Diamond Cutting Break-Even: About $141K Monthly Revenue

Fixed costs $54.3K Monthly overhead

Contribution margin 83% After variable costs

Break-even revenue $65.1K Revenue needed

Break-even timing Month 1 Launch month

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs to see if diamond cutting and polishing clears break-even.

Lean Base Full

Monthly revenue Monthly sales set the pool that covers direct costs and fixed overhead. $ Lower sales Higher sales Variable expenses Direct costs rise with each diamond and reduce cash left for overhead. $ Lower cost Higher cost

Money available to cover fixed costs $416,141 $475,833 revenue - $59,692 variable expenses

Margin ratio

87%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead the business must cover before profit. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which diamond cutting and polishing expenses are fixed, and which move with sales?

Cost classification

Break-even is reliable only when monthly overhead stays separate from per-stone and revenue-linked spend. Here, $51,300 of listed fixed monthly overhead sits apart from variable processing charges, selling fees, utilities pressure, and staffing steps.

Expense	Cost	Break-Even Treatment	Common Mistake
Secure facility rent	Fixed	Include $25,000 per month in fixed overhead before calculating required contribution.	Spreading rent per stone and making break-even look easier at higher volume.
Jewelers block insurance	Fixed	Include $15,000 per month as a fixed operating charge for the planning range.	Modeling insurance as a sales percentage even though the model lists a monthly amount.
Fixed support overhead	Fixed	Include security maintenance $2,000, admin software $1,000, fixed marketing $5,000, professional services $2,500, and office supplies $800 per month.	Leaving small monthly items out and understating fixed overhead by $11,300 per month.
Revenue-linked production allocations	Variable	Apply 4.0% of revenue by cut: 1.0% laser energy, 0.8% polishing materials, 0.5% production software, 1.2% quality assurance, and 0.5% facility security allocation.	Booking these as fixed shop overhead and overstating contribution margin.
Direct per-stone processing	Variable	Subtract unit spend before contribution: Round Brilliant $90, Princess Cut $112, Emerald Cut $134, Oval Cut $157, and Pear Cut $210.	Using one blended unit amount while product mix shifts across cuts.
Sales commissions and variable marketing	Variable	Apply 5.0% of revenue in the first year, declining to 3.0% by the fifth year.	Using the mature-year rate in Month 1 and overstating early break-even.
Utilities base plus usage pressure	Semi-variable	Start with the $3,000 monthly base, then track added usage as laser and polishing throughput rises.	Treating the full utility bill as fixed when production hours drive part of it.
Polishing Specialist payroll	Semi-fixed	Treat as capacity steps; staffing rises from 1.0 FTE in the first year to 2.0 FTE by the third year.	Modeling labor as a smooth per-stone percentage instead of planned staffing steps.

How does break-even shift from lean to full production in diamond cutting and polishing?

Scenario table

The lean case sits at the line, the base case already clears fixed overhead, and the full case widens the cushion as rent, insurance, security, and senior labor get spread across more monthly revenue.

Planning assumptions only; actual results will move with mix, yield, and labor use.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean break-even case	$133.0k	$15.4k	$117.6k	88.5%	$0	At the line; a small miss flips loss.
Year 1 base case	$475.8k	$54.9k	$117.6k	88.5%	$303.3k	Clear cushion; fixed costs are covered.
Year 5 full-capacity case	$1.41M	$151.3k	$132.2k	89.3%	$1.13M	Strong cushion as volume absorbs overhead.

What breaks the break-even plan if throughput slips or costs rise?

Stress test

The first-year plan still clears break-even, but the cushion depends on steady throughput and tight control of rework, insurance, and facility overhead. If stones sit unfinished or capacity goes idle, the buffer shrinks fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$141,000	$334,900 cushion	Healthy cushion if throughput holds.
Revenue shortfall	Revenue falls 20% to about $380,667.	$141,000	$239,700 cushion	Demand softness trims the buffer fast.
Fixed-cost increase	Fixed costs rise 10% to about $129,400.	$155,100	$320,700 cushion	Insurance or rent increases push break-even up.
Margin pressure	Variable ratio rises 5 points, from 16.5% to 21.5%.	$149,900	$325,900 cushion	More rework or waste cuts margin.
Combined pressure	Revenue falls 20%, fixed costs rise 10%, and variable ratio rises 5 points.	$211,400	$169,300 cushion	Delayed stones and idle capacity hit profit first.

Can you prove this diamond cutting plan can carry the lease, payroll, and cash load before you sign the secure facility?

Founder checklist

Check the break-even math against the real launch load, not the optimistic version. If demand, staffing, and cash don’t hold up together, the plan can show profit on paper and still run short in Month 6.

1Demand Proof$475.8K/mo

Verify buyer orders can support first-year revenue of about $475,833 per month before you lock the build-out.

2Fixed Load$54.3K/mo

Confirm the monthly fixed cost base stays at $54,300, because that rent-and-security load sits under every break-even decision.

3Unit Margin$90-$210/unit

Test the per-stone processing cost range by cut so the gross spread stays wide enough after direct laser, polishing, and QA work.

4Payroll Ramp$760K Y1

Lock cutter and technician hiring before you carry the full Year 1 payroll of $760,000, since labor is a big part of the opening burn.

5Cash Cushion-$2.284M

Protect runway for the Month 6 cash trough, because the model bottoms at negative $2.284 million even with breakeven shown in Month 1.

6Capacity Ramp3,600 to 9,200

Check that output can rise from 3,600 stones in Year 1 to 9,200 in Year 5 without breaking staffing, equipment, or quality control.