General Contractor Break-Even Analysis: $485K Monthly Revenue

Fixed costs $36.8K/mo Overhead plus payroll

Contribution margin 76% After variable spend

Break-even revenue $48.5K/mo Monthly revenue needed

Break-even timing Month 15 Model break-even point

Break-even calculator

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

Lean Base Full

Monthly revenue Revenue is the top line that has to cover direct costs and fixed overhead. $ Low sales High sales Variable expenses These are direct project costs that rise as work volume rises. $ Low direct cost High direct cost

Money available to cover fixed costs $49,000 $65,000 revenue - $16,000 variable expenses

Margin ratio

75%

Covers fixed costs

Yes

Fixed monthly costs These are monthly overhead costs the margin has to cover. $ Low overhead High overhead

Break-even chart Revenue Total costs

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

Cost classification

Break-even gets unreliable when overhead and job-level spend are mixed. Keep rent, insurance, and core software in monthly overhead, then treat revenue-linked items like marketing, travel, software licenses, and quality control as margin drag.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Carry $3,500/month in overhead from Month 1 through Month 60.	Loading rent into each job and overstating job-level margin.
Utilities & Internet	Fixed	Include $600/month in fixed overhead for the planning range.	Treating basic office service as variable with each project.
Business Insurance	Fixed	Include $1,200/month before calculating required project revenue.	Leaving insurance below the line and understating break-even revenue.
Construction Management Software	Fixed	Use $800/month as recurring overhead, separate from project-specific licenses.	Combining platform software with job software and blurring margin.
Marketing & Business Development	Variable	Apply 12% of revenue in the first year, declining to 8% by Year 5.	Using only the annual marketing budget and ignoring revenue-linked spend.
Project-Specific Travel & Entertainment	Variable	Apply 5% of revenue in the first year, declining to 3% by Year 5.	Putting site travel in office overhead instead of job delivery expense.
Project-Specific Software Licenses	Variable	Apply 4% of revenue in the first year, declining to 2% by Year 5.	Hiding per-project tools inside fixed software subscriptions.
Vehicle Maintenance & Fuel	Semi-variable	Start with the $750/month base, then raise it as job load and site visits rise.	Freezing vehicle spend while adding projects, which understates delivery burden.

How does break-even shift across lean, base, and full contractor setups?

Scenario table

Lean work stays under break-even because fixed payroll and overhead eat most of the margin. By the base case, revenue clears the break-even line, and the full case has a wide cushion if pricing and subcontractor costs stay in line.

Planning assumptions only; actual results will move with pricing, labor mix, and schedule slippage.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean residential-heavy case	$31.9K	$7.7K	$36.8K	76.0%	-$12.6K	Below the ~$48.5K break-even line, so cash stays negative.
Base balanced contractor case	$81.8K	$18.0K	$46.2K	78.2%	$17.7K	Clears the ~$59.1K break-even line and turns profitable.
Full mature contractor case	$482.7K	$72.4K	$66.6K	85.0%	$343.7K	Well above the ~$78.4K break-even line, but the cushion depends on holding margin.

What breaks this contractor’s break-even plan?

Stress test

The plan is tight: Year 1 break-even sits near $485K, so a small drop in signed work or a small rise in payroll and overhead can push it back into a gap. Margin matters too; a slide to 70% lifts break-even to about $526K.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$485K	$0 cushion	Base case leaves almost no room for slippage.
Revenue shortfall	Revenue slips to $40K a month.	$485K	$64K gap	Slow signed jobs can leave a real annual hole.
Fixed-cost increase	Monthly payroll or overhead rises by $5K.	$551K	$66K gap	Small overhead adds move break-even fast.
Margin pressure	Contribution margin falls to 70%.	$526K	$41K gap	Subcontractor price moves make pricing matter more.
Combined pressure	Margin falls to 70% and fixed costs rise to $418K.	$597K	$112K gap	This is the case that breaks the plan first.

What should a general contractor verify before signing the lease, hiring, and buying vehicles?

Founder checklist

Don’t commit to the lease, hires, or second vehicle until booked work, margin, and cash can carry the model past Month 15 break-even. This plan needs about $32.7K a month in fixed load and still bottoms at $641K minimum cash in Month 16.

1Demand Proof60/25/15

Verify your pipeline can support the Year 1 mix of 60% residential renovation, 25% custom home build, and 15% project oversight before you lock the lease.

2Fixed Load$32.7K/mo

Include rent, utilities, insurance, software, supplies, professional services, vehicle costs, and principal pay so you see the real monthly burn you must clear.

3Margin Mix76% CM

Confirm the blended contribution margin stays near 76% in Year 1 after software, quality control, marketing, and travel costs, or break-even slips.

4Capacity Ramp2.0 FTE

Do not add senior project staff faster than booked work can fill the Year 4 jump to 2.0 FTE Senior Project Manager and the later coordinator and estimator ramp.

5Cash Cushion$641K

Keep enough working capital to reach the Month 16 low point, because Year 1 EBITDA is -$151K before Year 2 turns to $213K.

6Launch Demand$15K / $1.5K

Test the Year 1 marketing budget against the $1,500 customer acquisition cost (CAC) before you scale spend, and hold the second $45K vehicle until booked jobs support it.