HR Software Break-Even Analysis: $107K Monthly Revenue Target

Fixed costs $47.4K/mo Core monthly base

Contribution margin 81% After variable spend

Break-even revenue $58.6K/mo Monthly target

Break-even timing Month 19 Launch to break-even

Break-even calculator

Use this to test monthly revenue, variable expenses, and fixed costs against break-even for an HR software plan.

Lean Base Full

Monthly revenue Revenue is the top line that must cover variable costs and fixed costs. $ Low sales High sales Variable expenses These are direct costs that rise as sales and usage grow. $ Low costs High costs

Money available to cover fixed costs $24,600 $30,000 revenue - $5,400 variable expenses

Margin ratio

82%

Covers fixed costs

$20,842 short

Fixed monthly costs This is the monthly cost base break-even must cover. $ Low overhead High overhead

Break-even chart Revenue Total costs

Which HR software expenses stay fixed, and which move with sales before break-even?

Cost classification

Break-even in Month 19 depends on sorting payroll, rent, usage fees, and sales-linked spend correctly. Misclassifying cloud, support, compliance, or onboarding work as fixed can make contribution margin look stronger than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
CEO Founder	Fixed	Include salary as fixed monthly overhead across the planning range.	Leaving founder pay out to force an early break-even.
Lead Software Developer	Fixed	Use salary and full-time equivalent staffing as committed overhead.	Treating core engineering payroll as usage-based delivery spend.
Office Rent	Fixed	Include $3,500 per month from Month 1 through Month 60.	Spreading rent across customers and calling it variable.
Sales Commissions & Bonuses	Variable	Apply 6.0% of revenue in the first year, then the lower forecast rates.	Putting commissions in fixed payroll and overstating contribution margin.
Digital Advertising & Marketing Tools	Variable	Apply 3.0% of revenue in the first year for break-even contribution math.	Mixing revenue-linked spend with the separate annual marketing budget.
Cloud Hosting & Infrastructure	Semi-variable	Model the first-year usage-linked rate at 7.0% of revenue.	Treating all cloud spend as fixed while product usage scales.
Third-Party Integrations & Licenses	Semi-variable	Model the first-year usage-linked rate at 3.0% of revenue.	Ignoring per-customer license load from integrations.
Security & Data Backup Services	Semi-fixed	Start with $400 per month, then step it up when capacity needs rise.	Assuming compliance and backup coverage never step up with scale.

How does break-even shift from a lean Year 1 build to a full Year 3 scale-up?

Scenario table

Lean Year 1 carries $579k of fixed spend. By Year 2 and Year 3, the mix shifts toward higher-priced Pro and Enterprise plans, CAC falls from $250 to $210, and support load rises with the internal HR specialist, so break-even gets easier.

Planning assumptions only; actual results can differ.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean Year 1 core-heavy	$681k	$129k	$579k	81.0%	-$27k	Core-heavy mix stays below the $715k break-even run-rate.
Base Year 2 balanced	$1.08M	$189k	$882k	82.4%	$4k	Better Pro mix and lower CAC put it just over break-even.
Full Year 3 scaled	$1.64M	$262k	$1.27M	84.0%	$107k	Higher-priced plans create a wider cushion for support growth.

What breaks the break-even plan if trial-to-paid conversion slips or support costs rise?

Stress test

The plan sits only about $107k above break-even at current run rate, so a small miss in paid conversion or a few points of margin loss can flip it back into a monthly gap. Higher CAC, more support tickets, or added compliance work make the cushion shrink fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1.07M	$107k gap	Current run rate is close to break-even.
Revenue shortfall	Trial-to-paid conversion falls 10%.	$1.07M	$204k gap	Slower paid conversion widens the revenue hole.
Fixed cost increase	Fixed spend rises 10% to about $970k a month.	$1.18M	$214k gap	Support, compliance, or payroll pressure raises the bar.
Margin pressure	Contribution margin falls 4 points to 78.4%.	$1.13M	$162k gap	Heavier servicing costs eat into every dollar sold.
Combined pressure	Fixed spend rises 10% and margin falls 4 points.	$1.24M	$275k gap	Small misses in growth and cost control compound fast.

Are you ready to lock in hiring and marketing spend before break-even is real?

Founder checklist

If Core HR at $15, HR Pro at $35, and HR Enterprise at $75 don’t close in Year 1, the hiring plan is too early. Test those price points first, because your break-even case depends on real paid demand, not just trial sign-ups.

1Price Test$15 / $35 / $75

Verify buyers will pay these Year 1 prices before you add more staff, or the break-even plan gets weak fast.

2Trial Flow3.0% / 20.0%

Check that visitors convert to free trials at 3.0% and trials convert to paid at 20.0%, or the funnel will not support scale.

3CAC Cap$250

Hold customer acquisition cost near $250 before scaling the $150K Year 1 marketing budget, since a higher CAC pushes payback out.

4Margin Mix81% CM

Contribution margin is what’s left after variable costs, and Year 1 needs about 81% after cloud, integrations, commissions, and ad tools.

5Fixed Load$45.4K/mo

Your Year 1 fixed load is about $45.4K a month, so don’t add more headcount unless the funnel can cover that burn.

6Launch Cash$63K / $486K

Fund the $63K launch capex and keep the $486K minimum cash cushion, because break-even lands at Month 19 and any slip should slow new commitments.