Psychologist Break-Even Analysis: $63K Monthly Revenue Target

Fixed costs $5.7K Monthly overhead

Contribution margin 87% After variable costs

Break-even revenue $6.5K Revenue threshold

Break-even timing Month 14 Model breakeven

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs against break-even for a psychologist practice.

Lean Base Full

Monthly revenue Revenue sets the margin available to cover fixed costs. $ Slow month Strong month Variable expenses These are direct costs that rise with session volume and intake flow. $ Low costs High costs

Money available to cover fixed costs $172,217 $196,147 revenue - $23,930 variable expenses

Margin ratio

88%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base your margin has to cover. $ Lean overhead Heavy overhead

Break-even chart Revenue Total costs

Which psychologist practice expenses are fixed, and which move with session revenue?

Cost classification

Break-even gets shaky when fixed overhead is treated like session volume, or revenue-linked fees are buried in overhead. Classify each line correctly so Month 14 break-even reflects real practice economics.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Include $4,000 every month before calculating required sessions.	Tying rent to session count instead of capacity.
EHR Software Subscription	Fixed	Include $300 monthly overhead separate from EHR transaction fees.	Combining subscription and usage fees into one line.
Telehealth Platform Subscription	Fixed	Include $200 monthly overhead even when virtual session volume is low.	Treating the platform subscription as a per-session charge.
Payment Processing Fees	Variable	Apply the modeled revenue rate, starting at 1.5% in the first year.	Leaving card fees out of contribution margin.
EHR System Transaction Fees	Variable	Apply the modeled revenue rate, starting at 0.5% in the first year.	Counting only the monthly EHR subscription.
Marketing & Advertising	Variable	Model as revenue-linked spend, starting at 8.0% in the first year.	Freezing marketing while assuming faster intake growth.
Administrative Assistant and Billing Specialist payroll	Semi-variable	Scale support payroll with workload as FTE rises by year.	Modeling admin support as either fully fixed or per-session only.
Clinician payroll	Semi-fixed	Add therapist FTE in annual steps by specialty, not per individual session.	Hiring clinicians one session at a time in the model.

How does break-even change from the lean launch plan to the staffed base plan and the expanded full plan?

Scenario table

As the service mix scales and staffing fills out, fixed overhead rises faster than launch revenue, but the contribution margin also improves. That’s why the lean plan stays under water while the base and full plans build real break-even cushion.

Planning figures are model assumptions, not guarantees, so actual break-even will move with case mix, no-shows, and staffing pace.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch plan	$515K	$67K	$546K	87.0%	-$98K	Still below break-even, so cash control matters most.
Base staffed plan	$1,279K	$156K	$936K	87.8%	$187K	Past break-even, with a modest monthly profit cushion.
Full expanded plan	$2,272K	$255K	$1,371K	88.8%	$646K	Well above break-even, so the scale plan has room for shocks.

What pushes this psychologist practice below break-even?

Stress test

Year 1 is already tight: $515K revenue against $546K fixed overhead leaves a $98K operating gap after variable costs. A 10% revenue dip, higher rent, or slower insurance collections pushes the practice further below break-even.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	Year 1 revenue is $515K, margin is 87%, and fixed overhead is $546K.	$628K	$98K gap	Cash burn lasts past Month 14.
Revenue shortfall	Revenue falls 10% to $464K while margin and fixed overhead stay the same.	$628K	$142K gap	Low booked sessions widen the launch gap.
Fixed-cost pressure	Fixed overhead rises by $20K to $566K.	$651K	$118K gap	Rent creep pushes break-even out.
Margin pressure	Variable costs rise from 13% to 16%, so margin slips to 84%.	$650K	$113K gap	Higher referral fees and processing fees thin contribution.
Combined pressure	Revenue falls to $464K, margin drops to 84%, and fixed overhead rises to $566K.	$674K	$176K gap	Slow insurance collections and weak volume can drain cash fast.

Can this practice prove enough demand and cash before signing the lease and hiring ahead?

Founder checklist

Don’t lock in the lease or add staff until booked demand, billing flow, and cash runway clear the Year 1 model. You need about 319 sessions a month to cover overhead, versus about 262 booked sessions a month in Year 1, so the gap is real.

1Demand proof319 vs 262/mo

Verify referral sources and intake volume can add about 57 booked sessions a month, because Year 1 modeled demand is about 262 sessions and break-even needs about 319.

2Monthly load$54.6K/mo

Check that rent, utilities, software, insurance, and payroll can fit a $54.6K monthly load, including $4,000 rent and about $48.96K in wages.

3Fee drag13% variable

Keep payment processing, EHR transaction fees, marketing, and referral costs near 13% of revenue so contribution stays around 87% before fixed costs.

4Workflow setupPre-launch

Set documentation, scheduling, and EHR workflows before the first client so notes and billing do not slow collections or create rework.

5Staff ramp0.5 FTE

Test whether the therapist mix can carry individual, couples, family, child adolescent, and later group sessions before you add nonessential hiring, especially billing support.

6Cash runway$666K min

Hold cash for the Year 1 EBITDA loss of $208K and the $666K minimum cash point in Month 24; keep the $49K startup build separate and watch Month 14 as the first break-even checkpoint.