Digital Transformation Agency Break-Even: $75K Monthly Revenue

Fixed costs $49.0K/mo Core monthly base

Contribution margin 76% After variable spend

Break-even revenue $64.4K/mo Revenue floor

Break-even timing Month 6 Launch month

Break-even calculator

Test how monthly revenue, direct costs, and overhead shape break-even for a consulting agency.

Lean Base Full

Monthly revenue Revenue sets the margin left after direct delivery costs. $ Low sales High sales Variable expenses Use costs that rise with sales, like commissions, travel, and subcontractors. $ Low direct cost High direct cost

Money available to cover fixed costs $60,000 $72,000 revenue - $12,000 variable expenses

Margin ratio

83%

Covers fixed costs

Yes

Fixed monthly costs Use the monthly overhead the business pays even before new work lands. $ Light overhead Heavy overhead

Break-even chart Revenue Total costs

Which expenses stay fixed, and which move with sales for this consulting firm?

Cost classification

Break-even is only reliable when fixed overhead stays separate from delivery spend tied to client work. Here, Month 6 break-even depends on treating rent and core tools as overhead, while commissions, subcontractors, and client licenses move with revenue.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Include the $5,000 monthly amount in baseline overhead from Month 1 through Month 60.	Tying rent to client volume instead of treating it as a monthly hurdle.
Utilities	Fixed	Include the $800 monthly amount in fixed overhead for the relevant planning range.	Modeling small office usage swings as if they rise with revenue.
Internal Software & CRM Licenses	Fixed	Include the $2,000 monthly platform spend in overhead before calculating contribution margin.	Confusing internal tools with client-specific licenses used on projects.
Subcontractor Fees for Specialized Skills	Variable	Apply 8% of revenue in the first year, stepping down to 6% by the mature year.	Budgeting subcontractors as fixed staff even though scope drives the spend.
Client-Specific Software Licenses	Variable	Apply 4% of revenue in the first year, declining to 3% by the mature year.	Placing project licenses in overhead and overstating gross margin.
Sales Commissions & Bonuses	Variable	Apply 7% of revenue in the first year, declining to 5% by the mature year.	Forgetting commissions when testing how many client hours cover overhead.
Consultant Delivery Payroll	Semi-fixed	Add salaries in hiring steps as capacity expands, not per individual client hour.	Treating full-time consultants as variable labor that disappears when sales dip.
Annual Marketing Budget	Semi-variable	Convert the annual budget to a monthly plan and adjust when pipeline goals change.	Locking spend as fixed while also assuming Customer Acquisition Cost improves.

How does break-even shift from a lean setup to a base case and then a full-capacity team?

Scenario table

Break-even moves mostly with fixed payroll and marketing, not the variable cost mix. Lean needs the least monthly revenue, base rises with paid marketing, and the full team pushes the revenue bar much higher because its fixed base is much bigger.

Planning figures only: these are break-even assumptions, not guarantees.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean delivery model	$64.4k	$15.5k	$49.0k	76%	$0	Lowest overhead, so break-even is easier to hold if utilization stays high.
Base case with Year 1 marketing	$75.4k	$18.1k	$57.3k	76%	$0	Paid marketing raises the monthly hurdle, but the margin stays stable.
Full-capacity Year 2 team	$127.4k	$28.4k	$99.0k	77.7%	$0	Big staffing costs need a stronger pipeline and steadier billable use.

What breaks this agency’s break-even plan?

Stress test

Here’s the quick math: $57,300 in fixed costs divided by a 76% contribution margin gives about $75,400 to break even. A 15% revenue drop, higher overhead, or a wider subcontractor load pushes the model into loss fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change to revenue, fixed costs, or margin.	$75,400	$0 cushion	The plan has no cushion.
Revenue shortfall	Revenue falls 15% to about $64,100.	$75,400	$11,300 gap	Sales softness turns into an $8,600 monthly loss.
Fixed-cost increase	Fixed costs rise 10% to about $63,030.	$82,900	$7,500 gap	Overhead rises faster than the sales base.
Margin pressure	Variable expenses rise from 24% to 29%.	$80,700	$5,300 gap	Subcontractor and travel drag make each dollar do less work.
Combined pressure	Revenue falls 15%, fixed costs rise 10%, and variable expenses rise to 29%.	$88,800	$24,700 gap	The month lands near a $17,500 operating loss.

Can this agency handle hiring and office spend before Month 6 break-even?

Founder checklist

Verify the pipeline, delivery hours, and cash before you lock in staff and overhead. The model only works if signed work clears the $75,400 monthly revenue target while you hold the 76% contribution margin and survive the $742,000 cash trough in Month 6.

1Pipeline$75.4K/mo

Check signed and late-stage deals against the $75,400 monthly revenue target, or break-even by Month 6 stays out of reach.

2Roadmap Hours40 hrs @ $250

Verify the lead consultant can cover the 40-hour roadmap load at $250 an hour, because that is the core delivery block before you add more headcount.

3Retainer Load15/12/8 hrs

Confirm process automation, data analytics, and cybersecurity retainers can each hold their 15, 12, and 8 hour loads without breaking delivery time.

4Margin76% CM

Protect the 76% contribution margin by keeping scopes tight and variable spend inside the subcontractor and client software bands.

5Launch Spend$147K + $12.3K/mo

Plan for the $147,000 launch spend and the $12,300 monthly fixed base before adding more payroll, because those costs hit before revenue matures.

6Cash & CAC$742K / $5K CAC

Stay above the $742,000 cash trough in Month 6 and make sure each $5,000 CAC can pay back from client revenue before you scale marketing.