Paper Recycling Break-Even: $123K Monthly Revenue To Cover Costs

Fixed costs $101.1K/mo Year 1 base

Contribution margin 82% After variable costs

Break-even revenue $123.5K/mo Monthly target

Break-even timing Month 1 Launch month

Break-even calculator

Test monthly revenue against variable expenses and fixed costs to see when the paper recycling facility clears break-even.

Lean Base Full

Monthly revenue Higher sales give you more room to cover fixed costs. $ Lower sales Higher sales Variable expenses These are the direct costs that move with output and sales. $ Lower cost Higher cost

Money available to cover fixed costs $3,825,817 $4,496,667 revenue - $670,850 variable expenses

Margin ratio

85%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base that contribution margin has to cover. $ Lower fixed Higher fixed

Break-even chart Revenue Total costs

Which paper recycling expenses are fixed, variable, semi-variable, or semi-fixed?

Cost classification

Your break-even math is only as good as the cost labels behind it. Put stable monthly overhead in fixed costs, direct unit spend in variable costs, and volume-linked plant support in semi-variable or semi-fixed buckets.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility lease	Fixed	Include $25,000 per month in fixed overhead before calculating monthly break-even revenue.	Spreading rent across units and making break-even look better at low volume.
Recurring administrative overhead	Fixed	Include administrative utilities, insurance, security, software, legal and accounting, office supplies, and marketing at $20,300 per month.	Treating office and compliance spend as optional after production starts.
Year 1 salaried operating team	Fixed	Include $670,000 per year, or about $55,833 per month, for the first-year salaried team.	Mixing salaried payroll with direct production wages and overstating unit margin.
Raw paper waste	Variable	Model as direct unit COGS: $60 for rolls, $40 for pulp bales, $65 for paperboard, $62 for linerboard, and $55 for tissue stock.	Using one blended input price before the sales mix is stable.
Direct production wages	Variable	Put direct labor in unit COGS at $20, $15, $22, $21, or $18 per unit, depending on product line.	Burying direct floor labor inside fixed payroll and overstating contribution margin.
Logistics and distribution	Variable	Apply 1.5% of revenue in the first year, then step down to 1.1% by the mature year.	Dropping the decimal and modeling the line as 15% of revenue.
Energy, water, and chemical inputs	Semi-variable	Track usage-linked COGS at 0.4%, 0.1%, and 0.7% of revenue, while watching plant load and run time.	Treating uptime, contamination sorting, and utility use as fully fixed.
Production support staffing	Semi-fixed	Add supervisors, quality control technicians, maintenance engineers, and safety staffing in FTE steps as capacity rises.	Assuming support headcount moves smoothly with every extra unit sold.

How does break-even shift from a lean Year 1 run to a base Year 3 run and a full Year 5 run?

Scenario table

Higher throughput spreads the $101k to $142k monthly fixed load over more output, so break-even gets safer as the run scales. The mix of paper grades and contracted sale prices still does most of the work.

Planning case only: actual break-even will move with product mix, sale prices, and operating costs.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean Year 1 run	$2.41M	$436k	$101k	81.9%	$1.87M	Above break-even, but this is the thinnest cushion.
Base Year 3 run	$4.50M	$788k	$125k	82.5%	$3.58M	Scale widens the cushion and lowers break-even risk.
Full Year 5 run	$6.95M	$1.16M	$142k	83.3%	$5.65M	Widest cushion, so price swings have less impact.

What breaks the break-even plan if recovered fiber prices slip or plant costs run hot?

Stress test

Base year break-even is well below planned sales, but the cushion shrinks if recovered fiber gets dirtier, buyer prices weaken, hauling rises, utilities spike, labor runs hot, or uptime slips. The first pressure point is margin, not fixed overhead.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$54,000,000	$187,000,000 cushion	The model clears break-even with room to absorb small shocks.
Revenue shortfall	Revenue falls 10% to about $217,000,000 a month.	$54,000,000	$163,000,000 cushion	Buyer demand is the first thing to weaken the cushion.
Fixed-cost pressure	Fixed overhead rises 10% to about $111,000 a month.	$54,011,000	$186,989,000 cushion	Lease and overhead inflation barely move break-even, but they still add drag.
Margin pressure	Variable costs rise 10% to about $479,000 a month.	$54,043,600	$186,956,400 cushion	Dirty feedstock, higher hauling, and utility spikes squeeze contribution.
Combined pressure	Revenue drops 10%, variable load rises 10%, and fixed costs rise 10%.	$54,054,600	$162,945,400 cushion	Downtime plus weak pricing can erase a big slice of profit fast.

Should you commit to the lease and equipment orders yet?

Founder checklist

Don’t commit yet until the build cost, supply, buyers, and staffing can carry the break-even load. This model needs $23.2M of capex, $45.3K of monthly fixed overhead before wages, and enough cash to survive the Month 10 gap.

1Capex lock$23.2M

Confirm the full buildout is funded and staged before you sign equipment commitments, since the facility, process line, paper machine, water system, handling gear, racking, IT, and office items total $23.2M.

2Fixed burn$45.3K/mo

Check that the $25,000 lease plus the other fixed costs total $45,300 a month before wages, because that burn starts before the ramp does.

3Unit spread81-86% pre-fixed

Verify each product line clears an 81% to 86% pre-fixed spread, or the plant will need too much volume to cover wages and overhead.

4Offtake proof33,000 units

Lock in inbound paper quality and offtake for recycled paper rolls, paperboard stock, and kraft linerboard before you assume the 33,000-unit Year 1 ramp.

5Staffing ramp$670K/yr

Confirm the Year 1 salaried team totals $670,000 a year and can support contamination control, maintenance, and selling from the opening month.

6Cash cushion$7.498M

Keep reserve cash for the $7.498M Month 10 low point, or the plant can run out of room before volume and collections stabilize.