Retirement Home Break-Even Analysis: $152K Monthly Revenue Target

Fixed costs $54.5K/mo Core monthly base

Contribution margin 84% After variable costs

Break-even revenue $64.9K/mo Monthly revenue floor

Break-even timing Month 2 Model break-even point

Break-even calculator

Use this calculator to test monthly revenue, variable expenses, and fixed costs against break-even.

Lean Base Full

Monthly revenue Revenue drives the margin available to cover fixed costs. $ Low revenue High revenue Variable expenses Food, care supplies, sales commissions, and wellness supplies rise with occupancy and services. $ Lower costs Higher costs

Money available to cover fixed costs $423,827 $452,053 revenue - $28,226 variable expenses

Margin ratio

94%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead that contribution margin must cover. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which retirement home expenses are fixed and which move with sales?

Cost classification

Break-even only works if each expense matches how it behaves. Treat fixed bills, revenue-linked supplies, and staffing step-ups correctly so the Month 2 break-even target isn’t overstated or understated.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Taxes	Fixed	Use $15,000 per month in the base break-even load.	Tying the bill to resident count.
Utilities	Semi-fixed	Start with the $10,000 per month baseline, then review step-ups as occupancy rises.	Treating all usage as per-resident.
Property & Liability Insurance	Fixed	Use $8,000 per month across the planning range.	Spreading it only across occupied rooms.
Food & Dining Supplies	Variable	Use 8.0% of first-year revenue for dining supply load.	Burying dining supplies in overhead.
Direct Care Supplies	Variable	Use 2.0% of first-year revenue and watch care package mix.	Ignoring the mix of care service packages.
Care Staff (Aides/Nurses)	Semi-variable	Model $45,000 salary per FTE, rising from 5.0 FTE in the first year to 18.0 FTE in Year 5.	Waiting too long to add coverage.
Hospitality Staff (Dining/Housekeeping)	Semi-variable	Model $35,000 salary per FTE, rising from 4.0 FTE in the first year to 14.0 FTE in Year 5.	Modeling labor as purely fixed.
Facility Maintenance & Repairs	Semi-fixed	Use the $7,000 per month baseline and add step-ups when occupancy strains the building.	Missing repairs that rise with operating scale.

How does break-even shift from a lean opening month to full capacity?

Scenario table

Break-even improves as occupancy rises because revenue grows faster than variable costs while fixed staffing stays fairly contained. The lean case is profitable already, but the cushion gets much wider in the base and full cases.

Planning assumptions only; these figures are directional and can shift with occupancy, wages, and service mix.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening case	$2.06M	$0.33M	$1.27M	84%	$0.46M	Already above break-even, but the cushion is still tight.
Stabilized base case	$7.12M	$0.82M	$1.81M	88.5%	$4.49M	Comfortable margin of safety; this is the main break-even planning point.
Full capacity case	$10.27M	$1.08M	$2.17M	89.4%	$7.01M	Very wide cushion; the main risk shifts to staffing and service control.

What breaks the break-even plan if occupancy slips or costs rise?

Stress test

Year 1 clears break-even, but the cushion gets thin if occupancy slips or payroll and food costs rise. A 10% revenue drop, a 10% fixed-cost jump, or a 5-point margin hit each cuts the safety net fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1.52M	$458k cushion	Year 1 is profitable, but the cushion is not wide.
Revenue shortfall	Revenue falls 10% to $1.86M.	$1.52M	$285k cushion	A modest occupancy miss still clears break-even, but less comfortably.
Fixed-cost pressure	Fixed costs rise 10% to $1.40M.	$1.67M	$330k cushion	Property tax, utilities, and upkeep can move the line fast.
Margin pressure	Variable expenses rise 5 points to 21%.	$1.61M	$355k cushion	Food, dining, and care supplies eat into break-even room.
Combined pressure	Revenue falls 10%, variable load rises to 21%, and fixed costs rise 10%.	$1.78M	$65k cushion	This leaves almost no room for error; one more slip pushes it to the edge.

What should you verify before you sign the lease and open a retirement home?

Founder checklist

Don’t sign the lease or start the buildout until you can show 30 first-year residents, 26 dining plans, and a cost base that fits the model. Here’s the quick math: Year 1 runs about $127.4K a month in fixed costs, and cash dips to negative $180K in Month 8.

1Resident base30 residents

Confirm 20 independent living units at $54,000 each and 10 assisted living suites at $78,000 each in Year 1, or the opening census won’t support the lease.

2Dining take-up26 plans

Verify 26 dining plans at $14,400 each in Year 1, because meal volume helps pay for kitchen labor and food supply costs.

3Margin cushion$414K

Check that Year 1 still leaves about $414K after food, care supplies, commissions, and payroll; that cushion makes the Month 2 break-even claim believable.

4Monthly load$127.4K/mo

Verify property taxes, utilities, insurance, software, admin, and Year 1 wages total about $127.4K per month, so the census has to clear this hurdle early.

5Staffing ramp15 to 40 FTE

Confirm you can scale from 15 total FTE in Year 1 to 40 total FTE by Year 5, because labor has to grow with occupancy and service levels.

6Cash trough-$180K

Keep reserves through the Month 8 low point of negative $180K and the $1.355M launch buildout, or cash pressure will hit before payback.