Small Business Consulting Break-Even Analysis: $199K Monthly Revenue

Fixed costs $5.2K/mo Core monthly overhead

Contribution margin 79% After variable costs

Break-even revenue $6.6K/mo Monthly target

Break-even timing Month 9 Model break-even point

Break-even calculator

Use this to test monthly consulting revenue against variable costs and the fixed cost base, then see how fast the business reaches break-even.

Lean Base Full

Monthly revenue Revenue is the money available to cover variable costs and then fixed costs. $ Low sales Busy pipeline Variable expenses These are direct costs that rise as client work and sales activity grow. $ Tight costs Heavier costs

Money available to cover fixed costs $18,480 $22,000 revenue - $3,520 variable expenses

Margin ratio

84%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base that contribution margin must cover. $ Lean overhead Larger team

Break-even chart Revenue Total costs

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

Cost classification

Break-even works only when fixed overhead stays separate from revenue-linked delivery costs. In this model, Month 9 break-even depends on covering $5,200 of recurring monthly overhead before variable percentages like commissions, expert fees, and project software.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent (Virtual/Co-working)	Fixed	Include $2,500 in monthly overhead.	Treating it as project delivery expense.
Core Software Subscriptions (customer relationship management and project management)	Fixed	Include $800 even when sales are slow.	Dropping it from break-even during low-volume months.
Professional Liability Insurance	Fixed	Include $350 in base overhead.	Excluding it because clients do not see it.
Legal & Accounting Services	Fixed	Use the recurring $750 monthly amount.	Modeling only one-time filings and missing monthly support.
Utilities & Internet	Semi-fixed	Hold at $400 until team or office use changes.	Treating every dollar as tied to billable hours.
Third-Party Expert Fees	Variable	Apply 2% of first-year revenue to delivery work.	Burying expert fees in overhead.
Project-Specific Software Licenses	Variable	Apply 3% of first-year revenue to client delivery.	Treating delivery tools like core subscriptions.
Sales Commissions & Performance Bonuses	Variable	Apply 8% of first-year revenue outside fixed payroll.	Counting commissions as fixed wages.

How does break-even change across lean, base, and full consulting setups?

Scenario table

Lean break-even is driven by lower payroll and support costs, while the base and full setups need more revenue to cover bigger teams. Retainer mix and more billable hours help margin, but they also sit on a higher cost floor.

Planning figures only; they show modeled break-even assumptions, not guaranteed results.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean consulting setup	$16.6K	$2.7K	$13.9K	84%	$0	Lowest fixed load, so this is the easiest path to break even.
Base team setup	$37.5K	$5.1K	$32.5K	86.5%	$0	Repeat demand can cover the team, but utilization has to stay high.
Full capacity retainer setup	$50.5K	$5.6K	$45.0K	89%	$0	Higher retainer mix gives the best cushion, but payroll lifts the revenue floor.

What breaks the break-even plan for this consulting business?

Stress test

This plan is most vulnerable to slow sales, higher overhead, and weaker pricing. A 10% revenue miss creates about a $17K gap, and a margin dip to 79% pushes break-even to about $211K.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change to pricing, mix, or overhead.	$199K	$0 gap	Base Year 1 only works if sales land as planned.
Revenue shortfall	Revenue falls 10% to about $179K with 84% margin.	$199K	$17K gap	A small sales miss turns break-even into a cash drain.
Fixed-cost pressure	Overhead rises 10% to about $183.7K.	$219K	$17K gap	Sticky payroll or rent lifts the sales bar fast.
Margin pressure	Variable expenses rise from 16% to 21%, so contribution margin falls to 79%.	$211K	$10K gap	Discounts or contractor use make each dollar work less.
Combined pressure	Revenue slips to about $179K, overhead rises 10%, and margin falls to 79%.	$233K	$42K gap	Slow sales plus cost creep creates a sharp monthly hole.

Can this consulting firm cover its fixed load before you sign a lease and add staff?

Founder checklist

Treat Month 9 break-even as the gate. If the pipeline can’t support $199K a month at Year 1 rates, don’t sign more space or add headcount; the model still needs $846K minimum cash by Month 18 and pays back in 28 months.

1Demand pipeline$199K/mo

Verify booked client work can reach this monthly revenue before you commit to higher overhead, because Month 9 break-even depends on real pipeline, not hope.

2Margin check84% CM

Keep Year 1 contribution margin at about 84% by controlling software, expert fees, commissions, and travel, or discounting will slow break-even fast.

3Fixed load$15.2K/mo

Make sure the current run rate stays near this level, because Year 2 adds about $13.75K a month in salary step-up and that hire should wait for recurring revenue.

4Delivery ramp10.0 hrs

Confirm the team can absorb the retainer workload, since Retainer Advisory rises from 15% of mix in Year 1 to 42% in Year 5 and needs contractor backup for expert work.

5Cash buffer$846K

Hold this much cash for the Month 18 low point, because the model’s minimum cash need comes before the business fully catches up on payback.

6Launch CAC$550 CAC

Check that Year 1 acquisition cost stays near $550 and client travel stays at 3% of revenue, or early sales spend will stretch the path to break-even.