Drilling Company Break-Even Analysis: $104K Monthly Revenue

Fixed costs $12.0K Monthly overhead

Contribution margin 73% After variable costs

Break-even revenue $16.4K Revenue target

Break-even timing Month 3 Model break-even point

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs to see where this drilling company clears break-even.

Lean Base Full

Monthly revenue Revenue is the top line that has to cover variable costs and then fixed costs. $ Lower sales Higher sales Variable expenses These are direct costs that move with drilling volume, like fuel, maintenance, logistics, insurance, and permits. $ Lower direct cost Higher direct cost

Money available to cover fixed costs $186,258 $246,700 revenue - $60,442 variable expenses

Margin ratio

76%

Covers fixed costs

Yes

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

Break-even chart Revenue Total costs

Which drilling expenses are fixed, and which move with sales?

Cost classification

Break-even is reliable only when fuel, maintenance, permits, and logistics reduce margin instead of sitting in overhead. Fixed items set the monthly hurdle; payroll and marketing need separate handling because they change in steps or with acquisition volume.

Expense	Cost	Break-Even Treatment	Common Mistake
Fuel & Lubricants	Variable	Model at 10% of revenue in Year 1, reducing contribution margin on each job.	Treating fuel as fixed overhead even though it rises with drilling activity.
Rig Maintenance & Consumables	Variable	Model at 8% of revenue in Year 1 as a direct margin cost tied to rig use.	Putting maintenance below the break-even line and overstating job margin.
Transportation Logistics	Variable	Model at 5% of revenue in Year 1 because mobilization and haul activity follow project volume.	Using one flat monthly number when logistics should move with work sold.
Project-Specific Insurance & Permits	Variable	Model at 4% of revenue in Year 1 and include it before calculating contribution margin.	Treating permits as office overhead instead of project-linked expense.
Office Rent	Fixed	Include $5,000 per month in fixed overhead for the relevant planning range.	Spreading rent as a percentage of revenue and hiding the monthly cash hurdle.
General Business Insurance	Fixed	Include $2,000 per month as baseline overhead before break-even volume is reached.	Mixing general coverage with project-specific insurance and permits.
Payroll	Semi-fixed	Model by staffing plan because full-time equivalent headcount changes by year as capacity expands.	Assuming payroll flexes smoothly with revenue instead of jumping with hires.
Marketing	Semi-variable	Use the Year 1 budget of $50,000 and $5,000 customer acquisition cost to separate planned spend from volume-driven acquisition.	Treating the full budget as fixed without checking how many customers it must buy.

How does break-even change across lean, base, and full drilling formats?

Scenario table

Lean sits right on the break-even line: $104,000 revenue against $28,080 variable costs and $75,750 fixed costs leaves about $170. Base and full cases add cushion because the same fixed load is spread over more revenue.

Planning assumptions only, not guarantees; actual break-even will move with contract timing and cost mix.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean drilling schedule	$104,000	$28,080	$75,750	73%	$170	Near break-even; a small miss turns it negative.
Base operating schedule	$212,000	$57,240	$75,750	73%	$79,010	Healthy cushion; listed workload covers fixed costs.
Full utilization case	$337,000	$91,000	$75,750	73%	$170,250	Strong cushion; more margin if contracts hold.

How much revenue loss or cost pressure pushes a drilling company below break-even?

Stress test

The plan sits at about $104,000 in monthly break-even revenue, so there is little room for error. A 10% revenue dip, a 10% fixed-cost jump, or a 5-point margin hit can each flip the month into loss; together they create roughly a $19,700 gap.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$104,000	$0 gap	No cushion; any slip turns into loss.
Revenue shortfall	Revenue falls 10% from plan.	$104,000	$7,400 gap	Slower contract flow quickly pushes the plan below break-even.
Fixed-cost pressure	Fixed costs rise 10% to about $83,325.	$114,100	$7,500 gap	Higher overhead widens the monthly loss.
Margin pressure	Variable expenses rise from 27% to 32% of revenue.	$111,600	$5,100 gap	Fuel, maintenance, or transport overruns squeeze contribution fast.
Combined pressure	Revenue falls 10%, fixed costs rise 10%, and variable expenses rise to 32%.	$122,500	$19,700 gap	Contract delays plus cost overruns can create a deep cash shortfall.

Can this drilling business clear break-even before you sign the rig and crew commitment?

Founder checklist

Do not sign the rig or crew commitment until you can show at least $104,000 a month of visible revenue and a $212,000 monthly base workload from Year 1 hours and rates. The model reaches break-even by Month 3, but cash still falls to negative $3.402 million by Month 12, so demand and funding both have to hold.

1Revenue cover$104.0K/mo

Confirm booked work can clear $104,000 a month before you commit, because that is the first real break-even gate.

2Base workload$212.0K/mo

Use Year 1 hours and rates to prove about $212,000 a month: 160 project hours, 320 retainer hours, and 240 lease hours.

3Crew plan$59.6K/mo

Lock payroll at $59,583 a month before adding headcount, or the rig and field team will outgrow demand too fast.

4Margin mix73% CM

Price fuel, lubricants, maintenance, trucking, and project permits at 27% of revenue in Year 1, leaving about 73 cents on the dollar before fixed costs.

5Cash trough-$3.402M

Stress-test through Month 12, because minimum cash reaches negative $3.402 million before the business settles.

6Growth gate$50K / $5K

Hold the $50,000 marketing budget and $5,000 CAC before ramping spend, and delay the Month 9 to Month 12 expansion rig unless backlog and utilization support it.