Power Factor Correction Service Break-Even at About $104K/Month

Fixed costs $61.2K/mo Base costs + payroll

Contribution margin 68.7% After variable cost

Break-even revenue $89.0K/mo Monthly target

Break-even timing Month 5 Model break-even

Break-even calculator

Test monthly revenue, direct costs, and overhead against break-even for a power factor correction service.

Lean Base Full

Monthly revenue Revenue sets the margin pool that has to cover fixed costs. $ Lower sales Higher sales Variable expenses These are the direct costs that move with each job and sale. $ Lower costs Higher costs

Money available to cover fixed costs $105,000 $175,000 revenue - $70,000 variable expenses

Margin ratio

60%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead the contribution margin must cover. $ Light overhead Heavy overhead

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in a power factor correction service?

Cost classification

Break-even is only reliable when fixed overhead stays separate from job-driven costs. In the first year, $24,000 in monthly fixed expenses and 31.3% revenue-linked costs need different treatment.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Include the $8,500 monthly rent in fixed overhead for the relevant planning range.	Tying rent to each installation instead of treating it as committed monthly overhead.
General Liability and Professional Insurance	Fixed	Include the $3,200 monthly insurance charge in fixed overhead from Month 1 through Month 60.	Dropping insurance from break-even because it does not touch the job site directly.
Capacitor Banks and Equipment	Variable	Model as 18.0% of revenue in the first year, falling to 15.0% by the fifth year.	Using one flat gross margin and hiding the main equipment load.
Installation Materials and Subcontractor Costs	Variable	Model as 8.0% of revenue in the first year, falling to 6.0% by the fifth year.	Putting subcontractor-heavy installs into fixed payroll and overstating margin.
Sales Commissions and Referral Fees	Variable	Apply 3.5% of revenue in the first year, then step down to 2.2% by the fifth year.	Counting commissions as fixed marketing and missing the margin hit on each sale.
Vehicle Fuel and Travel Expenses	Variable	Apply 1.8% of revenue in the first year, then reduce to 1.2% by the fifth year.	Blending fuel with vehicle leases and treating all fleet spend as fixed.
Licensed Electricians	Semi-fixed	Model salary as committed capacity, with headcount rising from 2.0 FTEs in the first year to 6.0 FTEs in the fifth year.	Putting all electrician payroll into per-job margin when salaries are monthly commitments.
Field Service Technician	Semi-fixed	Add this capacity in steps starting Month 25, from 1.0 FTE in the third year to 3.0 FTEs in the fifth year.	Smoothing technician payroll as a straight percentage of sales instead of a staffing step.

How does break-even change across lean, base, and full project mixes?

Scenario table

Break-even moves with project mix because higher-value manufacturing and data center work lifts revenue per job, while commercial and agricultural work drags it down. The lean case is tight, the base case covers fixed overhead, and the full case adds a wide cushion.

Planning assumptions only; actual margins can shift with job mix, staffing, and site conditions.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean mix	$84K	$36.0K	$59.3K	57.2%	-$11.3K	Still below break-even; more high-value work is needed.
Base case	$175K	$74.9K	$59.3K	57.2%	$40.8K	Fixed overhead is covered, with a solid monthly cushion.
Full mix	$328K	$95.4K	$80.6K	70.9%	$152.0K	Break-even is easy; the higher-value mix absorbs overhead well.

What breaks the break-even plan for this service?

Stress test

The base case clears break-even with room, but the cushion gets thin fast if sales soften and costs move up together. Combined pressure is the main risk because it leaves only about a $11K buffer.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$104K	$71K cushion	Base case clears break-even with room.
Revenue shortfall	Monthly revenue falls 20% to about $140K.	$104K	$36K cushion	Still profitable, but the buffer shrinks fast.
Fixed-cost pressure	Fixed costs rise 15% to about $81.8K a month.	$119K	$56K cushion	Overhead creep pushes break-even up hard.
Margin pressure	Variable expenses rise from 31.3% to 36.3% of revenue.	$112K	$63K cushion	Margin compression eats cushion faster than a sales dip.
Combined pressure	Revenue falls 20%, variable expenses rise to 36.3%, and fixed costs rise 15%.	$129K	$11K cushion	Below about $129K, the plan loses most protection.

Should the founder lock in the lease, fleet, and payroll now?

Founder checklist

Don’t commit to the lease, fleet, and full payroll until you’ve proven 15+ signed or high-confidence projects a month, a Year 1 average project value near $7K, and enough cash to hold the $402K low point through Month 6. If any one slips, break-even stretches fast.

1Pipeline15+/mo

Verify at least 15 signed or high-confidence projects a month, and keep CAC near the Year 1 $2,400 assumption, or the Month 5 break-even target gets thin fast.

2Deal Size~$7K

Check that the average first-year project value stays near $7K, because the revenue plan only works if each install carries that kind of ticket.

3Margin68.7%

Hold contribution margin near 68.7% by locking capacitor bank and equipment pricing close to the Year 1 18.0% cost assumption.

4Fixed Load$61.2K/mo

Sum the $25.0K monthly overhead and about $36.2K a month of Year 1 wages, then only lock in more payroll if the pipeline can cover that load.

5Licensed Crew2.0 FTE

Confirm licensed electrician coverage before you add more fixed payroll, because the plan starts with 2.0 FTE electricians and later work depends on commissioning, calibration, and insurance capacity.

6Cash Buffer$402K

Keep the $402K cash buffer intact and phase vehicles, warehouse setup, diagnostic tools, and marketing until utilization is stable, because Month 6 is the low point.