Break-Even Analysis For Tunable White Lighting Systems: $110K/Month

Fixed costs $26.9K/mo Overhead only

Contribution margin 77.2% After variable costs

Break-even revenue $108.4K/mo Full monthly need

Break-even timing Month 1 Launch month

Break-even calculator

Test how monthly revenue, direct costs, and fixed costs move break-even for a tunable white lighting business.

Lean Base Full

Monthly revenue Revenue is the cash in that has to cover direct costs and overhead. $ Lower sales Higher sales Variable expenses These are direct costs that rise as you install and ship more systems. $ Lower costs Higher costs

Money available to cover fixed costs $1,333,158 $1,553,125 revenue - $219,967 variable expenses

Margin ratio

86%

Covers fixed costs

Yes

Fixed monthly costs These are monthly costs you pay even before more sales come in. $ Lean setup Scaled team

Break-even chart Revenue Total costs

Which tunable white lighting expenses are fixed, and which move with sales?

Cost classification

Break-even is only reliable when monthly overhead, revenue-based fees, and per-unit materials stay separate. Month 1 break-even depends on not mixing one-time launch spend with recurring operating expense.

Expense	Cost	Break-Even Treatment	Common Mistake
Flagship showroom rent	Fixed	Include $12,000 per month from Month 1 through Month 60 in fixed overhead.	Loading rent into each unit and overstating variable margin drag.
Cloud infrastructure and app hosting	Fixed	Include $2,500 per month as recurring platform overhead for installed lighting controls.	Modeling hosting as a revenue percentage when the assumption is fixed monthly spend.
Marketing and digital ad spend	Fixed	Include $8,500 per month as committed demand-generation overhead.	Treating all marketing as sales-linked when the plan sets a monthly budget.
Salaried operating team	Semi-fixed	Use about $56,700 per month in first-year payroll, then step up as headcount rises.	Treating salaries like commissions instead of capacity added in hiring steps.
Sales commissions	Variable	Apply 5.0% of revenue from Month 1 through Month 60.	Putting commissions in fixed overhead and understating break-even revenue.
Shipping and logistics	Variable	Apply 3.0% of revenue in the first year, falling to 2.0% in the mature year.	Leaving freight flat even as unit volume grows from 5,900 to 28,400 units.
Fixture and control materials	Variable	Apply direct unit inputs from $45 to $425 per unit, based on product mix.	Using one blended material rate and hiding margin differences by fixture type.
Revenue-based reserves and handling	Variable	Apply product-group rates from 4.0% to 5.5% of revenue for warranty, testing, handling, insurance, and overhead.	Ignoring small percentage charges that compound at higher revenue levels.

How does break-even change from a lean coverage case to Year 1 and Year 5 scale?

Scenario table

The lean case only covers overhead, the Year 1 base plan already throws off cash, and the Year 5 case widens the cushion because revenue grows faster than fixed staffing and support costs.

Planning assumptions only; actual results will vary with mix, pricing, and staffing.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean coverage case	$1.10M	$265k	$836k	75.9%	$0	Right at break-even, so small misses create losses.
Year 1 base plan	$651.7k	$157k	$83.6k	75.9%	$411k	Break-even is hit in Month 1, leaving a launch cushion.
Year 5 scale case	$3.01M	$256k	$192.7k	91.5%	$2.56M	Wide cushion above break-even, but payroll growth still needs discipline.

What breaks the break-even cushion for tunable white lighting systems?

Stress test

Base plan clears break-even by about $5,416K/month. The real risks are a sales miss, higher shipping or warranty costs, and adding payroll before demand is steady.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,101K	$5,416K cushion	Wide cushion, but sales and margin still need to hold.
Revenue shortfall	Monthly revenue runs at the Year 1 average implied by $7,820K annual revenue, about $652K/month.	$1,101K	$449K gap	At that pace, the model misses break-even by about $449K each month.
Fixed costs up	Monthly fixed costs rise by $10K.	$1,115K	$5,402K cushion	The cushion still covers it, but overhead raises the sales bar.
Margin pressure	Contribution margin drops 1 point from plan.	$1,115K	$5,402K cushion	One margin point trims about $65K of monthly profit at the planned run-rate.
Combined pressure	Monthly revenue runs at the Year 1 average, fixed costs rise by $10K, and contribution margin drops 1 point.	$1,129K	$477K gap	That mix leaves little room for slower installs or higher warranty claims.

Should you sign the showroom and scale hiring before this lighting business proves break-even?

Founder checklist

Not yet unless the signed pipeline already clears the $1.101M monthly break-even line. Keep the $1.136M cash floor intact, because Month 1 buildout is the tightest point.

1Demand proof$1.101M/mo

Verify signed pipeline clears the monthly break-even line before you add showroom space, hires, or ad spend.

2Unit pricing$45-$425

Validate supplier quotes against the unit build inputs so gross margin holds before you order stock.

3Variable load8.0% Yr1

Lock Year 1 sales commissions at 5.0% and shipping at 3.0%, because those costs cut straight into contribution margin.

4Fixed overhead$83.6K/mo

Add the $26.9K monthly fixed spend to the $680K Year 1 wage load, and you get about $83.6K a month before one extra hire or lease.

5Team capacity1.0 to 4.0 FTE

Verify the project team can handle multi-site work at 1.0 to 4.0 project manager FTE and 2.0 to 5.0 lighting designer FTE, or sales will outrun delivery.

6Cash cushion$1.136M min

Keep working capital above the minimum cash need, because Month 1 is the low point and the $800K launch capex comes before the operating model fully ramps.