Preschool Break-Even Analysis: About $427k/Month Needed

Fixed costs $12.8K Monthly overhead base

Contribution margin 85% After variable costs

Break-even revenue $15.0K Monthly target

Break-even timing Month 1 First covered month

Break-even calculator

Test monthly tuition revenue against variable costs and fixed overhead for a preschool.

Lean Base Full

Monthly revenue Revenue is the money available to cover direct costs and overhead. $ Lower sales Higher sales Variable expenses These are direct costs that rise as enrollment and activity grow. $ Lower costs Higher costs

Money available to cover fixed costs $66,000 $77,700 revenue - $11,700 variable expenses

Margin ratio

85%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead your margin has to cover. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which preschool expenses stay fixed, and which move with enrollment?

Cost classification

Break-even is only reliable if rent, staffing, supplies, and usage costs are treated by how they actually move. Misclassifying payroll or classroom costs can make Month 1 break-even look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease	Fixed	Keep at $8,000 per month across the planning range.	Spreading rent per child and hiding empty-seat risk.
Insurance	Fixed	Keep at $800 per month unless coverage changes.	Reducing insurance when enrollment is below plan.
Educational Materials	Variable	Model as 5.0% of revenue in the first year.	Treating materials as a flat monthly budget.
Classroom Supplies	Variable	Model as 3.0% of revenue in the first year.	Ignoring higher supply use as classrooms fill.
Marketing & Advertising	Variable	Model as 5.0% of revenue in the first year.	Cutting acquisition spend before occupancy stabilizes.
Ancillary Program Costs	Variable	Model as 2.0% of revenue in the first year.	Forgetting extra activity costs tied to paid programs.
Utilities	Semi-variable	Start with the $1,200 monthly base, then review usage as rooms fill.	Assuming power, water, and heat stay flat at higher occupancy.
Director and classroom staff	Semi-fixed	Model payroll in hiring steps as ratios and rooms change.	Treating payroll as purely variable per enrolled child.

How does break-even shift from lean to full preschool enrollment?

Scenario table

Lean still runs short of fixed-cost coverage, base crosses into a small cushion, and full enrollment creates a much wider buffer. The jump comes from spreading lease and payroll over more children while variable costs rise more slowly.

These are planning assumptions, not guaranteed results; actual enrollment, staffing, and fee collection can move the break-even point.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean Year 1 model	$32.2k	$4.8k	$30.3k	85.0%	-$2.9k	Still below fixed-cost coverage, so break-even risk stays high.
Base Year 2 model	$46.9k	$6.2k	$35.5k	86.7%	$5.2k	Fixed costs are covered, but the cushion is still modest.
Full Year 5 model	$76.4k	$7.0k	$42.7k	90.8%	$26.7k	Higher occupancy gives a strong cushion and lowers break-even risk.

What pushes a preschool below break-even?

Stress test

The plan is fragile once enrollment slips or payroll and rent move up. A 10% revenue drop, a 20% variable-cost load, or a $5k fixed-cost bump can all push the preschool deeper below break-even, and the combined hit is the one to watch.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$427,000	$41,000 gap	The base case is already close to the line.
Revenue shortfall	Revenue falls 10% from the base plan.	$427,000	$68,000 gap	Lower enrollment quickly turns into a bigger annual loss.
Fixed-cost pressure	Fixed costs rise by $5,000.	$471,000	$85,000 gap	Small rent or payroll creep can wipe out the cushion.
Margin pressure	Variable load rises from 15% to 20%.	$454,000	$55,000 gap	Supply and marketing inflation cuts the cushion fast.
Combined pressure	Revenue drops 10%, variable load rises to 20%, and fixed costs rise by $5,000.	$482,000	$135,000 gap	Watch this if waitlist stays below 35, hiring starts early, or licensing is not clear.

Is this preschool ready for a lease and full team?

Founder checklist

Yes—only if you can fill 60% of the 50-seat launch case, hold a 35-child paid waitlist, and still cover about $36.3K a month in payroll and overhead. The model also needs $895K of Month 1 cash before the full build-out and hiring plan is safe.

1Launch fill60% / 30 kids

Verify you can open at 60% occupancy, or about 30 of the 50 Year 1 seats, and still build a 35-child paid waitlist before you lock the full fixed cost base.

2Tuition fit$1.5K/$1.2K/$1.1K

Check that families will accept the Year 1 monthly rates for toddler, preschool, and Pre-K before you sign the lease, because pricing has to support the model from day one.

3Fixed load$36.3K/mo

Verify the Month 1 payroll and overhead load is about $36.3K a month, based on $283K in Year 1 wages plus $12.75K in monthly fixed costs, so the site does not outrun demand.

4Contribution85% CM

Here’s the quick math: 5.0% materials, 3.0% supplies, 5.0% marketing, and 2.0% ancillary costs equal 15% variable cost in Year 1, so about 85% of revenue is left to cover fixed spend.

5Staffing1-2-3-1

Confirm you can hire 1 director, 2 lead teachers, 3 assistant teachers, and 1 support staff in Year 1, because the break-even case depends on that staffing mix being in place.

6Cash floor$895K

Keep at least the Month 1 minimum cash of $895K, and do not start the $91K of classroom, playground, STEAM, security, kitchen, tech, and outdoor setup until enrollment can carry it.