Charcoal Production Break-Even Analysis: $949K Monthly Sales

Fixed costs $17.5K/mo Overhead only

Contribution margin 83% After variable costs

Break-even revenue $21.2K/mo Monthly target

Break-even timing Month 2 Forecast break-even

Break-even calculator

Test whether monthly charcoal revenue covers variable costs and then clears fixed plant costs.

Lean Base Full

Monthly revenue Higher sales give you more margin to cover fixed plant costs. $ Low sales High sales Variable expenses These are the direct costs that rise as charcoal output and sales rise. $ Low cost High cost

Money available to cover fixed costs $95,639 $118,417 revenue - $22,778 variable expenses

Margin ratio

81%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base that margin must cover. $ Light base Heavy base

Break-even chart Revenue Total costs

Which charcoal production expenses are fixed and which move with sales?

Cost classification

Break-even is only useful if fixed overhead stays separate from per-unit inputs. In the first operating year, raw wood, bags, labor, commissions, and marketing move with volume, while rent stays fixed and management payroll shifts in steps.

Expense	Cost	Break-Even Treatment	Common Mistake
Raw Wood per Bag	Variable	Model by unit: $0.75 for 10lb lump, $1.20 for 20lb lump, and $0.60 for 8lb briquette.	Averaging all bag sizes into one wood rate.
Bag Material	Variable	Deduct per unit sold: $0.30 for 10lb lump, $0.45 for 20lb lump, and $0.25 for 8lb briquette.	Burying packaging inside general overhead.
Direct Kiln Labor	Variable	Treat per production unit: $0.50 for 10lb lump, $0.70 for 20lb lump, and $0.40 for 8lb briquette.	Putting kiln labor into fixed payroll only.
Kiln Energy	Semi-variable	Split base utility needs from usage tied to burn cycles and production volume.	Calling all energy fixed because bills arrive monthly.
Facility Rent Production & Office	Fixed	Include the $12,000 monthly rent in fixed overhead for the relevant planning range.	Spreading rent across units and hiding capacity risk.
CEO General Manager, Production Manager, and Sales & Marketing Manager	Semi-fixed	Model salaried managers as payroll steps, not per-bag inputs; first operating year base salaries total $320,000.	Treating management payroll as fixed forever.
Sales Commissions	Variable	Deduct as a revenue-linked expense; first operating year rate is 5.0% of sales.	Leaving commissions below EBITDA break-even math.
Marketing & Advertising	Variable	Deduct as a sales-linked expense; first operating year rate is 4.0% of revenue.	Treating launch marketing as fixed overhead.

How does break-even move from lean output to full kiln capacity in charcoal production?

Scenario table

Lean Year 1 is barely past break-even, so small swings in wood yield or sales mix matter. By Year 3 and Year 5, higher throughput across bags, bulk, and pallet mix spreads fixed overhead and gives the plant a wider cushion.

Planning case figures use model assumptions and do not guarantee actual results.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean Year 1 mix	$118.4k	$40.8k	$68.5k	65.6%	$9.1k	Break-even lands by Month 2, but the cushion is thin.
Base Year 3 throughput	$271.2k	$84.1k	$88.8k	69.0%	$98.3k	Higher kiln use gives a much safer margin.
Full Year 5 capacity	$441.8k	$126.3k	$106.3k	71.4%	$209.3k	Full output pushes break-even risk low.

What breaks the break-even plan for charcoal production?

Stress test

The model clears break-even at about $949K a month, so the base plan has about a $235K cushion. The main risks are softer sales, higher wood or energy costs, and fixed overhead creep.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change. Revenue holds at the base run rate.	$949K	$235K cushion	There is room, but not a huge one.
Revenue shortfall	Monthly revenue falls 20% from the base case.	$949K	$2K gap	A 20% sales drop nearly wipes out the buffer.
Fixed-cost pressure	Fixed overhead rises 10% across the month.	$1.044M	$140K cushion	Rent, payroll, or compliance creep lowers the safety margin.
Margin pressure	Variable expenses rise 10%, cutting margin to about 69.5%.	$987K	$197K cushion	Wood, kiln energy, or packaging inflation pushes break-even up.
Combined pressure	Revenue falls 15%, variable expenses rise 10%, and fixed overhead rises 10%.	$1.06M	$55K gap	That mix pushes the plan back below break-even.

Is the charcoal plant ready to commit to the kiln system, lease, and hiring plan?

Founder checklist

Do not lock the big spend until the plant can reach break-even by Month 2 and still stay above the $606K cash floor in Month 13. If the kiln, labor, and packaging plan cannot support Year 1 volume, the launch is too early.

1Throughput Test26,000 units

Verify the kiln can handle Year 1 volume across all five products before you buy more wood or commit to feedstock contracts.

2Compliance Gate$350K

Confirm zoning and environmental compliance before the kiln system install, because the biggest capex should not start until the site can legally run.

3Pack Workflow$80K

Test bag sizes and pallet flow before packaging automation, so the line fits the mix instead of forcing rework after spend is sunk.

4Unit Margin82-83% CM

Check that each unit still clears raw wood, kiln energy, packaging, labor, commissions, and marketing, because this margin has to carry fixed overhead.

5Staffing Ramp$612.5K/yr

Keep staffing tied to the 26,000-unit Year 1 plan, since payroll is already this high before overtime, bonuses, or extra shifts.

6Cash Floor$606K

Hold this reserve for the Month 13 low point, and do not sign restaurant or pallet deals until freight and packaging math still leaves room.