Quilt Shop Break-Even Analysis: ~$177K Monthly Revenue Target

Fixed costs $5.1K/mo Month 1 base

Contribution margin 82.5% After variable

Break-even revenue $6.2K/mo Sales target

Break-even timing Month 37 Model month

Break-even calculator

Use this to test monthly revenue against variable expenses and the fixed cost base.

Lean Base Full

Monthly revenue Revenue sets the pool available to cover variable costs and fixed overhead. $ Soft start Busy shop Variable expenses These costs rise with sales, like inventory, card fees, and campaign spend. $ Lean costs Busy costs

Money available to cover fixed costs $30,528 $36,000 revenue - $5,472 variable expenses

Margin ratio

85%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead the shop must cover before profit. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which quilt shop expenses are fixed, variable, semi-variable, or semi-fixed for break-even?

Cost classification

Break-even gets reliable when rent, payroll steps, and sales-linked costs sit in the right buckets. Misclassifying inventory or fees can make Month 37 break-even look easier than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Commercial rent	Fixed	Use $3,500 per month as overhead before contribution margin.	Spreading rent across units and hiding true monthly overhead.
Business insurance	Fixed	Use $150 per month in fixed operating overhead.	Dropping small fixed bills because they feel immaterial.
POS and software subscriptions	Fixed	Use $200 per month as a recurring fixed expense.	Treating the subscription like a payment fee tied to each sale.
Utilities	Semi-variable	Start with the $500 monthly base, then add usage pressure as workshops grow.	Assuming utilities stay flat when class activity increases.
Wholesale goods cost	Variable	Apply 12.0% of first-year sales, declining to 10.0% by the fifth year.	Treating the $20,000 initial inventory purchase as fixed overhead.
Workshop materials	Variable	Apply 1.0% of first-year sales, declining to 0.6% by the fifth year.	Ignoring material use as workshop mix rises from 20.0% to 40.0%.
Payment processing fees	Variable	Apply 2.5% of first-year sales, declining to 2.1% by the fifth year.	Budgeting card fees as a flat monthly bill.
Retail associate payroll	Semi-fixed	Model staffing in FTE steps: 1.0 in the first year, 1.5 in the third year, and 2.0 in the fifth year.	Scaling payroll smoothly with sales instead of adding headcount in jumps.

How does break-even shift from a lean quilt shop to a full-service one?

Scenario table

Workshops lift the basket and the margin, but they also add instructor payroll and materials. So break-even sales rise as the shop gets fuller-service, even while the CM ratio improves.

Planning assumptions only; actual break-even will move with traffic, mix, and payroll.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean shop, Year 1	$177K	$31K	$146K	82.5%	$0	At this level, the shop is just covering costs.
Core shop, Year 3	$226K	$36K	$190K	84.0%	$0	This is the main break-even target, with a thin cushion.
Full-service shop, Year 5	$255K	$37K	$218K	85.6%	$0	Better margin helps, but higher payroll still keeps the bar high.

What breaks the quilt shop break-even plan?

Stress test

Year 1 breaks even at about $177,000 of revenue, against roughly $146,000 of fixed costs, so the cushion is thin. A 10% traffic miss, a 10% rent or payroll jump, or 5 points of extra margin pressure can push it into a loss.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change to the base case.	$177,000	$0 cushion	The plan has almost no room for a miss.
Revenue shortfall	Revenue drops 10% to about $159,300.	$177,000	$14,600 loss	Weaker weekday traffic pushes the shop below break-even.
Fixed-cost pressure	Rent or payroll rises 10%.	$194,700	$14,600 loss	Higher overhead needs more sales just to stand still.
Margin pressure	Variable expenses rise 5 points to 22.5%.	$188,400	$8,100 loss	Discounting or mix shift cuts contribution fast.
Combined pressure	Revenue drops 10%, variable expenses rise to 22.5%, and fixed costs rise 10%.	$207,200	$37,300 loss	Weak traffic plus higher costs blows past break-even.

Is your quilt shop ready for the lease, inventory, and staff ramp?

Founder checklist

Before you sign the lease and place the first deep inventory order, test Year 1 demand, rent, and cash against the model. This shop does not reach breakeven until Month 37, so the opening plan has to survive a long burn.

1Visitor flow160/wk

Verify the location can draw 160 weekly visitors and convert 15.0% of them into buyers, which is 24 new buyers a week, because softer traffic makes the lease harder to carry.

2Rent load$3.5K/mo

Confirm the $3,500 monthly rent fits the fixed base, because total nonpayroll overhead is $5,075 a month and that floor has to be covered before profit starts.

3Margin mix82.5% CM

Check that Year 1 mix and variable costs leave about 82.5% contribution margin (what’s left after variable costs) after 12.0% wholesale, 1.0% workshop materials, 2.5% payment fees, and 2.0% marketing; that margin funds rent and payroll.

4Staffing ramp2.5 FTE

Verify the opening team can run at 2.5 full-time equivalents: one manager, one associate, and a half-time instructor; that stack is $114.5K a year before owner pay and supports workshops at 20.0% of Year 1 sales.

5Cash runway$472K

Hold enough cash to absorb losses through Month 37, because minimum cash reaches $472K and breakeven does not arrive until then.

6Launch build$77.5K

Make sure the launch budget covers the full $77.5K build: $30K build-out, $20K initial inventory, $8K workshop equipment, $6K website, $4K POS hardware, $5K signage, $3K office gear, and $1.5K security; secure supplier terms before deep fabric buys.