Medical Equipment Rental Break-Even Analysis: $546K/Month

Fixed costs $37.8K/mo Launch overhead

Contribution margin 70.5% After variable costs

Break-even revenue $53.6K/mo Monthly target

Break-even timing Month 19 Model break point

Break-even calculator

Test how monthly rental revenue, variable expenses, and fixed costs compare with break-even for a medical equipment rental business.

Lean Base Full

Monthly revenue Monthly rentals drive the cash left after direct costs. $ Low sales Strong sales Variable expenses These are direct costs that rise with each rental month. $ Light costs Heavy costs

Money available to cover fixed costs $16,000 $25,000 revenue - $9,000 variable expenses

Margin ratio

64%

Covers fixed costs

$22,483 short

Fixed monthly costs This is the monthly overhead break-even must cover. $ Lean overhead Higher overhead

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in a medical equipment rental business?

Cost classification

Break-even is reliable only when fixed overhead, revenue-linked charges, and step hiring are split cleanly. In the first operating year, non-utility fixed overhead is $5,700/month, while revenue-linked operating costs start at 29.5% of revenue before payroll steps.

Expense	Cost	Break-Even Treatment	Common Mistake
Warehouse & Office Rent	Fixed	Use $3,500 per month from Month 1 through Month 60; it does not change with rental revenue inside the current planning range.	Assuming low early volume reduces rent.
Utilities (Electricity, Water, Internet)	Semi-variable	Start with the $700 monthly service level, then watch usage as cleaning, charging, and warehouse activity rise with rentals.	Modeling every utility dollar as fixed.
Business Insurance (Liability, Property, Fleet)	Fixed	Use $400 per month for break-even until fleet size, coverage limits, or insured equipment values change.	Tying premiums to each booking.
Software Subscriptions (CRM, Accounting, Scheduling)	Fixed	Use $600 per month because the model does not show per-order software fees.	Charging software per rental without data.
Equipment Depreciation	Variable	Treat as revenue-linked because the model applies 12.0% of revenue in the first operating year, falling to 8.0% by the fifth year.	Treating equipment wear as free capacity.
Sanitation & Maintenance Supplies	Variable	Use 3.0% of revenue in the first operating year; this moves with returns, cleaning cycles, and repair activity.	Treating cleaning and repairs as free capacity.
Fuel & Vehicle Maintenance	Variable	Use 3.0% of revenue in the first operating year because route miles, pickups, and setup visits rise with rental volume.	Ignoring route wear after buying vans.
Delivery & Setup Technician Payroll	Semi-fixed	Model headcount in steps: technicians rise from 2.0 FTE in the first year to 5.0 FTE by the fifth year.	Treating route labor as free capacity.

How does break-even shift across lean, base, and full-scale setups for medical equipment rental?

Scenario table

Lean break-even only works if founder pay stays deferred and routes stay dense. Base and full-scale cases need more monthly revenue because payroll, storage, and delivery capacity rise faster than variable costs.

Planning only; actual break-even shifts with utilization, mix, and staffing, and the one-time startup purchases of $445K sit outside this monthly view unless financed or depreciated into the model.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch, deferred founder pay	$33,667	$9,917	$23,750	70.5%	$0	Works only with deferred founder pay, mobility-heavy rentals, and tight route coverage.
Base case, full Year 1 payroll	$45,500	$13,417	$32,083	70.5%	$0	This is the first realistic steady-state case, but mix, storage, and delivery must stay balanced.
Full scale, mature Year 5 staffing	$69,583	$13,916	$55,667	80.0%	$0	Mature staffing can support wider coverage, but underfilled routes or limited storage will erase the cushion fast.

What breaks the break-even plan for this rental business?

Stress test

At a $546K monthly break-even, the plan is sensitive to demand and cost creep. A 10% revenue dip creates about a $38K operating gap, and a 5-point jump in variable costs pushes break-even to about $588K.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$546,000	$0 gap	No cushion if volume slips.
Revenue shortfall	Monthly revenue falls 10% below plan.	$546,000	$38,000 gap	Demand softening can erase monthly profit.
Fixed-cost pressure	Fixed overhead rises 10%.	$601,000	$55,000 gap	Underused vans and staff raise the floor.
Margin pressure	Variable expenses rise 5 points to 34.5%.	$588,000	$42,000 gap	Longer routes and repair spikes hit margin.
Combined pressure	Revenue falls 10%, fixed costs rise 10%, and variable expenses rise 5 points.	$648,000	$102,000 gap	Hiring early while demand slips can break the plan.

What should you verify before signing the lease and buying the first inventory?

Founder checklist

Do not sign the lease or buy the first inventory until referral volume, unit pricing, and operating cash can carry the Month 19 break-even path. If the five demand channels and the 70.5% contribution margin are not real in your market, the loss period will run longer than the model shows.

1Referral Demand5 channels

Confirm discharge planners, home health agencies, hospice providers, rehab clinics, and direct-pay families can send steady rentals before you lock in fixed costs.

2Base Burn$38.5K/mo

Check that rent, utilities, insurance, software, professional fees, and Year 1 payroll stay inside a monthly burn you can fund through the loss period.

3Margin Test70.5% CM

Verify the Year 1 prices of $95, $280, and $180 hold after depreciation, sanitation, delivery labor, fuel, fees, and performance marketing.

4Route Capacity2 vans

Map delivery zones before you add vehicles, so the first two vans can cover setup, pickup, and service without pushing labor and fuel past plan.

5Cash Cushion$161K

Hold this reserve before launch, because the model shows a minimum cash need around Month 19 and a Year 1 EBITDA loss of $270K.

6Launch Stack4 systems

Get billing, scheduling, insurance, and customer service coverage working before spend starts, or collections and response times will slow break-even.