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Short Circuit Analysis Service Break-Even: $72K Monthly Revenue


You’re carrying licensed Professional Engineer (PE) payroll before demand is steady, so the short circuit analysis service break-even revenue is about $72K per month under the Year 1 planning case Here’s the quick math: listed fixed monthly costs are about $518K, and variable delivery expenses run 28% of revenue, leaving a 72% contribution margin, meaning revenue left after project-level delivery costs Break-even revenue is $518K / 72%, or about $72K in monthly bookings The model reaches break-even in Month 10, but Year 1 still shows $663K revenue and negative $194K EBITDA, so early cash cushion matters



Fixed costs $10.8K/mo recurring overhead
Contribution margin 72% after direct costs
Break-even revenue $15.0K/mo monthly target
Break-even timing Month 10 forecast break-even

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Which expenses are fixed, variable, or capacity-driven for a short circuit analysis service?

Cost classification

Break-even is only useful if each expense follows the right volume driver. In the first operating year, fixed overhead runs $10,800/month before labor, while several project costs rise with revenue or capacity.

Expense Cost Break-Even Treatment Common Mistake
Professional Liability Insurance Fixed Use $2,500/month from Month 1 through Month 60. Spreading it by project and hiding the true monthly hurdle.
Office Rent and Utilities Fixed Use $4,200/month within the current office capacity range. Assuming rent falls when project volume dips.
IT Infrastructure and Security Fixed Use $1,200/month as baseline operating overhead. Treating core security tools as optional project spend.
Administrative Support Services Fixed Use $1,500/month to cover recurring coordination support. Leaving admin support out of break-even because it is not engineering labor.
Project Travel and Site Visits Variable Model as 5.0% of first-year revenue, then adjust by year. Using one flat travel budget despite changing project volume.
Sales Commissions and Referral Fees Variable Model as 5.0% of first-year revenue, tied to booked work. Counting referral fees as fixed marketing overhead.
Subcontracted Drafting Services Semi-variable Model as 6.0% of first-year revenue because drafting expands with workload. Treating drafting as fully fixed even when drawings and revisions rise.
Software Subscription Fees Semi-fixed Model as 12.0% of first-year revenue, with capacity checks as users and models increase. Treating all software, professional engineer review, and proposal labor as fixed.

How does break-even change from the lean ramp to the base scale-up and the full mature plan?

Scenario table

Break-even improves as revenue rises faster than variable costs, but fixed payroll and overhead also climb. The base case is the tightest point; the full case has the widest cushion.

Planning cases only; actual results will move with billable hours, staffing, and client mix.
Scenario Monthly Revenue Variable Costs Fixed Costs CM Ratio Operating Profit Break-Even Signal
Lean ramp, Year 1 $55.3K $15.5K $55.9K 72.0% -$16.2K Below break-even, so launch cash stays tight.
Base scale-up, Year 2 $107.0K $27.3K $80.2K 74.5% -$0.5K Near break-even around Month 10, so utilization has to stay disciplined.
Full mature plan, Year 5 $307.6K $60.0K $140.2K 80.5% $107.4K Well above break-even, with room for slower collections and a bigger team.

What breaks the break-even plan for this short circuit analysis service?

Stress test

Year 1 is close to break-even, but the cushion is thin. At about $67K in monthly break-even revenue, a 10% booking miss or Year 2 overhead jump can widen the gap fast.

Stress Case Changed Assumption Break-Even Revenue Revenue Gap Risk Signal
Current plan No change. $67K $12K gap Only a small buffer sits above break-even.
Revenue shortfall Year 1 revenue runs 10% below plan. $67K $17K gap Lower proposal conversion eats the cushion quickly.
Fixed-cost increase Year 2 fixed costs rise to about $780K a year. $90K $35K gap Added staffing and overhead move break-even up hard.
Margin pressure Variable expenses rise from 28% to 32% of revenue. $71K $16K gap More software, drafting, or rework spend cuts contribution.
Combined pressure Year 1 revenue runs 10% below plan and Year 2 fixed costs are in place. $90K $41K gap Thin demand plus heavier overhead stretches cash the most.

What should you verify before locking in payroll, software, and office spend?

Founder checklist

Confirm booked work can carry the team through the Month 10 break-even point before the business development role reaches full run rate. If pipeline or cash slips, delay the fixed spend, because this model only pays off after demand and capacity line up.

1Demand ProofMonth 10

Verify booked proposals can cover the break-even month before the sales role moves to full run rate.

2Fixed Load$10.8K/mo

Hold the office lease until remote delivery proves out, because fixed overhead already runs $10.8K a month before wages.

3Contribution72.0% CM

Check that Year 1 work keeps about 72.0% contribution margin before payroll, since software, drafting, travel, and referral fees take 28.0%.

4Capacity Ramp18.5 hrs

Verify each active customer really uses 18.5 billable hours a month in Year 1 and that staffing can stretch to 22.5 by Year 5.

5Cash Cushion$544K

Keep cash above the $544K floor, because the low point hits Month 20 and you still need room for hiring and equipment.

6Launch Mix90/75/60/40

Use the opening mix to stage spend: 90.0% fault current studies, 75.0% protective coordination, 60.0% arc flash analysis, and 40.0% system modeling.