Engineering Consulting Firm Break-Even Analysis: $59K/Month

Fixed costs $93.3K/mo Year 3 run-rate

Contribution margin 76% After variable costs

Break-even revenue $122.8K/mo Monthly revenue target

Break-even timing Month 25 First break-even month

Break-even calculator

Test whether monthly revenue can cover direct costs and fixed monthly costs for an engineering consulting firm.

Lean Base Full

Monthly revenue Revenue is the cash coming in each month before direct costs. $ Low revenue High revenue Variable expenses These are direct costs that move with project volume, like software, subcontractors, commissions, and travel. $ Low direct cost High direct cost

Money available to cover fixed costs $134,583 $166,152 revenue - $31,569 variable expenses

Margin ratio

81%

Covers fixed costs

Yes

Fixed monthly costs These are the monthly costs you pay even if project volume dips. $ Low overhead High overhead

Break-even chart Revenue Total costs

Which engineering consulting expenses stay fixed, and which move with sales?

Cost classification

Your break-even number is only useful if fixed overhead stays in overhead and project-linked percentages reduce contribution margin. In the first year, software at 8%, subcontractors at 5%, commissions at 7%, and travel at 4% can’t be buried in payroll.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Lease	Fixed	Include $8,000 per month in overhead from Month 1.	Tying rent to client projects.
Utilities	Semi-variable	Use $1,200 per month as the base, with usage reviewed as office activity rises.	Treating the full amount as project-driven.
General IT & Communication	Fixed	Include $1,500 per month in launch-month overhead.	Leaving core systems out until revenue starts.
Accounting & Legal Fees	Fixed	Include $1,000 per month in operating coverage.	Excluding compliance work from break-even overhead.
Project-Specific Software Licenses	Variable	Reduce first-year contribution margin by 8% of revenue.	Classifying project licenses as fixed software overhead.
Specialized Subcontractor Fees	Variable	Reduce first-year contribution margin by 5% of revenue.	Mixing subcontractors into employee payroll.
Marketing & Sales Commissions	Variable	Reduce first-year contribution margin by 7% of revenue.	Combining commissions with the annual marketing budget.
Senior Project Manager Salary	Semi-fixed	Add $140,000 per year for each full-time equivalent as staffing depth increases.	Spreading each hiring step evenly across every project.

How does break-even change as this engineering consulting firm moves from a lean start to full capacity?

Scenario table

Each step-up adds payroll and overhead, so the break-even line moves higher even when the margin improves. The main check is simple: sign the next hire only when backlog can cover that fixed-cost jump.

Planning-only figures based on the model; actual break-even can move with billable mix, subcontractor use, and hiring timing.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean year 1 consulting model	$58.9k	$14.1k	$44.8k	76.0%	$0	Lowest fixed load, so break-even is the easiest to reach.
Base year 2 consulting model	$87.6k	$18.9k	$68.8k	78.5%	$0	More margin, but the added team raises the revenue needed to stay flat.
Full-capacity year 5 consulting model	$164.7k	$23.1k	$141.7k	86.0%	$0	Best margin, but the payroll base makes missed bookings hurt faster.

What breaks the break-even plan for this engineering consulting firm?

Stress test

The plan is tight at $589k in monthly revenue against $448k of fixed costs and a 76% contribution margin. A 10% revenue miss or a 10% rise in overhead quickly turns break-even into a $45k to $60k monthly gap.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$589k	$0 gap	No cushion; any miss turns into loss.
Revenue shortfall	Monthly revenue falls 10% to $530k.	$589k	$59k gap	A small miss creates about $45k monthly loss.
Fixed-cost increase	Fixed overhead rises 10% to $493k per month.	$648k	$59k gap	Lease and staffing pressure push break-even higher.
Margin pressure	Variable expenses rise from 24% to 29%.	$631k	$42k gap	Subcontractor and travel overruns eat the margin.
Combined pressure	Variable expenses rise to 29% and fixed overhead rises 10%.	$694k	$105k gap	Delayed starts and low utilization become dangerous fast.

What should an engineering consulting founder verify before signing the lease and hiring?

Founder checklist

Test the pipeline, rates, capacity, margin, and cash against break-even before you lock in payroll and space. If the signed work and billable hours do not clear the model, the fixed base will outrun the business fast.

1Pipeline$589k/mo

Verify signed or near-signed work reaches this level before you add payroll, and keep the $25,000 Year 1 marketing budget separate from the 7% sales commission line so CAC stays at $2,500.

2Rate card$180/$200/$250

Lock these first-year hourly rates for engineering consulting, project management, and AI digital twin modeling before you quote fixed-fee work.

3Billable load327 hrs/mo

Check that the team can sell and deliver this much consulting time, or the same mix, without stretching quality or missing client deadlines.

4Contribution76% CM

Confirm variable costs stay at 24% total, because that leaves 76% of revenue to cover the fixed base and still fund growth.

5Cash buffer$65k min

Hold this reserve because Year 1 EBITDA is negative $434k, breakeven lands in Month 25, and payback takes 43 months.

6Lease gate$8,000/mo

Delay the office lease and big equipment buys until backlog can cover this monthly load and the first hires can earn their salaries.