Oil Rig Training Simulator Development Break-Even: $129K/Month

Fixed costs $93.3K/mo Monthly fixed base

Contribution margin 71.1% Before fixed costs

Break-even revenue $131.2K/mo Monthly target

Break-even timing Month 1 Launch month

Break-even calculator

Use this calculator to test whether monthly revenue covers variable expenses and fixed monthly costs.

Lean Base Full

Monthly revenue Monthly sales must cover the cash left after direct variable spend. $ Low revenue High revenue Variable expenses These costs rise as more simulators ship or get deployed. $ Low variable High variable

Money available to cover fixed costs $2,117,000 $2,292,000 revenue - $175,000 variable expenses

Margin ratio

92%

Covers fixed costs

Yes

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

Break-even chart Revenue Total costs

Which simulator development expenses are fixed, and which move with sales?

Cost classification

Break-even is only as good as the cost labels. Fixed overhead sets the monthly hurdle, while unit builds and revenue fees move with each simulator sale, so mixing them can make Month 1 break-even look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Core launch payroll	Fixed	Use $67.5K/month in first-year overhead: ($185K + $290K + $130K + $95K + $110K) / 12.	Treating salaried technical staff as variable labor.
R&D facility lease	Fixed	Carry $12K/month from Month 1 through Month 60 as fixed overhead.	Allocating rent to each simulator unit sold.
Professional liability insurance	Fixed	Use $3K/month as a fixed operating charge, separate from revenue-linked insurance.	Combining fixed policy premiums with sales-based insurance.
Software development tools subscription	Fixed	Include $1.8K/month in baseline overhead for the planning range.	Burying tool subscriptions inside payroll.
Cloud infrastructure hosting and computing usage	Semi-variable	Model $4.5K/month fixed hosting plus 0.5% of revenue for usage.	Putting all cloud spend in fixed overhead.
Simulator hardware and assembly	Variable	Subtract direct unit inputs per sale: $45.5K, $28K, $8K, $14.5K, and $25K by product line.	Using one blended unit cost without checking sales mix.
Revenue-linked licensing, API, warranty, and insurance	Variable	Apply 3.5% of revenue here; with cloud usage included, listed revenue-linked COGS total 4.0%.	Double-counting cloud usage after adding it separately.
Sales commissions, shipping, and marketing	Variable	Use 14.0% of first-year revenue: 5.0% commissions, 3.0% shipping, and 6.0% marketing.	Treating revenue-based trade show spend as fixed.

How does break-even change from a lean launch to Year 1 and Year 5?

Scenario table

Break-even is tight in the lean case, then it opens up fast as annual contract volume rises. The real swing factor is fixed staff and support load, not just top-line revenue.

Planning view only; these are model assumptions, not guaranteed results.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch mix	$129K	$36K	$93K	72%	$0	Right on the line, so small misses hurt.
Year 1 base case	$940.8K	$261.2K	$93.3K	72%	$586K	Clear cushion, if delivery stays on plan.
Year 5 full buildout	$4.098M	$995.4K	$218.3K	76%	$2.885M	Wide cushion, but support and implementation work still drive cost.

What can push the simulator plan off break-even?

Stress test

The base plan has a wide cushion, but it gets squeezed by delayed simulator orders, hiring before contracts close, and delivery creep. One missed high-ticket build or one extra engineer moves the break-even line fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,548,000	$9,742,000 cushion	Break-even is covered, but Month 1 is still the cash low.
Revenue shortfall	One Cyber Chair Driller Station order slips out of Year 1.	$1,548,000	$9,292,000 cushion	One missed high-ticket build cuts the cushion by $450,000.
Fixed-cost pressure	Add one Lead Software Engineer at $145,000 a year.	$1,748,000	$9,542,000 cushion	Hiring before contracts close raises the break-even floor.
Margin pressure	Raise revenue-linked costs by 4 points before hardware.	$1,639,000	$9,651,000 cushion	Delivery creep and heavier selling spend push the floor up.
Combined pressure	One Cyber Chair Driller Station slips, one Lead Software Engineer is added, and revenue-linked costs rise by 4 points.	$1,851,000	$8,989,000 cushion	This is where timing, staffing, and delivery all bite at once.

What should you verify before you commit to the first big simulator build?

Founder checklist

Do not lock the build until signed pilot work can clear about $129K a month and you still keep the Month 1 cash need of $933K covered. If that demand is not real yet, hold the lease, capex, and hires.

1Pilot pricing5 tiers

Verify buyers will sign at the $450K, $320K, $220K, $150K, and $85K levels, because interest without deposits will not fund the first build.

2Break-even load$129K/mo

Check that expected signed work clears about $129K a month, not just the $93.3K fixed base, including the $12K R&D lease and $4.5K cloud hosting, so the launch does not stall under payroll and overhead.

3Cash cushion$933K

Hold the Month 1 cash reserve at $933K before heavy spend, because capex and payroll hit first and revenue lands later.

4Capex gates$670K

Approve the $670K capex only after each build milestone is met, so demo spend does not outrun proof of demand.

5Supplier lock5 inputs

Lock hardware and assembly quotes for the five main unit inputs and test them against the unit cost model, or margin will drift before delivery.

6Hiring rampMonth 13

Keep support hiring at Month 13 unless pilot delivery is already steady, because early FTE growth would push burn up before the product proves itself.