Break-Even Analysis For A Restoration And Renovation Business: $35K/Month

Fixed costs $25.3K/mo Year 1 base

Contribution margin 71.5% After variable spend

Break-even revenue $35.4K/mo Monthly target

Break-even timing Month 4 Ramp point

Break-even calculator

Use this to test monthly revenue against variable expenses and fixed costs, then see where break-even lands.

Lean Base Full

Monthly revenue Revenue sets the pool that covers costs each month. $ Lower sales Higher sales Variable expenses These are direct project costs that rise with sales, like materials, subcontract labor, marketing, and software. $ Lower costs Higher costs

Money available to cover fixed costs $389,751 $512,830 revenue - $123,079 variable expenses

Margin ratio

76%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead the business must cover before profit starts. $ Lean overhead Higher overhead

Break-even chart Revenue Total costs

Which expenses are fixed, variable, semi-variable, or semi-fixed before this renovation business calculates break-even?

Cost classification

Break-even is only useful if each expense behaves the right way in the model. Materials, subcontractors, fuel, software, and crew capacity don’t move the same, so separate overhead from job-driven spend first.

Expense	Cost	Break-Even Treatment	Common Mistake
Office/showroom rent	Fixed	Use $3,500 per month in fixed overhead from Month 1 through Month 60.	Spreading rent across jobs and making margins look cleaner than cash flow.
Utilities, insurance, office supplies, accounting/legal, and CRM subscriptions	Fixed	Include $2,300 per month in fixed overhead before adding job-level costs.	Leaving small monthly overhead out because each line feels minor.
Direct materials: building supplies and devices	Variable	Model as 14.0% of revenue in the first year, falling to 10.0% by the mature year.	Treating materials like overhead instead of tying them to each project.
Subcontractor labor	Variable	Model as 9.0% of revenue in the first year, falling to 7.0% by the mature year.	Combining subcontractors with employee wages and hiding true job margin.
Project-specific software licenses	Variable	Use 1.5% of revenue in the first year, declining to 0.7% by the mature year.	Putting all software in fixed overhead even when licenses are project-specific.
Vehicle maintenance and fuel	Semi-variable	Start with the $1,200 monthly base, then review when route volume and crew trips rise.	Treating fuel like rent even though job count and distance drive usage.
Marketing and advertising	Semi-variable	Separate planned annual spend from the sales-linked 4.0% first-year assumption.	Using only customer acquisition spend and ignoring revenue-based campaign costs.
Skilled technician and junior technician hiring	Semi-fixed	Add labor in staffing steps as capacity grows, including the junior technician from Month 7.	Treating crew wages, fuel, permits, rentals, and subcontractors as one bucket.

How does break-even change as the restoration team moves from lean to full staffing?

Scenario table

Break-even shifts as payroll and subcontractor use change the cost base. Lean needs less revenue to cover overhead, the base case reaches the model’s Month 4 break-even, and the full team only works if higher-value jobs keep the bench busy.

Planning case only: project mix, subcontractor reliance, and staffing can move break-even up or down.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean setup: founder + 1 skilled technician	$325K	$92K	$233K	71.5%	$0	Lower overhead helps, but subcontractor-heavy work still keeps the cushion tight.
Base setup: founder + junior technician load	$354K	$101K	$253K	71.5%	$0	This is the model's break-even case, and Month 4 is the key checkpoint.
Full setup: Year 3 team mix	$695K	$167K	$528K	76.0%	$0	Higher capacity helps, but the bigger payroll makes break-even much less forgiving.

What breaks the break-even plan for a restoration and renovation business?

Stress test

The plan can look safe on paper and still flip to a loss if projects start late, labor runs over, or materials come in above estimate. The base case leaves only about a $33K operating cushion, so small misses matter.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$354K	$46K cushion	Thin cushion, so delays matter.
Revenue shortfall	Revenue drops 10% to $360K a month.	$354K	$6K cushion	A small miss almost erases slack.
Fixed-cost pressure	Fixed costs rise 10% to about $279K a month.	$390K	$10K cushion	Overhead growth pushes break-even up fast.
Margin pressure	Variable expenses rise from 28.5% to 33.5%.	$381K	$19K cushion	Labor or materials inflation cuts contribution.
Combined pressure	Revenue falls to $360K, variable expenses rise to 33.5%, and fixed costs rise 10%.	$420K	$60K gap	This turns a near-even month into a loss.

Is your backlog big enough to clear the $354K monthly break-even point before you lock in the showroom, vans, and hires?

Founder checklist

Before you sign the big commitments, make sure signed or high-confidence work can cover the $354K monthly break-even point. If the pipeline is thinner than that, keep spend light and delay the next vehicle, showroom upgrade, or hire.

1Backlog Cover$354K/mo

Verify signed and high-confidence jobs can cover monthly break-even, because this model only scales cleanly once demand outruns fixed payroll and overhead.

2Overhead Load$25.3K/mo

Check that rent, utilities, insurance, fuel, supplies, and Year 1 payroll stay supportable before you add more fixed space or admin.

3Margin Mix71.5% CM

Use Year 1 cost ratios to confirm contribution margin stays near 71.5%; if supplier quotes or subcontractor rates drift, break-even moves fast.

4Crew Ramp1.0→5.0 FTE

Match hiring to the billable-hour ramp, because skilled technician capacity rises from 1.0 FTE to 5.0 FTE and junior support starts in Month 7.

5Cash Cushion$810K

Hold at least $810K before launch, because minimum cash hits Month 2 and the model does not reach breakeven until Month 4.

6Launch Demand$500 CAC

Check whether estimates close fast enough to justify the $25K Year 1 marketing budget and the $500 customer acquisition cost, or the pipeline will not refill in time.