Garment Manufacturing Break-Even Analysis: $78K Monthly Revenue

Fixed costs $63.0K/mo Month 1 base

Contribution margin 83.5% After variable costs

Break-even revenue $75.5K/mo Monthly target

Break-even timing Month 1 Launch month

Break-even calculator

Use this calculator to test whether monthly revenue covers variable expenses and the fixed cost base.

Lean Base Full

Monthly revenue Revenue pays variable costs first, then the fixed base. $ Low sales High sales Variable expenses Direct materials, labor, and sales fees move with output. $ Low costs High costs

Money available to cover fixed costs $406,260 $494,917 revenue - $88,657 variable expenses

Margin ratio

82%

Covers fixed costs

Yes

Fixed monthly costs Rent, salaries, and overhead sit here each month. $ Lean base Heavy base

Break-even chart Revenue Total costs

Which garment manufacturing expenses are fixed and which move with sales?

Cost classification

Break-even is only reliable when stable monthly costs stay separate from unit-linked production costs. If wages, utilities, and equipment are lumped together, Month 1 break-even can look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Factory Admin Rent	Fixed	Use $10,000 per month as baseline overhead from Month 1 through Month 60.	Allocating it to each garment and hiding the true monthly hurdle.
Business Insurance	Fixed	Use $800 per month as fixed operating overhead before contribution margin.	Dropping it below break-even because it is not tied to production runs.
T-Shirt Fabric Cost	Variable	Use $1.00 per unit produced; at 50,000 first-year units, that is $50,000.	Treating fabric buys as fixed just because orders are placed in bulk.
Direct Sewing Labor	Variable	Model by garment unit, such as $0.50 per T-Shirt and $1.50 per Jeans unit.	Putting all production wages into payroll overhead instead of unit margin.
Sales Commissions	Variable	Apply 3.0% of first-year revenue, then use the lower forecast rates in later years.	Using a flat payroll line and overstating margin as sales rise.
Admin Office Utilities and Factory Utilities	Semi-variable	Keep $1,500 per month as the admin base, then add production-linked factory utility percentages by garment line.	Treating every utility dollar as fixed even when production volume drives usage.
Quality Control Lead	Semi-fixed	Model salary capacity in steps: 1.0 FTE through the third year, then 1.5 FTE from the fourth year.	Spreading the role across every unit and missing the hiring step-change.
Logistics Coordinator	Semi-fixed	Use 0.5 FTE in the first year and 1.0 FTE from the second year as volume support scales.	Assuming logistics rises smoothly with each unit instead of in staffing blocks.

How does break-even change across lean, base, and full garment production?

Scenario table

Break-even gets easier as production scales because fixed overhead stays mostly flat while each unit still carries a strong margin. The lean case is the tightest, the base case clears the line, and the full case gives the best cushion.

Planning figures only; actual break-even will move with product mix, scrap, labor efficiency, and order timing.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean cut-and-sew setup	$1,525K	$296K	$630K	80.6%	$599K	Close to break-even; small misses cut cushion fast.
Base first-year mix	$2,542K	$493K	$630K	80.6%	$1,419K	Comfortable cushion; fixed overhead is covered.
Full second-year mix	$3,678K	$687K	$630K	81.3%	$2,361K	Best cushion; scale spreads fixed cost across more units.

What breaks the break-even plan if garment orders slow or factory costs rise?

Stress test

The current plan has a wide cushion, but the warning sign is revenue drifting toward the $782K monthly break-even line. Slower orders, higher payroll and rent, or extra waste and rework can shrink that cushion fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$782K	$1,760K cushion	Healthy cushion, but volume must hold.
Revenue shortfall	Year 1 revenue falls 20% to $2,034K.	$782K	$1,252K cushion	Still above break-even, but the cushion shrinks.
Fixed-cost pressure	Fixed monthly costs rise 10% to $693K.	$860K	$1,682K cushion	Higher rent and payroll lift the threshold.
Margin pressure	Contribution margin slips to 75.6% as fabric, trims, sewing labor, rework, and payouts rise.	$833K	$1,709K cushion	Small margin loss adds real break-even pressure.
Combined pressure	Revenue falls 20%, fixed costs rise 10%, and margin slips to 75.6%.	$917K	$1,117K cushion	Three hits together still clear break-even, but the cushion gets much thinner.

What should you verify before signing the factory lease and buying production equipment?

Founder checklist

Do not sign the lease or place bulk equipment orders until booked or likely orders can clear roughly 3,076 units a month and you can cover the Month 2 cash low of $1.064M. If either number slips, the break-even case is too thin.

1Break-Even Run3,076/mo

Verify booked or likely orders can clear the break-even run rate, because anything below that keeps fixed factory costs uncovered.

2Monthly Base$63.0K/mo

Check the monthly base cost from rent, utilities, software, marketing, admin, and payroll, because that cash leaves before variable costs do.

3Unit Margin≈80% CM

Confirm real unit cost after fabric, labor, trims, packaging, overhead, commissions, and expedited payouts, because break-even only works if waste stays tight.

4Ramp TimingMonth 4-8

Make sure machines, cutting, ERP, QC lab, and delivery are ready in sequence, so staffing and output rise after capacity, not before it.

5Cash Buffer$1.064M

Hold enough cash to get through the Month 2 low point, because capex lands early and EBITDA does not protect you from a short cash squeeze.

6Launch Demand120K units/yr

Validate the Year 1 mix of 50,000 T-shirts, 20,000 hoodies, 15,000 jeans, 10,000 dress shirts, and 25,000 polos before bulk fabric buys.