IT Consulting Break-Even Analysis: About $98K Monthly Revenue

Fixed costs $67.2K/mo Base load

Contribution margin 73% After variable costs

Break-even revenue $92.0K/mo Monthly target

Break-even timing Month 18 Ramp point

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs against the break-even point.

Lean Base Full

Monthly revenue More billings give you more margin to cover overhead. $ Low billings High billings Variable expenses Direct project costs, commissions, travel, and subcontractors rise with billings. $ Low direct High direct

Money available to cover fixed costs $30,741 $42,111 revenue - $11,370 variable expenses

Margin ratio

73%

Covers fixed costs

$36,417 short

Fixed monthly costs This is the overhead your monthly contribution margin has to cover. $ Lean overhead Heavy overhead

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in this IT consulting model?

Cost classification

Break-even is only useful if fixed commitments and revenue-linked expenses are split cleanly. In this model, Month 18 break-even depends on treating payroll as capacity and delivery fees as revenue-driven.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Include $8,000 per month in fixed operating costs from Month 1 through Month 60.	Tying rent to billable hours instead of treating it as a monthly commitment.
Staff Payroll	Semi-fixed	Include committed full-time equivalent salaries as capacity steps; first-year payroll is about $51,458 per month.	Treating idle consultant time as variable when the salary is already committed.
Third-Party Project Software Licenses	Variable	Use 8.0% of revenue in the first year, then lower the rate as modeled in later years.	Burying client delivery tools in overhead and overstating gross margin.
Subcontractor Project Support	Variable	Use 5.0% of revenue in the first year for project delivery support.	Ignoring overruns when projects need outside specialists to finish on time.
Sales Commissions & Performance Bonuses	Variable	Use 10.0% of revenue in the first year, tied to closed revenue.	Counting commissions before revenue closes and pulling break-even forward.
Client Project Travel & Expenses	Variable	Use 4.0% of revenue in the first year unless client contracts reimburse it separately.	Netting travel against billings without confirming reimbursement terms.
Internal Software Licenses (CRM, PM)	Fixed	Include $1,500 per month as an internal operating platform expense.	Confusing internal tools with client delivery software that scales with revenue.
Professional Services (Accounting, Legal)	Semi-variable	Start with the modeled $2,000 per month base and review as deal volume grows.	Leaving advisory fees flat when contracts, collections, and compliance work increase.

What does break-even look like in a lean, base, and full IT consulting setup?

Scenario table

Break-even climbs as the team and overhead scale, even though variable costs take a smaller share of revenue. EBITDA moves from -$437K in Year 1 to $120K in Year 2 and $4.69M in Year 5, but these are break-even targets, not guaranteed sales.

Scenario figures are planning assumptions for break-even, not guaranteed sales or profit.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean IT consulting	$977K	$264K	$713K	73%	$0	One small miss below this level turns profit negative fast.
Base IT consulting	$1,118K	$280K	$838K	75%	$0	This is the pivot point; revenue above it starts building cushion.
Full-capacity IT consulting	$1,727K	$328K	$1,399K	81%	$0	Higher scale improves margin, but overhead still demands a bigger sales base.

What pushes an IT consulting plan below break-even?

Stress test

The plan reaches break-even in Month 18, but it is sensitive to small misses in billings, rent, and payroll. A $10K monthly revenue slip, an $8K rent load, or a margin drop from 75% to 73% can each move the break-even line fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1.118M	$0 gap	The model lands at break-even by Month 18.
Revenue shortfall	Monthly billings fall by $10K.	$1.218M	$100K gap	That miss cuts about $73K of annual contribution at a 73% margin.
Fixed-cost pressure	Office rent stays in place at $8K per month.	$1.228M	$110K gap	Rent alone adds about $110K to the revenue needed at a 73% margin.
Margin pressure	Year 2 margin falls from 75% to 73%.	$1.148M	$30K gap	Small margin compression pushes required revenue up even with sales flat.
Combined pressure	Monthly billings miss by $10K and payroll steps up by $54K.	$1.245M	$127K gap	Delayed starts, discounting, and low utilization can break cash fast.

Can you prove enough billable work before you lock in office space and hiring?

Founder checklist

Treat this as a pipeline-and-cash test, not a lease-first bet. The model only starts to look real when demand, pricing, and staffing can carry a $15.7K monthly fixed base, $158K launch capex, and a $287K cash floor through Month 18.

1Demand proof$977K/mo + 458 hrs/mo

Confirm about $977K in likely monthly billings, or roughly 458 monthly billable hours at the implied $213 blended rate, before you call break-even near-term.

2Fixed load$15.7K/mo

Delay the $8K office lease if remote delivery can work, because the fixed base already runs $15.7K a month.

3Margin mix73% before payroll

Check that 10% commissions, 4% travel, 8% software, and 5% subcontractor support still leave 73% before payroll and rent.

4Staffing ramp5.0 FTE

Do not add FTE capacity before booked work supports it, since Year 1 already assumes 5.0 full-time equivalent roles.

5Marketing CAC$50K / $2.5K CAC

Prove pipeline economics before spending the $50K Year 1 marketing budget, because a $2.5K acquisition cost leaves little room for weak close rates.

6Launch cash$158K + $287K

Separate the $158K launch capex from operating break-even and keep at least $287K cash through Month 18, since payback is modeled at 37 months.