Small Inn Break-Even Analysis: $71K Monthly Revenue Target

Fixed costs $25.5K/mo Core overhead base

Contribution margin 82.5% After variable costs

Break-even revenue $30.9K/mo Monthly target

Break-even timing Month 14 Model crosses zero

Break-even calculator

Test how monthly room revenue, add-on income, variable spend, and fixed overhead affect break-even for a small inn.

Lean Base Full

Monthly revenue Revenue from rooms and add-on sales sets the pool that covers all costs. $ Lower sales Higher sales Variable expenses Direct costs move with stays, supplies, commissions, and other guest-driven sales. $ Lower spend Higher spend

Money available to cover fixed costs $46,700 $54,200 revenue - $7,500 variable expenses

Margin ratio

86%

Covers fixed costs

$10,550 short

Fixed monthly costs Lease, payroll base, and overhead must be covered every month. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which small inn expenses are fixed, and which move with occupied rooms and sales?

Cost classification

Break-even gets more reliable when fixed overhead stays separate from occupancy-linked spend. If laundry, supplies, booking fees, and breakfast inputs get buried in fixed costs, the model overstates margin as occupancy grows.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Lease Payment	Fixed	Include the $15,000 monthly lease in fixed overhead for Month 1 through Month 60.	Spreading lease payments across occupied rooms and understating the room nights needed to break even.
Utilities	Semi-variable	Start with the $3,500 monthly utility load, then sensitivity-test usage as occupancy rises.	Treating all utilities as fixed even though HVAC, laundry, and hot water move with stays.
Food & Beverage Costs	Variable	Apply the first-year 8.0% rate against modeled sales, then use the forecast rates by year.	Putting breakfast inputs and kitchen consumption into overhead instead of tying them to guest volume.
Guest Room Supplies	Variable	Apply the first-year 1.5% rate to room activity, since toiletries and consumables rise with occupied nights.	Budgeting supplies as a flat monthly line while occupancy moves from 55.0% to 82.0%.
OTA Commissions & Marketing	Variable	Apply the first-year 7.0% rate to booking activity, with lower forecast rates in later years.	Treating booking commissions as fixed marketing spend instead of a charge tied to reservations.
Housekeeping Staff	Semi-fixed	Model labor in staffing steps, moving from 2.0 FTE in the first year to 3.0 FTE by the third year.	Assuming housekeeping labor changes smoothly with every occupied room instead of stepping up by headcount.

How does break-even change across lean, base, and full demand for this small inn?

Scenario table

With 17 rooms, a $172 blended ADR, and $13,000 of monthly extra income, fixed costs are only covered near the full-demand case. Lean and base stay below break-even, and the break-even line lands around 66% occupancy if extra income holds.

Planning figures only; actual results will move with occupancy, room mix, and monthly ancillary sales.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean demand case	$52,500	$9,200	$58,750	82.5%	-$15,400	Well below break-even; the model still burns cash.
Base demand case	$61,300	$10,700	$58,750	82.5%	-$8,200	Still below break-even, but the monthly loss is smaller.
Full demand case	$78,900	$13,800	$58,750	82.5%	$6,300	Above break-even; this case creates a small cushion.

What pressure points can push this inn below break-even?

Stress test

Base case is still short of break-even, so weak midweek occupancy is the first risk. Rising booking commissions, higher housekeeping load, and utilities above plan can push the inn deeper into monthly loss.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change in occupancy, ADR, or cost rates.	$69,500	$8,200 gap	Midweek demand is the first watchpoint.
Revenue shortfall	Total revenue falls 10% to about $55,200 a month.	$69,500	$13,200 gap	A small demand miss turns into a larger loss.
Fixed costs up	Monthly fixed costs rise 10% to about $64,600.	$75,300	$14,000 gap	Lease, utilities, or wage creep can break the plan.
Margin pressure	Variable expenses rise from 17.5% to 20.5%.	$71,300	$10,000 gap	Higher commissions or housekeeping spend cut cash fast.
Combined pressure	Revenue falls 10%, fixed costs rise 10%, and variable expenses move to 20.5%.	$75,900	$20,700 gap	Weak demand and cost inflation push cash below break-even.

What should you verify before signing the lease on a small inn?

Founder checklist

Before you sign the lease, confirm the inn can carry its fixed load and still hit break-even. The model needs about $52.8K in monthly fixed costs, Year 1 blended ADR near $172, and occupancy climbing from 55% toward roughly 66% by break-even.

1Fixed Load$52.8K/mo

Check the lease against this base load, because rent, payroll, and overhead already consume about $52.8K each month before launch spend.

2Occupancy Path55% → 66%

Test that occupancy can move from 55% in Year 1 to about 66% at break-even, or the room count will not cover fixed costs.

3Blended ADR$172

Verify room pricing holds a Year 1 blended ADR near $172, because weak rate control pushes break-even out.

4Contribution Margin82.5% CM

Keep variable costs near 17.5% so contribution stays around 82.5%; if OTA, supplies, laundry, or F&B creep up, break-even slips.

5Staffing Ramp7.5 FTE

Confirm the opening roster covers 1 GM, 1.5 front desk, 2 housekeeping, 1 head chef, 1 kitchen, 0.5 spa, and 0.5 marketing FTE.

6Runway Plan$132K + $727K

Fund the $132K launch build separately and keep the $727K minimum cash buffer by Month 24, with permits, insurance, housekeeping cadence, linen flow, channel mix, and a seasonal reserve already set.