SaaS Break-Even Analysis: About $130K MRR by Month 23

Fixed costs $7.3K/mo Office overhead

Contribution margin 90.5% After variable costs

Break-even revenue $8.1K/mo Run-rate target

Break-even timing Month 23 Model break point

Break-even calculator

Test how monthly revenue, variable expenses, and fixed costs shape SaaS break-even.

Lean Base Full

Monthly revenue Revenue sets the pool left after direct costs to cover overhead. $ Low sales High sales Variable expenses Use direct costs that rise with subscriptions, support, and sales. $ Low direct High direct

Money available to cover fixed costs $86,300 $95,000 revenue - $8,700 variable expenses

Margin ratio

91%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead your margin must cover. $ Low overhead High overhead

Break-even chart Revenue Total costs

Which SaaS expenses are fixed, and which move with sales?

Cost classification

Break-even gets more reliable when usage-linked fees, paced marketing, and step-up payroll are separated from true fixed overhead. Misclassifying cloud or support as flat can make Month 23 break-even look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Cloud Infrastructure & Hosting	Variable	Model as 3.0% of revenue in the first year, declining to 2.0% by the fifth year.	Treating hosting as fully fixed while user activity and data volume rise.
Payment Processing Fees	Variable	Model as 1.5% of revenue in the first year, improving to 1.0% by the fifth year.	Forgetting that card fees scale directly with paid subscriptions and transaction revenue.
Sales Commissions	Variable	Model as 4.0% of revenue in the first year, easing to 3.0% by the fifth year.	Putting commissions in fixed payroll and overstating contribution margin.
Third-Party API Usage	Variable	Model as 1.0% of revenue in the first year, declining to 0.6% by the fifth year.	Ignoring per-use vendor charges as customer activity grows.
Annual Marketing Budget	Semi-variable	Pace spend from $250,000 in the first year to $1,100,000 in the fifth year, but treat committed campaigns as burn.	Assuming marketing can be cut instantly after contracts, campaigns, or channels are locked.
CEO, Engineering, Sales, Marketing, and Support Payroll	Semi-fixed	Step payroll up as full-time headcount rises from 4.0 FTE in the first year to 15.0 FTE in the fifth year.	Calling all payroll fixed and missing hiring jumps tied to scale and support load.
Office Rent	Fixed	Carry $3,000 per month from Month 1 through Month 60 within the current planning range.	Linking rent to revenue even though the lease does not move with sales volume.
Internal Software Licenses, Legal & Accounting, Utilities, Insurance, and Admin	Fixed	Carry the monthly overhead base at $4,300 from Month 1 through Month 60.	Spreading small fixed overhead across customers and treating it like usage spend.

How far does break-even move from lean to base to full SaaS scale?

Scenario table

These monthly revenue figures are break-even thresholds, not guaranteed sales. The lean case needs about $845K, the base case about $1.3M, and the full case about $2.5M as fixed costs rise faster than the cushion.

Planning assumptions only; results can shift with churn, pricing, or hiring.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean case, Year 1 run-rate	$845K	$80K	$765K	90.5%	($411K)	Costs are still heavy, so small misses hurt.
Base case, Year 2 run-rate	$1.3M	$116K	$1.2M	91.1%	($167K)	Month 23 is the first break-even signal.
Full case, Year 5 run-rate	$2.5M	$164K	$2.3M	93.4%	$3.1M	Scale creates a clear cushion above fixed overhead.

What breaks first if revenue slips or costs rise?

Stress test

Year 2 is close to a knife edge: $1.301M of monthly revenue covers $1.186M of fixed cost at a 91.1% contribution margin, or what’s left after variable costs. A 10% revenue miss or a 3-point margin squeeze quickly pushes the month into loss.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1.301M	$0 gap	Base plan just clears break-even.
Revenue shortfall	Revenue runs 10% below plan.	$1.301M	$130K gap	A 10% miss pushes the month into loss.
Fixed-cost pressure	Fixed costs increase 10% from the Year 2 base.	$1.431M	$130K gap	Extra overhead adds roughly $130K to break-even revenue.
Margin pressure	Contribution margin falls 3 points to 88.1%.	$1.346M	$45K gap	Small margin slips move break-even faster than the top line.
Combined pressure	Revenue falls 10%, fixed costs rise 10%, and margin drops to 88.1%.	$1.481M	$310K gap	The month is about $272K underwater.

What should a SaaS founder verify before locking in paid growth and sales hiring?

Founder checklist

Before you scale traffic or add sales headcount, prove the funnel can hold at 2.0% visitor-to-trial and 15.0% trial-to-paid. Keep the Year 1 mix at a 90.5% contribution margin and the Month 26 cash floor in view so the Month 23 break-even target does not slip.

1Trial flow2.0%

Verify visitors convert to free trials at 2.0% before you buy more traffic, because weak top-of-funnel flow pushes CAC up fast.

2Close rate15.0%

Keep trial-to-paid conversion at 15.0% or better before adding sales headcount, since the funnel only works if trials close quickly.

3CAC fit$350 vs $124/mo

Use the Year 1 mix price of about $124 a month, not the one-time fees, when you test whether a $350 CAC can pay back cleanly.

4Margin guard90.5% CM

Keep cloud, payment, sales commission, and API costs at 9.5% of revenue or less, or the margin left for growth gets thin fast.

5Burn load$55.6K/mo

Your base burn is about $55.6K a month, so delay nonessential office, tool, and support commitments if break-even slips past Month 23.

6Cash floor$242K

Hold at least $242K in cash through Month 26 and review onboarding time, churn, support tickets, and product usage every week.