Precision Machining Break-Even Revenue: About $808K/Month

Fixed costs $65.7K/mo Overhead and payroll

Contribution margin 83%–86% After variable costs

Break-even revenue $78K/mo Sales to cover fixed

Break-even timing Month 1 Launch month

Break-even calculator

Test monthly revenue against variable expenses and fixed monthly costs to see where a precision machining shop breaks even.

Lean Base Full

Monthly revenue This is the money coming in before direct costs. $ Low sales High sales Variable expenses These costs move with each job, like direct labor, tooling wear, shipping, and sales commissions. $ Tight costs Higher costs

Money available to cover fixed costs $628,632 $754,917 revenue - $126,285 variable expenses

Margin ratio

83%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead the margin has to cover. $ Lean ops Bigger team

Break-even chart Revenue Total costs

Which precision machining expenses are fixed, variable, or semi-variable for break-even?

Cost classification

Break-even is reliable only when each expense follows the right behavior. Put stable monthly overhead in fixed costs, unit-level shop inputs in variable costs, and capacity-driven staffing in semi-fixed costs.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Rent	Fixed	Include $12,000 per month in fixed overhead from Month 1 through Month 60.	Spreading rent across parts and hiding the true monthly hurdle.
Business Insurance	Fixed	Include $1,500 per month in fixed overhead for the relevant planning range.	Using $15,000 per month instead of the model assumption of $1,500.
Software Subscriptions	Fixed	Include $2,500 per month as recurring operating overhead, separate from software purchased as CAPEX.	Treating CAD/CAM license purchases as monthly operating overhead.
Salaried Shop and Admin Payroll	Semi-fixed	Model Year 1 payroll at about $41,458 per month, then step it up as FTE counts rise.	Treating all payroll as variable per part, even when staff is salaried.
Raw Material	Variable	Apply per unit by product, from $12.00 for Fluid Connector to $80.00 for Medical Implant.	Using one blended material rate across very different part families.
Direct Machining Labor	Variable	Apply the modeled per-unit labor rate by product, such as $25.00 for Aerospace Bracket and $60.00 for Medical Implant.	Double-counting labor by also loading the same work into salaried payroll.
Utilities Base and Utilities Overhead	Semi-variable	Split $3,500 per month as fixed base utility spend and product overhead at 0.6% to 0.9% of revenue.	Putting the full utility bill in fixed costs when machine usage rises with volume.
Sales Commissions	Variable	Apply the revenue percentage by year, starting at 4.0% in Year 1 and falling to 2.5% in Year 5.	Entering 40% instead of 4.0%, which can crush contribution margin.

How does break-even shift from a lean machining ramp to the base and full production plans?

Scenario table

Each step-up adds cushion because EBITDA is separately shown at $2.361M, $6.221M, and $10.893M in Years 1, 3, and 5. The real drivers are machine hours, job mix, setup efficiency, and scrap control.

Planning assumptions only; actual break-even moves with job mix, scrap, and inspection load.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean machining mix, Year 1	$331k	$40k	$66k	87.8%	$225k	Above break-even, but the cushion is still the thinnest.
Base machining mix, Year 3	$755k	$89k	$90k	88.3%	$576k	Still above break-even, with the best spread of fixed costs.
Full machining mix, Year 5	$1.23M	$139k	$95k	88.8%	$1.00M	Most cushion, but QA and labor load need tight control.

What breaks first if machining orders slow or costs creep up?

Stress test

Year 1 revenue runs about $331k/month versus an $81k/month break-even, leaving roughly $250k/month of cushion. That cushion shrinks fast if orders slip, fixed costs rise, or scrap and overtime push margin down.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$81k/mo	$250k cushion	Wide cushion in the base plan.
Revenue shortfall	Year 1 revenue falls 20% to about $265k/month.	$81k/mo	$184k cushion	Sales still clear break-even, but the buffer shrinks.
Fixed costs	Monthly overhead rises by $10k.	$93k/mo	$238k cushion	Overhead creep raises the bar fast.
Margin pressure	Contribution margin drops 1 point to 80.3%.	$82k/mo	$249k cushion	Small scrap or overtime creep nudges break-even higher.
Combined pressure	Revenue falls 20%, overhead rises $10k/month, and margin drops 1 point.	$94k/mo	$171k cushion	A miss on all three levers cuts the safety buffer.

Should you lease the shop and buy the first CNCs before your quotes clear break-even?

Founder checklist

Do not lock in the shop until quoted work and backlog can clear the $808K monthly break-even target. The Year 1 plan averages about $330.8K a month, so the current mix only works if the pipeline is much fuller than the base forecast.

1Demand cover$330.8K/mo

Verify signed quotes and backlog can average the Year 1 revenue plan before you lease, because demand has to outrun the fixed load.

2Fixed load$65.7K/mo

Add the $24.2K of monthly site overhead and about $41.5K of payroll to see the cash burn you carry before variable costs and downtime.

3Contribution81% CM

Check that quoted work still covers material, direct labor, tooling, inspection, sales commissions, and shipping; the Year 1 mix holds about an 81% contribution margin.

4Capacity rampMonth 6

Make sure the first CNC can carry the opening mix until the second machine comes online by Month 6, and hold maintenance cash because downtime cuts contribution fast.

5Cash reserve$951K

Keep enough cash to survive the Month 2 trough, and remember planned capital spending totals about $1.01M before the shop is fully set up.

6Launch mix5 parts

Confirm the opening order book spans aerospace brackets, medical implants, automotive sensor housings, robotics gears, and fluid connectors, with inspection ready for tighter-tolerance work.