Clothing Manufacturing Break-Even Analysis: $85K Monthly Revenue

Fixed costs $68.0K Monthly base cost

Contribution margin 80.1% After variable costs

Break-even revenue $84.9K Revenue to cover

Break-even timing Month 1 Launch month

Break-even calculator

Test whether monthly revenue covers variable expenses and the fixed cost base, then see how close the business gets to break-even.

Lean Base Full

Monthly revenue Use the monthly sales run rate that drives margin available for fixed costs. $ Lower sales Higher sales Variable expenses Use direct material, direct labor, and revenue-linked fees that rise with output. $ Lower costs Higher costs

Money available to cover fixed costs $451,807 $550,167 revenue - $98,360 variable expenses

Margin ratio

82%

Covers fixed costs

Yes

Fixed monthly costs Use rent, salaries, and overhead that stay close to flat each month. $ Lower fixed Higher fixed

Break-even chart Revenue Total costs

Which clothing manufacturing expenses are fixed and which move with sales volume?

Cost classification

Break-even is only reliable if each expense is treated by how it behaves. Contribution margin, meaning sales minus volume-linked costs, gets overstated when factory costs, labor, scrap, or packaging are buried in the wrong bucket.

Expense	Cost	Break-Even Treatment	Common Mistake
Factory Rent	Fixed	Use $15,000 per month in fixed overhead from Month 1 through Month 60.	Spreading rent across units and hiding the true monthly break-even floor.
Insurance Premiums and Software Licenses	Fixed	Include $2,000 per month together: $1,200 insurance plus $800 software.	Treating small fixed tools as variable and understating required baseline sales.
Garment Materials and Packaging	Variable	Deduct per-unit inputs by product: $1.40 T-shirt, $3.90 hoodie, $5.00 denim jean, $3.25 dress, and $7.50 puffer jacket.	Using one average material rate and ignoring packaging by garment type.
Direct Sewing Labor	Variable	Model direct labor per unit, from $0.30 for a basic T-shirt to $1.20 for a puffer jacket.	Treating all labor as fixed because management payroll is salaried.
Sales Commissions and Client Sourcing Fees	Variable	Apply Year 1 selling fees at 4.5% of revenue: 3.0% commissions plus 1.5% sourcing fees.	Forgetting that channel mix changes contribution margin before fixed costs are covered.
Utilities & Internet and Factory Utilities	Semi-variable	Keep $2,500 monthly as the base charge, then add factory utilities at 0.5% of revenue.	Putting all utilities in fixed overhead and missing usage pressure as production rises.
Quality Control Overhead	Semi-variable	Model quality control overhead at 0.4% of revenue, and track rework outside the fixed payroll line.	Burying scrap and rework in overhead, which makes margins look cleaner than operations are.
Equipment Maintenance Contracts and Production Supervisor Allocation	Semi-fixed	Use $1,500 monthly for maintenance contracts, then watch supervisor allocation at 0.7% of revenue as capacity steps up.	Assuming capacity support grows smoothly instead of jumping when a new lead is needed.

How does break-even shift from a lean setup to base and full production?

Scenario table

As volume rises, fixed costs get spread over more garments, so break-even gets easier if fabric, labor, commissions, and sourcing stay in line. The $68,000 fixed base is the test; once contribution clears it, the model has cushion.

Planning assumptions only; actual break-even can move with mix, waste, wage rates, and selling costs.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean cut-and-sew plan	$85,000	$17,000	$68,000	80.0%	$0	Just covers fixed costs, so any slip in cost control breaks even.
Base Year 1 production plan	$261,700	$52,300	$68,000	80.0%	$141,400	Clear cushion above break-even, with fixed costs fully covered.
Full Year 2 scale plan	$402,300	$76,000	$68,000	81.1%	$258,300	Strong coverage of payroll, rent, utilities, and admin.

What breaks the break-even plan if demand softens or costs run hot?

Stress test

The base case has room, but a 10% sales drop or a 10% rise in fixed or variable costs cuts the cushion fast. Lower orders, scrap, overtime, freight, slower sell-through, and rework are the signals that matter.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	Base case revenue is about $261,700, with about 80% contribution margin and $68,000 in fixed costs.	$85,000	$141,400 cushion	Healthy cushion, but production must stay smooth.
Revenue shortfall	Revenue falls 10% to about $235,500 while costs stay flat.	$85,000	$120,400 cushion	Lower orders cut cushion first.
Fixed-cost increase	Fixed costs rise 10% to about $74,800.	$93,500	$134,600 cushion	Overhead creep eats cushion even if sales hold.
Margin pressure	Variable expenses rise 10% versus base, trimming contribution margin to about 78%.	$87,200	$136,100 cushion	Scrap, overtime, and rework hit margin fast.
Combined pressure	Revenue falls 10%, fixed costs rise 10%, and variable expenses rise 10% versus base.	$95,900	$108,900 cushion	Sales softness plus cost creep still leaves cushion, but less room for error.

Can your order pipeline cover the factory before you sign the lease?

Founder checklist

Don’t sign the lease or fund inventory until the first-year output, margin, and cash still work at scale. Year 1 volume is 125,000 garments, or about 10,417 a month, before the $23.0K monthly overhead and $540K salary load hit the model.

1Lease cover$15.0K/mo

Verify committed orders can carry the monthly factory rent before you lock the space, or fixed burn starts before demand does.

2Launch gateBefore bulk

Confirm fabric, trims, packaging, and finishing quotes, lock lead times, approve samples, and set quality rules before bulk cutting or shipment.

3Order cover10.4K/mo

Confirm the first-year pipeline can absorb about 10,417 garments a month, since that is the base load behind the break-even plan.

4Unit margin~80% CM

Check that fabric, trims, labor, indirect factory costs, commissions, and sourcing fees still leave enough contribution margin to carry fixed costs.

5Capacity ramp10,417/mo

Test machine capacity against the Year 1 build rate and verify the $540K salary plan matches that throughput before you hire.

6Cash reserve$1.138M

Fund the $405K capex and early inventory before revenue collection, or the business can run short of cash even if the model is profitable.