Tire Recycling Break-Even Analysis: About $83K/Month

Fixed costs $26.0K/mo Monthly fixed base

Contribution margin 81.1% After variable costs

Break-even revenue $32.1K/mo Cover fixed costs

Break-even timing Month 1 Model break-even point

Break-even calculator

Use this calculator to test monthly revenue, variable expenses, and fixed monthly costs against break-even for a tire recycling plant.

Lean Base Full

Monthly revenue Revenue from recycled material sales drives the margin left for fixed costs. $ Low sales High sales Variable expenses These are the direct costs that rise as processed volume and shipments grow. $ Light costs Heavy costs

Money available to cover fixed costs $169,667 $216,667 revenue - $47,000 variable expenses

Margin ratio

78%

Covers fixed costs

Yes

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

Break-even chart Revenue Total costs

Which tire recycling expenses stay fixed, and which move with tons processed?

Cost classification

Because the model shows break-even in Month 1, the fixed-variable split must be clean. Treat tire collection, processing labor, wear parts, freight, and commissions as volume-linked, or contribution margin will look too high.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Rent	Fixed	Include $15,000 per month in fixed overhead from Month 1 through Month 60.	Spreading rent per unit and making break-even look better as volume rises.
Insurance	Fixed	Include $2,500 per month in fixed overhead across the planning range.	Dropping insurance below EBITDA because it does not touch production directly.
Utilities Plant	Semi-variable	Model the $4,000 monthly base separately from energy tied to processing output.	Treating all power as fixed and missing higher usage when throughput rises.
Tire Collection	Variable	Apply $5 to $10 per unit based on product line before contribution margin.	Using one blended rate and hiding product mix changes.
Direct Processing Labor	Variable	Apply the product-level labor percentages to revenue as units are processed and sold.	Putting direct processing labor into fixed payroll.
Equipment Wear	Variable	Apply wear rates by product, such as 1.0% for Fine Crumb Rubber and 0.7% for Recycled Steel.	Treating wear parts like general maintenance instead of volume-driven expense.
Logistics & Transportation	Variable	Use 5.0% of first year revenue, stepping down to 3.0% by the fifth year.	Modeling freight as a flat monthly bill while shipments grow.
Salaried Supervision and Admin	Semi-fixed	Model staffing in steps as full-time equivalents rise, especially sales, quality control, and general labor.	Treating every payroll dollar as variable direct labor.

How does break-even change from a lean Year 1 plant to a full Year 5 operation?

Scenario table

Here’s the quick math: revenue rises faster than fixed overhead, while variable costs stay near 12% of sales. That keeps the contribution margin near 88% and makes break-even easier as the plant scales.

Planning assumptions only; actual results will move with tire mix, pricing, and plant efficiency.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean Year 1 plant	$216.7k	$25.7k	$67.7k	88.1%	$164.9k	Sales sit about 2.8x above break-even.
Base Year 2 plant	$349.8k	$40.9k	$77.3k	88.3%	$231.6k	Higher volume gives a wider cushion than Year 1.
Full Year 5 plant	$782.0k	$88.0k	$87.3k	88.7%	$606.7k	Fixed costs are a much smaller share, so break-even risk is lowest.

What breaks the break-even plan if tire recycling volume or pricing slips?

Stress test

The base plan clears break-even by a wide margin, but the cushion is exposed to weaker crumb rubber demand, higher hauling and power costs, and repair downtime. A deeper sales drop plus cost creep can turn that buffer into a gap.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	Base Year 1 revenue and costs stay unchanged.	$834K	about $1,333K cushion	Wide buffer if plant uptime holds.
Revenue shortfall	Revenue falls 25% while margin stays flat.	$834K	about $641K cushion	Sales soften, but break-even is still covered.
Fixed-cost pressure	Fixed overhead rises 20% from the base run rate.	$1,001K	about $1,166K cushion	Higher rent, utilities, or compliance costs shrink the buffer.
Margin pressure	Variable expenses rise 10 points on revenue.	$951K	about $1,216K cushion	Longer hauls, power spikes, and repairs push break-even up.
Combined pressure	Revenue drops 50%, margin falls 10 points, and fixed costs rise 20%.	$1,126K	$42K gap	That combo puts the model just below break-even.

What should a tire recycling founder verify before signing the lease and buying the shredder?

Founder checklist

Before you sign the lease or buy major equipment, test real tire supply, signed buyers, and the Month 7 cash trough. Here’s the quick math: the plant carries about $67.7K a month in fixed load, so break-even only works if the Year 1 mix and roughly 88% contribution margin hold.

1FeedstockPre-build

Verify signed tire-supply commitments before the lease and build-out; without inbound tires, the shredder and crumb lines sit idle and break-even slips.

2Contribution88% CM

Check that the Year 1 product mix still clears about 88% contribution margin after unit COGS, logistics, and sales commissions, or the cash cushion gets thin fast.

3Buyer Offtake5 products

Confirm buyers for fine crumb, coarse crumb, recycled steel, processed fiber, and rubber mulch before you hire up; launch demand has to absorb the first 5,100 units.

4Fixed Load$67.7K/mo

Verify the yard layout, fire safety, drainage, storage, truck access, power supply, and compliance costs fit the model; the plant still carries about $67.7K a month before variable costs.

5Cash Trough$1.586M

Hold enough cash to cover the Month 7 low point, because minimum cash reaches negative $1.586M before EBITDA turns the corner.

6Staffing Ramp9.0 FTE

Keep launch staffing close to the Year 1 plan of 9.0 FTE until outlet contracts are signed; early hires raise burn without lifting sell-through.