Digital Evidence Management Break-Even: About $213K Monthly Revenue

Fixed costs $157.2K/mo Year 1 run-rate

Contribution margin 83.5% After variable costs

Break-even revenue $188.2K/mo Monthly revenue target

Break-even timing Month 1 Launch month

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs against break-even for a digital evidence platform.

Lean Base Full

Monthly revenue Revenue is the pool that pays variable costs and then fixed costs. $ Low sales High sales Variable expenses These costs rise with sales and reduce the cash left for fixed costs. $ Light spend Heavy spend

Money available to cover fixed costs $2,024,225 $2,353,750 revenue - $329,525 variable expenses

Margin ratio

86%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base break-even must cover. $ Lean team Larger team

Break-even chart Revenue Total costs

Which expenses stay fixed and which move with agency count, storage use, and rollout volume?

Cost classification

Classification matters because this model breaks even in Month 1 on $178k monthly overhead and an 83.5% first-year contribution margin. Treat storage-heavy evidence workloads as fixed, and break-even will look safer than cash reality.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Use $10,000 per month in monthly overhead.	Spreading rent by customer and masking true baseline burn.
General & Administrative Software	Fixed	Use $3,500 per month unless the model changes seat counts.	Treating core admin tools as usage-based at low scale.
Security and Compliance Audits	Fixed	Use $10,000 per month in the fixed compliance base.	Cutting audit spend below what agency buyers expect.
Payroll	Semi-fixed	Use about $116,700 per month in the first year, then step up as hiring grows.	Modeling salaries as a smooth percentage of revenue.
Cloud Infrastructure and Hosting	Semi-variable	Use 8.0% of revenue in the first year, falling to 5.0% by the fifth year.	Assuming hosting is fully fixed while evidence volume grows.
Third-Party Software Licenses	Semi-variable	Use 2.0% of revenue in the first year, declining to 1.0% by the fifth year.	Ignoring per-agency or per-user license expansion.
Sales Commissions	Variable	Use 5.0% of revenue in the first year, declining to 3.5% by the fifth year.	Putting commissions in fixed overhead and overstating margin.
Data Storage Overage Costs	Variable	Use 1.5% of revenue in the first year, rising to 2.5% by the fifth year.	Treating storage-heavy evidence workloads as fully fixed.

How does break-even move from a lean pilot to a full rollout in this evidence management platform?

Scenario table

As the rollout gets bigger, monthly revenue rises, but fixed staffing and marketing also rise, so the break-even point moves up too. The model still clears break-even in every case, just with different cushions.

Planning cases only; actual break-even will move with deal mix, timing, and sales pace.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean pilot launch	$968k	$160k	$178k	83.5%	$630k	Break-even revenue is only $213k, so pilot risk is low.
Base multi-agency rollout	$2,354k	$330k	$306k	86.0%	$1,718k	Break-even revenue rises to $356k, but the cushion stays strong.
Full deployment expansion	$4,495k	$539k	$431k	88.0%	$3,525k	Break-even revenue reaches $490k, so scale adds cushion and overhead.

What breaks the break-even plan if signups slow or cloud costs rise?

Stress test

At the Year 1 mix, the plan has about $780k of monthly cushion, but a $100k delay strips about $83.5k of contribution margin, which is revenue left after variable costs. Demos, pilot conversion, and storage-heavy accounts are the main watchouts.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change; Year 1 mix holds at an 83.5% contribution margin.	$188k	$780k cushion	Launch-month revenue clears break-even with room to spare.
Revenue shortfall	Monthly revenue lands $100k below plan from slower agency signups.	$188k	$680k cushion	A small slip still covers costs, but the cushion shrinks.
Fixed-cost increase	Year 2 fixed costs rise to about $241.8k per month.	$287k	$681k cushion	Payroll and compliance spend lift the monthly hurdle higher.
Margin pressure	Storage overage rises from 15% to 25% while other Year 1 rates hold.	$216k	$752k cushion	Higher cloud load squeezes contribution before sales scale.
Combined pressure	Year 2 fixed costs and 25% storage overage hit together.	$293k	$675k cushion	Two pressure points together leave less room for launch delays.

What should a founder verify before the first hiring wave and platform spend?

Founder checklist

Before you add headcount or lock in long-term platform spend, test whether pilot demand, setup fees, and security work can carry the model’s roughly $157.2K monthly fixed burn. With an 83.5% Year 1 contribution margin, the business still needs about $188K in monthly sales to stay at break-even.

1Workflow proof8% / 30%

Confirm evidence ingestion, retention, audit trail, permissions, and chain-of-custody work in a live pilot, because agencies will not pay compliance money for a shaky workflow.

2Fixed burn$157.2K/mo

Check that payroll, rent, audits, software, insurance, and conference spend stay covered by early recurring revenue.

3Margin floor83.5% CM

Verify cloud, software licenses, sales commissions, and storage costs leave enough contribution to absorb the fixed base.

4Team ramp10 FTE

Hold staffing at the opening team size until implementation backlog and ticket volume prove you need more help.

5Cash cushion$804K

Make sure opening cash covers the $580K build and early burn, or the launch-month break-even claim will crack.

6Setup terms$15K-$100K

Verify onboarding fees are accepted before implementation starts, and lock storage overage terms before high-video agencies go live.