Power System Engineering Study Break-Even: $86K Monthly Revenue

Fixed costs $57.2K/mo Base monthly burn

Contribution margin 71% After variable costs

Break-even revenue $80.6K/mo Monthly revenue target

Break-even timing Month 7 Forecast breakeven

Break-even calculator

Use this calculator to test whether monthly revenue covers variable expense and the fixed cost base.

Lean Base Full

Monthly revenue Revenue is the cash flow that has to cover direct costs first, then fixed overhead. $ Low sales High sales Variable expenses These are direct costs that move with project work, like travel, referral fees, and software tied to delivery. $ Low direct cost High direct cost

Money available to cover fixed costs $75,437 $106,250 revenue - $30,813 variable expenses

Margin ratio

71%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead base that contribution margin has to cover. $ Light overhead Heavy overhead

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in an engineering study firm?

Cost classification

For this engineering study firm, break-even gets reliable only when monthly overhead, project-level percentages, and hiring steps are split cleanly. Misclassifying referral fees as rent, or new engineers as a smooth monthly drip, distorts the Month 7 break-even read.

Expense	Cost	Break-Even Treatment	Common Mistake
Office lease	Fixed	Include $6,500 per month from Month 1 through Month 60, regardless of project volume.	Tying rent to revenue and understating the low-sales break-even point.
Professional liability insurance	Fixed	Include $2,200 per month as required operating coverage before any study work is sold.	Treating insurance like a per-project charge instead of baseline overhead.
Accounting and legal services	Fixed	Include $1,800 per month in fixed overhead for recurring compliance and contract support.	Leaving it below EBITDA and making operating break-even look too easy.
Specialized software subscriptions	Semi-variable	Model recurring access as operating coverage, then let project usage scale with volume; Year 1 load is 8% of revenue.	Mixing recurring subscriptions with one-time software license capex.
Project specific field expenses	Variable	Apply 5% of revenue in the first year, then reduce per the forecast as delivery efficiency improves.	Omitting site costs and overstating contribution margin on field-heavy studies.
Sales commissions and referral fees	Variable	Apply 10% of first-year revenue only to won, billable work tied to sales activity.	Charging commissions on pipeline instead of closed project revenue.
Travel and client site visits	Variable	Apply 6% of first-year revenue for site work that rises with study count and customer location.	Averaging travel into fixed overhead and missing margin swings by project mix.
Engineering staff additions	Semi-fixed	Add salaries in steps as workload rises, including senior engineers, junior engineers, and principal engineer FTE increases.	Smoothing future hires across months instead of adding capacity in real hiring steps.

How does break-even change from a lean study load to a base case and a full workload?

Scenario table

Break-even shifts quickly here because billable hours, study mix, and service fees move together. When workload is lean, fixed costs press hard; when utilization rises, the same team spreads overhead and profit cushion widens.

Planning cases only; actual results will move with billable utilization and study mix.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean power study load	$85,880	$24,905	$60,975	71%	$0	Near break-even; a small dip turns negative.
Base year one mix	$106,250	$30,813	$60,975	71%	$14,463	Small cushion, so keep utilization above plan.
Full year two load	$231,333	$62,460	$82,850	73%	$86,023	Strong cushion, but staffing and marketing must stay matched to demand.

What breaks the break-even plan for a power system engineering study firm?

Stress test

The base plan clears break-even by about $20.4k a month, but that cushion gets thin fast. A 15% revenue slip nearly wipes it out, and a 10% overhead rise or 5-point margin hit pushes break-even into the mid-$90k range.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$85,880	$20,370 cushion	Healthy, but the buffer is not wide.
Revenue shortfall	Monthly revenue falls 15% to about $90,313.	$85,880	$4,433 cushion	Sales delays shrink the buffer to almost nothing.
Fixed-cost increase	Fixed costs rise 10%, lifting the fixed base to about $67,073.	$94,468	$11,782 cushion	Overhead growth cuts room fast, even before sales soften.
Margin pressure	Variable delivery costs rise 5 points, cutting margin to 66%.	$92,386	$13,864 cushion	Travel overruns or subcontractor creep push break-even higher.
Combined pressure	Revenue drops 15%, fixed costs rise 10%, and margin falls 5 points.	$97,779	$7,466 gap	Delayed awards plus cost creep can flip the month negative.

Can your study pipeline hit break-even before you sign the lease?

Founder checklist

Before you commit, prove the monthly pipeline can carry about $86K in revenue and still leave room for staffing, travel, and collections. If any one piece is weak, break-even slips fast.

1Pipeline$86K/mo

Confirm your booked study work can reach the monthly break-even revenue target before you lock in major spending.

2Price mix71% CM

Verify Year 1 pricing still lands at $10,125 for power system analysis, $5,850 for arc flash assessment, and $2,700 for safety program audits so the 29% variable cost stack still clears margin.

3PE capacity1 PE

Confirm a licensed Professional Engineer can review enough work in the opening month before you hire more, because review capacity can cap delivery before sales do.

4Lease load$6.5K/mo

Delay the $6,500 office lease if remote delivery works, because non-payroll fixed overhead already runs $14.1K a month and the lease adds more drag.

5Cash cushion$621K min cash

Verify you can fund the $219,500 capex plan and still protect the Month 7 cash trough, or the setup wave can outrun collections.

6Cash controlsA/R control

Lock insurance, proposal terms, collection timing, and field travel controls before launch so site work and project spend do not turn into slow cash.