$765K

Do not buy printers, machining centers, the laser system, software build, fit-out, storage racks, network gear, and test tools until the full equipment spend is funded without starving working cash.

5Staffing RampMonth 6

Match sales, engineering, and quality hiring to confirmed orders, and map setup time, changeovers, inspection, packaging, and rework so the floor can absorb the ramp.

6Cash Cushion$780K

Hold at least this much cash by Month 6, because that is the model's minimum cash point and any slip in demand or production timing will hit hard.