LED Lighting Manufacturing Break-Even Analysis: $114K/Month

Fixed costs $26.5K Monthly overhead

Contribution margin 82% After variable costs

Break-even revenue $32.3K Revenue target

Break-even timing Month 14 Model ramp point

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs against break-even for LED lighting manufacturing.

Lean Base Full

Monthly revenue Revenue is the cash available to cover direct and fixed costs. $ Low sales High sales Variable expenses Direct costs that rise with monthly sales. $ Low direct High direct

Money available to cover fixed costs $317,299 $329,833 revenue - $12,534 variable expenses

Margin ratio

96%

Covers fixed costs

Yes

Fixed monthly costs Monthly overhead the margin has to cover. $ Lean overhead Heavy overhead

Break-even chart Revenue Total costs

Which LED lighting manufacturing expenses are fixed and which move with sales?

Cost classification

Break-even gets reliable only when unit inputs stay separate from monthly overhead. For this model, the big split is per-unit materials and assembly labor versus recurring rent, salaries, and overhead allocations.

Expense	Cost	Break-Even Treatment	Common Mistake
LED chips, drivers, housings, lenses, globes, bases, and packaging	Variable	Include in unit-level production input by product line before calculating contribution margin.	Averaging all bills of materials across fixtures and bulbs.
Direct assembly labor per unit	Variable	Treat as a per-unit production input that rises with units produced.	Mixing per-unit assembly labor with salaried production payroll.
Factory lease, office rent, insurance, software, legal and accounting, R&D, and fixed marketing	Fixed	Use as monthly overhead: $26,500 per month from Month 1 through Month 60.	Spreading fixed overhead into unit costs too early.
Factory utilities allocation, indirect manufacturing supplies, quality control overhead, and maintenance allocation	Semi-variable	Model as revenue-linked overhead totaling 1.4% before the factory lease allocation.	Treating usage-linked factory overhead as fully fixed.
Sales commissions and e-commerce transaction and fulfillment fees	Variable	Apply as a percent of sales; first-year rates total 4.5% of revenue.	Leaving selling fees below the contribution margin line.
Production manager, manufacturing technicians, and quality control specialists	Semi-fixed	Step payroll up as capacity rises; technicians move from 2.0 FTE in the first year to 6.0 FTE in the fifth year.	Assuming labor scales smoothly with every unit sold.

How does break-even change from a lean Year 1 case to a full-scale Year 3 case?

Scenario table

Break-even improves as volume rises because fixed overhead gets spread across more sales while the margin stays high. The lean case stays below break-even, the base case clears it, and the full case builds the strongest cushion.

Planning cases only. Actual break-even will move with mix, pricing, scrap, and labor use.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch case	$1.044M	$191K	$932K	81.7%	-$79K	Short of break-even by about $97K.
Base operating case	$2.061M	$375K	$1.007M	81.8%	$679K	Clears fixed overhead with room to spare.
Full scale case	$3.298M	$590K	$1.128M	82.1%	$1.580M	Builds a strong cushion over break-even.

What breaks the Year 1 break-even plan for this LED lighting plant?

Stress test

Year 1 starts slightly under break-even, so there’s no real cushion. A 10% sales miss, higher input costs, or 10% fixed-cost creep quickly pushes the plant into a deeper monthly loss.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1.14M/month	$97K gap	Base case is already below break-even.
Revenue shortfall	Revenue falls 10% in the first operating year.	$1.14M/month	$165K gap	A sales miss widens the cash drain fast.
Fixed-cost pressure	Fixed costs rise 10% from the launch-month run rate.	$1.26M/month	$211K gap	Lease, payroll, and overhead creep eat the cushion.
Margin pressure	Variable load rises 5 percentage points.	$1.215M/month	$171K gap	Component, labor, scrap, or freight pressure cuts contribution fast.
Combined pressure	Revenue falls 10%, variable load rises 5 points, and fixed costs rise 10%.	$1.35M/month	$305K gap	This is the point where volume needs to jump just to hold ground.

What should you verify before you sign the lease and commit to the first production run?

Founder checklist

Don't sign the lease or place big orders until wholesale demand, BOM costs, and staffing all support the model. This plan carries $93.2K of fixed monthly overhead, an 81.7% contribution margin, and a cash low of $286K in Month 13 before breakeven in Month 14.

1Demand proof$1.25M/yr

Verify wholesale orders and repeat demand can support the first-year sales plan before you lock the lease.

2Payroll load$93.2K/mo

Map salaried payroll against the fixed monthly base before adding headcount, because that cost hits every month.

3Margin stack81.7% CM

Confirm the Year 1 mix still leaves about 81.7% contribution margin, the cash left after variable costs, once parts, factory allocations, commissions, and fees hit.

4Supplier BOM$1.15-$33.00/unit

Quote the BOM (bill of materials) for LED chips, drivers, housings, lenses, globes, bases, and packaging by SKU before you buy inventory.

5Launch stack$610K core

Make sure Line 1 at $250K, Line 2 at $180K, the $50K QA equipment, the $100K lab, and the $30K platform build are truly needed before you commit.

6Cash runway$286K M13

Keep at least $286K on hand through Month 13, because Year 1 EBITDA is -$219K and breakeven lands in Month 14.