Professional Employer Organization Break-Even Analysis: $89k Monthly Revenue

Fixed costs $15.9K Monthly base overhead

Contribution margin 90.5% After variable fees

Break-even revenue $81.3K Monthly target

Break-even timing Month 6 Model payback point

Break-even calculator

Test monthly revenue, variable expenses, and fixed monthly costs to see where this HR outsourcing model breaks even.

Lean Base Full

Monthly revenue Revenue sets the gross cash pool that covers variable cost and overhead. $ Lower sales Higher sales Variable expenses Direct costs like commissions and processing rise with each dollar booked. $ Lower direct cost Higher direct cost

Money available to cover fixed costs $333,500 $364,500 revenue - $31,000 variable expenses

Margin ratio

91%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead break-even must absorb before profit. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in this HR outsourcing business?

Cost classification

Break-even is only useful if fees that rise with service revenue stay out of fixed overhead. Here, misclassifying 4.5% transaction fees or 5.0% commissions can distort the Month 6 break-even read.

Expense	Cost	Break-Even Treatment	Common Mistake
Platform Transaction and ACH Fees	Variable	Apply 4.5% to Year 1 service revenue.	Applying fees to client payroll pass-through funds.
Sales Commissions and Referral Fees	Variable	Apply 5.0% to Year 1 service revenue.	Burying commissions inside fixed payroll.
Hybrid Office Hub Rent	Fixed	Include $6,500 per month in recurring overhead.	Scaling rent directly with each new client.
Core HR Platform Licensing	Fixed	Include $3,200 per month as minimum platform spend.	Ignoring the base contract commitment.
Professional Liability Insurance	Fixed	Include $1,800 per month from Month 1.	Treating coverage as optional after launch.
Cloud Infrastructure and Security	Fixed	Include $2,100 per month in operating overhead.	Waiting to fund security until volume arrives.
Staff Roles	Semi-fixed	Model Year 1 wages at about $47,667 per month.	Adding clients before service capacity is staffed.
Annual Marketing Budget	Semi-fixed	Use $120,000 in Year 1, or $10,000 per month.	Tracking spend without the $1,200 CAC target.

How does break-even change from a lean launch to base and full scale in a professional employer organization?

Scenario table

Break-even gets easier as revenue rises and the variable cost rate slips from 9.5% to 8.5%. Still, fixed payroll and overhead rise fast, so the lean case stays tight and the full case has the widest cushion.

Planning assumptions only; payroll and benefits pass-through funds are excluded.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch case	$111.3k	$10.6k	$63.6k	90.5%	$37.1k	Small cushion, so launch discipline matters.
Base hiring-control case	$238.1k	$21.4k	$85.8k	91.0%	$130.8k	Strong cushion, but hiring still needs control.
Full scale capacity case	$826.1k	$70.2k	$190.6k	91.5%	$565.3k	Wide buffer, so focus shifts to capacity planning.

What breaks this break-even plan if sales slow or costs step up?

Stress test

Year 1 has cushion, but it can disappear fast: a $10,000 monthly revenue miss cuts annual contribution by about $108,600, and a $10,000 monthly overhead bump lifts break-even by about $132,600. Watch CAC above $1,200 and cash near the $721,000 low point in Month 6.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,074,000	$261,000 cushion	Base case clears break-even, but the cash buffer is not huge.
Revenue shortfall	Year 1 revenue runs $10,000 lower per month.	$1,074,000	$141,000 cushion	A $120,000 annual sales miss cuts the cushion fast.
Fixed-cost increase	Monthly overhead rises $10,000.	$1,206,000	$129,000 cushion	Another $10,000 a month of overhead adds real break-even drag.
Margin pressure	Variable expense rises 1 point, from 9.5% to 10.5%.	$1,085,000	$250,000 cushion	A 1-point margin slip trims room, then compounds with scale.
Combined pressure	Revenue falls $10,000 per month, overhead rises $10,000, and margin drops 1 point.	$1,219,000	$4,000 gap	This is the edge case that can crack the Month 6 cash plan.

Is this professional employer organization ready to hire ahead and commit more launch cash?

Founder checklist

Only move ahead if signed demand, CAC, cash, and delivery capacity all line up with the model. The break-even date is Month 6, so don’t add headcount or fixed tools until the pipeline can support Year 1 revenue and the $721K cash floor.

1Client volume50 clients

Confirm signed or near-signed work can reach about $111K a month, which is roughly 50 clients at the $2,225 weighted fee mix, or break-even slips past Month 6.

2CAC target$1,200

Keep customer acquisition cost near the $1,200 model before you scale the $120K Year 1 marketing budget, or paid growth will outrun the revenue it brings in.

3Base overhead$63.6K/mo

Check that $15.9K a month of fixed spend plus about $47.7K a month of Year 1 wages is covered, because that is the core load before variable fees.

4Workflow stack4 workflows

Lock payroll management, HR advisory, benefits administration, and compliance audit workflows before volume rises, because slow onboarding turns into support backlog fast.

5Cash cushion$721K

Hold enough working capital to clear the $721K minimum cash point in Month 6, since the model needs that reserve before it reaches break-even.

6Capex gate$115K

Release the first $115K of capex only when security, software customization, hardware, and onboarding capacity are ready; otherwise you lock in spend before it speeds delivery.