Cottage Rental Break-Even Point: $457K Monthly Revenue

Fixed costs $9.0K/mo Monthly base cost

Contribution margin 84.5% After variable costs

Break-even revenue $10.7K/mo Revenue target

Break-even timing Month 2 Early ramp point

Break-even calculator

Test monthly room revenue, direct costs, and fixed overhead against break-even.

Lean Base Full

Monthly revenue Higher room revenue gives you more margin to cover fixed overhead. $ Low sales High sales Variable expenses Cleaning, platform fees, and other direct costs that move with bookings. $ Low direct cost High direct cost

Money available to cover fixed costs $41,400 $49,000 revenue - $7,600 variable expenses

Margin ratio

84%

Covers fixed costs

Yes

Fixed monthly costs Monthly payroll and overhead the contribution margin has to cover. $ Light overhead Heavy overhead

Break-even chart Revenue Total costs

Which small-house rental expenses stay fixed, and which move with bookings?

Cost classification

Break-even only works if monthly operating costs go in the right bucket. Keep recurring overhead in fixed costs, apply volume-linked percentages to revenue, and leave launch capital out of operating break-even unless the model toggles it on.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Taxes	Fixed	Include $2,500 per month from Month 1 through Month 60 in the fixed monthly target.	Using an annual tax estimate as the monthly amount.
Utilities	Fixed	Use $2,000 per month in the base break-even case, with usage risk watched as occupancy rises.	Making the full utility bill variable and understating early break-even revenue.
Property Insurance	Fixed	Include $1,200 per month as recurring overhead, not as a percentage of bookings.	Spreading insurance across occupied nights and hiding the true fixed load.
Website & Software	Fixed	Include the recurring $800 per month subscription and operating software charge.	Mixing recurring software with one-time website development spending.
Food & Beverage Costs	Variable	Apply the revenue-linked rate: 7.0% in the first year, falling to 6.0% by the fifth year.	Budgeting food spend as fixed even when dining revenue changes.
Professional Cleaning	Variable	Apply the revenue-linked rate: 4.0% in the first year, falling to 3.0% by the fifth year.	Counting cleaning as fixed payroll and missing per-stay margin pressure.
Booking Platform Fees	Variable	Apply the booking-linked fee: 3.0% in the first year, falling to 2.5% by the fifth year.	Treating platform fees as a flat subscription instead of a sales drag.
Front Desk, Spa Therapist, and Maintenance Staffing	Semi-fixed	Treat as step costs because full-time equivalent staffing rises by year as rooms and services scale.	Modeling these payroll lines as a smooth percentage of revenue.

How does break-even shift from a lean opening to a base case and a full buildout?

Scenario table

Lean opening sits close to break-even because fixed overhead is still heavy. As occupancy and ADR rise in the base and full cases, the cushion widens fast.

Planning case only; these are model assumptions, not guaranteed results.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening case	$399K-$549K	$62K-$85K	$386K	84.5%	-$49K to $78K	Near break-even; the low end is short, but the high end builds a small cushion.
Base Year 3 case	$930K-$1,282K	$131K-$181K	$536K	85.9%	$262K-$565K	Comfortably past break-even; the model clears the hurdle with room to spare.
Full Year 5 case	$1,589K-$2,197K	$199K-$275K	$613K	87.5%	$778K-$1,310K	Deeply past break-even; scale adds a much larger cushion even with higher fixed costs.

What pushes this cottage plan past break-even?

Stress test

Year 1 is already close to the line, so softer demand or higher overhead can tip it into loss fast. The first things to watch are shoulder-season occupancy, cabin mix, cleaning fees, and insurance.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change; Year 1 stays at the base case.	$457K	$0 cushion	No cushion if demand softens.
Revenue shortfall	Year 1 revenue slips to $399K.	$457K	$49K gap	Weak occupancy or lower cabin mix turns break-even into loss.
Fixed-cost increase	Monthly overhead rises by $10K.	$575K	$118K gap	A small overhead jump needs a much larger booking base.
Margin pressure	Variable expenses rise 1 point.	$463K	$6K gap	Cleaning, platform, or repair inflation can erase the margin.
Combined pressure	Year 1 revenue stays at $399K, monthly overhead rises $20K, and variable expenses rise 1 point.	$472K	$73K gap	Demand softness and cost inflation hit the model at the same time.

What should you verify before you commit to this cottage site?

Founder checklist

Don't sign the land or spend launch capex until the site, mix, and demand math still support break-even. In this model, 55% launch occupancy on 10 units points to about 165 booked nights a month, but cash still bottoms at -$3.218M in Month 10.

1Site pathBefore land

Confirm zoning, short-term stay permission, and the permit path before you commit, because a late stop here can break the whole launch plan.

2Launch mix10 units

Validate the Year 1 mix of 5 studios, 3 lofts, and 2 cabins, and make sure the staffing plan can cover that opening load with the $355.5K payroll reserve.

3Demand test165 nights/mo

Check that pre-launch bookings and channel response can support 55% occupancy, because the model needs about 165 booked nights each month to stay on track.

4Fixed load$9K/mo

Verify the non-payroll fixed base stays at the modeled $9,000 a month, since property taxes, utilities, insurance, software, maintenance, supplies, and accounting set the floor.

5Margin math84.5% CM

Hold variable costs near 15.5% of revenue and make sure dining, spa, and events can add the modeled $13K in Year 1, or the contribution margin gets thin fast.

6Cash floor-$3.218M

Fund the full $4.23M launch capex plan across land, construction, furnishings, kitchen, spa, IT, grounds, and website, and keep enough cash for the Month 10 trough.