Break-Even Analysis For IT Disaster Recovery: $101K/Month

Fixed costs $62.4K/mo Committed monthly base

Contribution margin 72% After variable cost

Break-even revenue $86.7K/mo Monthly target

Break-even timing Month 19 Model break point

Break-even calculator

Use this calculator to test monthly revenue, direct costs, and fixed costs against break-even for IT disaster recovery work.

Lean Base Full

Monthly revenue This is the monthly sales you bring in before direct costs. $ Lower sales Higher sales Variable expenses These are direct costs that rise as revenue grows, like commissions and outside consulting. $ Lower cost Higher cost

Money available to cover fixed costs $47,000 $65,000 revenue - $18,000 variable expenses

Margin ratio

72%

Covers fixed costs

$15,000 short

Fixed monthly costs This is the monthly cost base your margin has to cover. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which disaster recovery expenses are fixed, and which move with sales?

Cost classification

Break-even only works if fixed load and per-dollar expenses are split cleanly. Misclassifying locked payroll or cloud usage can move the break-even month away from the model’s Month 19 target.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Include $8,000/month in fixed overhead for the full Month 1 to Month 60 planning range.	Flexing rent with client count instead of treating it as committed space.
Utilities & Internet	Fixed	Include $1,200/month in fixed overhead unless the operating footprint changes.	Linking basic connectivity spend to revenue when the model treats it as monthly overhead.
Accounting & Legal Retainer	Fixed	Include $1,500/month in fixed overhead before calculating required gross profit.	Dropping retainers below EBITDA because they feel administrative.
Year 1 Staffed Payroll and On-Call Coverage	Semi-fixed	Use $48,125/month as committed capacity, then add hiring steps when service load outgrows the team.	Treating committed engineers as Variable when payroll is already locked in.
Cloud Infrastructure & Hosting Fees	Variable	Apply 12.0% of revenue in the first year, falling to 9.0% by the mature year.	Modeling hosting as a flat bill while protected workloads grow with sales.
Software Licensing for DR Tools	Variable	Apply 7.0% of revenue in the first year, tapering to 5.0% by Year 5.	Burying usage-based recovery tools inside fixed software subscriptions.
Sales Commissions & Bonuses	Variable	Apply 6.0% of revenue in the first year, declining to 4.0% by Year 5.	Putting commissions in fixed payroll and overstating contribution margin.
Emergency Travel, Subcontracted Recovery Labor, and Failover Testing Overages	Semi-variable	Keep a base allowance in overhead, then add incident-linked and test-overage spend as usage rises.	Treating rare recovery surges as fully fixed monthly spend.

How does break-even change from a lean launch to a base case and full-service IT disaster recovery model?

Scenario table

Lean launch sits under break-even, base case clears it by a thin margin, and full-service adds a better cushion. The swing comes from fixed staffing and tools rising faster than variable share.

Planning assumptions only; actual results will move with signed retainers, incident volume, and how much response work stays in-house.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch	$955k	$268k	$724k	72.0%	-$36k	Still below break-even; one more retainer helps close the gap.
Base case	$1,387k	$358k	$1,022k	74.2%	$7k	Near break-even; a small demand miss can flip profit negative.
Full-service model	$2,000k	$470k	$1,468k	76.5%	$62k	Clearer cushion; break-even risk eases if staffing stays tight.

What pushes this IT disaster recovery plan below break-even?

Stress test

The plan is most exposed to demand misses and cost creep. A 10% revenue shortfall or a 5-point margin hit moves break-even up fast, and if fixed costs rise too, Month 19 breakeven can slip into a cash gap.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,006k	$0 cushion	Breakeven lands in Month 19.
Revenue shortfall	Revenue runs 10% below plan.	$1,006k	$72k gap	Fewer forensic audits or slower onboarding can open a gap.
Fixed-cost pressure	Fixed costs rise to $824k.	$1,145k	$139k gap	Insurance or tool renewals can lift the floor fast.
Margin pressure	Variable expenses rise to 33%.	$1,081k	$75k gap	Subcontractor rate pressure squeezes contribution margin.
Combined pressure	Revenue is 10% lower, variable expenses rise to 33%, and fixed costs reach $824k.	$1,230k	$224k gap	Delayed onboarding plus higher delivery costs can turn the plan cash tight.

What should an IT disaster recovery founder verify before hiring past the Year 1 team?

Founder checklist

Before you hire past the Year 1 team or promise 24/7 recovery, prove the pipeline can absorb a $2.5K CAC, a $120K first-year marketing budget, and a $395K launch build. The model only gets safe once demand, margin, staffing, and cash all line up.

1Demand proof$2.5K CAC

Confirm signed recurring deals are landing before you add headcount, because each customer still costs about $2.5K to win.

2Fixed load$64.5K/mo

Make sure the Year 1 team and overhead stay covered at about $64.5K a month, or the service base gets too heavy too early.

3Marketing timing$120K Y1

Match the $120K first-year marketing budget to close rates, not activity, so spend tracks signed revenue instead of promise volume.

4Unit margin72% CM

Keep blended contribution near 72% after 19% COGS and 9% variable costs, because thin margins make break-even drift later.

5Coverage rampYear 2

Delay 24/7 coverage until recurring contracts and subcontractor rates can support the Year 2 ramp without overpromising response times.

6Cash cushion-$19K Month 18

Protect cash through the Month 18 low point of negative $19K and the $395K launch capex, or the build can outrun the bank balance.