Geothermal Drilling Break-Even Analysis: $139K Monthly Revenue

Fixed costs $87.8K/mo Payroll plus overhead

Contribution margin 72% After variable costs

Break-even revenue $121.9K/mo Monthly revenue target

Break-even timing Month 8 Ramp period

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs against the break-even point for a geothermal drilling service.

Lean Base Full

Monthly revenue Revenue is the cash that has to cover direct costs and overhead. $ Low sales High sales Variable expenses These are direct project costs that rise as drilling work scales. $ Low direct High direct

Money available to cover fixed costs $324,100 $432,100 revenue - $108,000 variable expenses

Margin ratio

75%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead contribution margin must cover. $ Lean overhead Heavy overhead

Break-even chart Revenue Total costs

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

Cost classification

Break-even is only useful if each expense is treated the right way. Fixed overhead keeps running during slow months, while materials, rentals, commissions, and permits rise with revenue.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Use $8,500 per month from Month 1 through Month 60.	Spreading rent by project and missing the monthly cash floor.
Insurance (General Liability & Equipment)	Fixed	Use $4,000 per month before contribution margin.	Treating insurance as job-linked when coverage runs even without drilling revenue.
Specialized Software Licenses	Fixed	Use $1,800 per month as recurring operating overhead.	Confusing recurring software with one-time software capital spending.
Drilling Crew Lead Payroll	Fixed	Use scheduled payroll as fixed within each planning year; first year is 2.0 FTE at $90,000 each.	Assuming crew lead payroll flexes down when jobs slip.
Project Materials & Consumables	Variable	Apply 16.0% of first year revenue, declining to 14.0% by mature year.	Using a flat dollar budget instead of tying materials to project revenue.
Direct Project Equipment Rental	Variable	Apply 6.0% of first year revenue, declining to 4.0% by mature year.	Counting rentals as fixed even though rental need follows active project volume.
Sales Commissions & Project Travel	Variable	Apply 4.0% of first year revenue, declining to 3.0% by mature year.	Forgetting travel and commissions when testing gross margin.
Vehicle Leases & Maintenance	Semi-fixed	Use the $2,800 monthly baseline, then add step increases when fleet capacity grows.	Treating rig downtime as harmless because fixed payroll and leases keep running.

How does break-even shift from a lean drilling crew to a full geothermal buildout?

Scenario table

CM ratio means what’s left after variable costs. Higher hourly rates and fuller crews lift that ratio, but the heavier payroll also raises fixed cost. So the lean case is near loss territory, while the full case has the widest cushion.

Planning cases only; actual break-even moves with rig uptime, project mix, and crew coverage.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean case — Year 1 setup	$108.6K	$30.4K	$83.6K	72.0%	$-5.4K	Still below break-even; backlog is too thin.
Base case — Year 3 operating mix	$432.2K	$108.9K	$134.1K	74.8%	$189.2K	Clears break-even and gives a workable cushion.
Full case — Year 5 scale	$758.6K	$170.7K	$201.8K	77.5%	$386.2K	Strong cushion if rigs and crews stay fully booked.

What breaks geothermal drilling break-even first?

Stress test

Break-even is tight: a 10% revenue miss, a 10% rise in fixed overhead, or more materials, rental, and travel can flip the plan from break-even into a gap. Idle rig days, permit delays, and a weak backlog are the first warning signs.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,392K	$0 cushion	Breakeven is met, but the cushion is thin.
Revenue shortfall	Revenue falls 10% below plan.	$1,392K	$139K gap	A small top-line miss creates a real cash gap.
Fixed-cost increase	Fixed overhead rises 10% to about $1,103K a year.	$1,532K	$140K gap	Overhead creep pushes breakeven out fast.
Margin pressure	Variable costs rise from 28% to 33% of revenue.	$1,496K	$104K gap	Materials, rental, and travel overruns shrink the cushion.
Combined pressure	Revenue falls 10%, fixed overhead rises 10%, and variable costs hit 33%.	$1,656K	$264K gap	Idle rig days, permit delays, or weak backlog make this the break point.

Can your backlog cover the first rig commitment before you hire and spend?

Founder checklist

Do not sign the rig and crew commitments until signed or near-signed backlog can cover the $1.392M monthly break-even run rate. The model still shows a Month 9 cash trough of -$2.061M, so demand and runway need to be proven before the first big spend.

1Backlog Coverage$1.392M/mo

Verify signed or near-signed work can cover the monthly break-even run rate before you lock in the rig purchase and crew plan.

2Fixed Burn$78.8K/mo

Check that Year 1 fixed overhead stays near this level so each project has enough gross profit to pay the base.

3Margin Mix72% CM

Keep direct project costs at 28% of revenue, because that contribution margin is what funds the fixed load.

4Crew Ramp0.5 FTE

Hold the coordinator and maintenance hires until installation and service hours are busy enough to keep utilization ahead of payroll.

5Cash Trough-$2.061M

Fund the Month 9 low point before ordering major equipment, since cash does not recover until after that draw.

6Pipeline Yield~27 projects

Test whether $150K of Year 1 marketing at a $5.5K CAC can source enough qualified projects to fill the launch pipeline.