Custom Home Builder Break-Even Revenue: Month 27 Plan Before Profit

Fixed costs $26.8K/mo Overhead base

Contribution margin 95.5% After variable costs

Break-even revenue $28.1K/mo Monthly target

Break-even timing Month 27 Crossover point

Break-even calculator

Use this calculator to test whether monthly revenue covers variable costs and fixed overhead.

Lean Base Full

Monthly revenue Revenue is the cash base that has to cover direct costs and overhead. $ Smaller pipeline Bigger pipeline Variable expenses These are direct project costs that rise as sales volume or contract value rises. $ Lower direct costs Higher direct costs

Money available to cover fixed costs $2,123,000 $2,200,000 revenue - $77,000 variable expenses

Margin ratio

96%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead contribution margin must cover before profit starts. $ Lean overhead Heavier overhead

Break-even chart Revenue Total costs

Which home builder expenses are fixed, and which move with sales?

Cost classification

Break-even only works if overhead, sales-linked fees, and job-costed build spend stay in the right buckets. Here, the big risk is treating $22.8M of construction budgets like monthly office overhead.

Expense	Cost	Break-Even Treatment	Common Mistake
Office & Design Studio Rent	Fixed	Model $12,000 per month across the planning range.	Flexing rent with home sales or build volume.
General Liability & Builder Risk Insurance	Fixed	Carry $5,000 per month as recurring overhead.	Loading the full policy into one project margin.
Project Management Software Licenses	Fixed	Use $1,500 per month unless license counts change.	Treating software as a per-home variable fee.
Utilities & Office Maintenance	Semi-variable	Start with the $1,000 monthly base; add usage only when activity drives it.	Calling the whole amount fixed during heavy site activity.
Company Vehicle Lease & Maintenance	Semi-variable	Keep the $1,800 monthly base, then track site-visit usage separately.	Treating lease payments and mileage wear the same.
Project Delivery and Support Payroll	Semi-fixed	Step staffing from about $26.5k per month in Year 1 to $63.3k in Year 3, excluding CEO pay.	Smoothing headcount as a flat percent of sales.
Sales & Brokerage Commissions	Variable	Apply 3.0% in Years 1–2, 2.5% in Year 3, and 2.0% in Years 4–5 to sales.	Booking commissions as fixed monthly marketing spend.
Direct Construction Budgets	Variable	Job-cost the $22.8M total build budget by home and build schedule.	Treating direct build spend like office overhead.

How does break-even shift as a custom home builder moves from a lean start to a full buildout?

Scenario table

Lean has no sale base yet, so overhead swamps the model. In the base case, sales start covering fixed cost by Month 27; the full case adds margin cushion because the same core team supports more project revenue.

Planning assumptions only; actual break-even will move with sale timing, project mix, and cost overruns.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean start	$0	$0	$683k	0%	-$555k	No sales yet, so break-even is not meaningful.
Base buildout	$4.71M	$1.65M	$1.05M	65%	$2.01M	Break-even lands in Month 27, but cushion is still tight.
Full capacity	$5.64M	$1.69M	$1.05M	70%	$2.89M	Higher margin gives more cushion once the pipeline is full.

What breaks the break-even plan for a custom home builder?

Stress test

The plan only clears by Month 27, and Month 26 cash still bottoms at about -$7.8M. That leaves little room for slower sales, higher subcontractor bids, or another month of overhead before break-even slips again.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$108,948	$0 gap	Break-even lands in Month 27, with no cash cushion before the Month 26 trough.
Revenue shortfall	Revenue lands 10% below the Year 3 plan.	$108,948	$10,895 gap	A modest pricing or timing miss pushes the recovery point later.
Fixed cost pressure	Year 3 fixed overhead rises 10%.	$119,843	$10,895 gap	More rent, insurance, or payroll lifts the break-even bar fast.
Margin pressure	Variable expenses stay at 4.5% instead of 3.5%.	$110,089	$1,141 gap	Higher commissions or warranty reserves cut the margin cushion.
Combined pressure	Revenue lands 10% below plan, fixed overhead rises 10%, and variable expenses stay at 4.5%.	$121,099	$12,151 gap	This is the case that widens the Month 26 cash gap the fastest.

Can you prove the pipeline and cash can carry this build before you commit to land, rent, and crews?

Founder checklist

Don’t lock in land, rent, or field staff until the cash trough and early job pipeline are covered. The model bottoms out at -$7.802M in Month 26, so funding has to carry the gap to breakeven in Month 27.

1Cash trough-$7.802M

Verify funding survives the Month 26 low point, because the model bottoms out there before breakeven arrives in Month 27.

2Project capital$30.75M

Confirm you can fund the $7.95M land buys plus the $22.8M construction budgets before you commit, since that cash is tied up long before sale proceeds land.

3Fixed burn$69.3K/mo

Keep the $12K rent off the table until the pipeline can absorb about $69.3K a month of fixed burn, or overhead will drain cash before jobs do.

4Reserve load4.5%

Price in the 3.0% sales commission and 1.5% reserve on every job, since that 4.5% early load comes off every sale.

5Staffing ramp2 PMs / 2 supers

Hire project managers and supervisors only when active jobs justify the Year 2 jump to 2.0 FTEs each, or payroll will outrun production.

6Pipeline proofMonth 8 / Month 27

Verify permit timing, subcontractor bench coverage, and buyer demand before Month 8 construction starts and before the first sale in Month 27.