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Key Takeaways
- Initial monthly running costs for the B2C business are projected to fall between $23,000 and $35,000, driven by substantial fixed and variable expenses.
- The financial model indicates a significant runway of 30 months is required before the business reaches its breakeven point in June 2028.
- To cover the projected negative EBITDA and sustain operations until breakeven, a minimum working capital buffer of $304,000 must be secured.
- The largest recurring expenses are product sourcing (100% of revenue) and a fixed $10,000 monthly marketing spend dedicated to achieving a $45 Customer Acquisition Cost.
Running Cost 1 : Product Sourcing (COGS)
COGS: The Zero Margin Start
Your initial Cost of Goods Sold (COGS) is 100% of revenue in 2026, which means zero gross profit until you scale. You must aggressively negotiate supplier pricing immediately to hit the 80% target by 2030. This initial margin pressure is defintely the biggest early hurdle.
What COGS Includes
COGS covers the direct costs of acquiring the physical goods sold, like wholesale purchase price and inbound freight. For this B2C business, you need firm quotes from ethical suppliers for home goods and personal care items. If the initial purchase price equals 100% of the sale price, your margin starts at zero.
- Input: Wholesale unit cost.
- Benchmark: 100% of revenue in 2026.
- Goal: Achieve 80% by 2030.
Driving Down Acquisition Cost
Since COGS starts at 100% of revenue, every dollar saved flows directly to gross profit. Use increasing order volume as leverage for better tiered pricing structures from your vendors. Avoid stockouts, which force expensive spot buys that erode margins. You need to establish these cost structures now.
- Negotiate volume discounts early.
- Lock in pricing contracts for 12 months.
- Review supplier performance quarterly.
Margin Impact
Moving COGS from 100% to 80% of revenue by 2030 adds 20 points of gross margin, which is crucial for funding overhead and customer acquisition costs. That 20% improvement funds payroll growth planned for 2027.
Running Cost 2 : Customer Acquisition
Marketing Spend Target
You need $120,000 for marketing in 2026, which is $10,000 per month. This budget is set to acquire customers at a $45 Customer Acquisition Cost (CAC). Hitting this CAC is crucial for scaling profitably early on.
Budget Inputs
This $10,000 monthly spend funds all marketing efforts aimed at driving initial sales for the curated e-commerce brand. To maintain the $45 CAC target, you must track monthly spend against new customer volume. Here’s the quick math: $10,000 divided by $45 CAC means you need about 222 new customers monthly.
- Annual spend set at $120,000.
- Target CAC is fixed at $45.
- Need ~222 new customers/month.
CAC Levers
Reducing CAC below $45 means focusing on organic growth and improving conversion rates on your site. Since you target digitally-native shoppers, focus on high-intent channels. A common mistake is overspending on broad awareness campaigns early on. If onboarding takes 14+ days, churn risk rises defintely.
- Boost organic traffic via SEO.
- Improve site conversion rates.
- Track channel-specific CAC closely.
Scaling Check
If your initial Average Order Value (AOV) is low, a $45 CAC might be too expensive to justify immediately. You must rapidly increase AOV or secure repeat purchases to ensure Lifetime Value (LTV) significantly exceeds this acquisition cost.
Running Cost 3 : Wages and Salaries
Payroll Ramp
Payroll starts lean in 2026 at $8,333 monthly covering just the Founder/CEO, but expect a major jump in 2027 when you hire a Marketing Manager and Curation Specialist. This fixed expense dictates your initial burn rate defintely.
Cost Breakdown
Wages and Salaries is a fixed monthly cost starting January 1, 2026. Initially, it covers only the Founder/CEO at $8,333 per month, which is your baseline operating expense. Next year, you must budget for the addition of a Marketing Manager and a Curation Specialist, substantially raising this overhead.
- Initial monthly cost: $8,333
- 2026 headcount: 1 (Founder/CEO)
- 2027 additions: Marketing Manager, Curation Specialist
Managing Hires
You control the timing of the 2027 hires, which is your main lever here. Delaying the Marketing Manager by three months saves cash, but only if sales targets are met later. Structure new roles with variable compensation components to manage the fixed salary burden.
- Tie new hires to revenue milestones.
- Use contract labor for specialized, short-term needs.
- Review total compensation structure carefully.
Future Impact
The $8,333 payroll in 2026 is misleading for future planning. If the Marketing Manager and Curation Specialist each cost $70,000 annually, your monthly payroll jumps by over $11,600 starting in 2027, increasing your required break-even revenue run rate.
Running Cost 4 : Shipping & Fulfillment
Fulfillment Cost Shock
Shipping costs hit 50% of revenue right out of the gate in 2026. This variable expense demands immediate attention. You must aggressively drive down the cost per order from day one. If you don't manage this, profitability disappears fast.
Cost Inputs Needed
This line item covers packaging, carrier fees, and the handling labor charged by your 3PL partner per shipment. To model this, you need quotes for materials and the negotiated carrier rate per weight/zone. This 50% variable cost sits on top of your fixed $1,500 warehousing base fee.
- Packaging material quotes
- Carrier rate cards
- 3PL handling fees
Reducing Variable Spend
Since this is variable, volume helps, but negotiating carrier rates is key. Avoid using oversized boxes that inflate dimensional weight charges. You should defintely focus on right-sizing packaging immediately. If you hit $1M in sales, aim to cut this below 40%.
- Negotiate carrier contracts early
- Right-size packaging dimensions
- Audit 3PL handling fees often
Margin Protection
You're paying 50% for shipping while Product Sourcing (COGS) is 100% in 2026—that leaves nothing for overhead or profit. Prioritize selling higher-margin, lighter items first. Lighter orders reduce carrier spend, which immediately improves your contribution margin.
Running Cost 5 : Platform & Software Fees
Fixed Software Overhead
Your core software stack—hosting, design, and service tools—is a fixed overhead of $1,450 per month. This cost must be covered regardless of sales volume, making it crucial to factor into your break-even analysis right away.
Cost Inputs Defined
These platform fees cover the digital infrastructure needed to run the e-commerce site. The inputs are fixed monthly quotes: $800 for hosting, $400 for design subscriptions, and $250 for customer service and project management (PM) software. This $1,450 sits squarely in fixed overhead, separate from variable costs like COGS or shipping.
- Hosting: $800/month
- Design Tools: $400/month
- Service/PM Stack: $250/month
Managing Tool Spend
Since these are fixed, cutting them requires strategic tool consolidation or negotiating annual plans. Avoid paying for unused features in PM software; audit usage defintely monthly. If you can shift to yearly billing, you might save 10% to 15% annually on certain subscriptions.
- Audit feature usage quarterly
- Consolidate overlapping tools
- Negotiate annual commitments
Impact on Break-Even
Because these costs are fixed, they dilute your contribution margin until you hit sales volume. If your monthly fixed overhead hits $25,000 (including wages and warehousing), you need sufficient gross profit dollars just to cover the lights before making a dime of net profit.
Running Cost 6 : Warehousing Base Fee
Fixed Warehousing Cost
Your Third-Party Logistics (3PL) warehousing commitment starts with a fixed monthly base fee of $1,500. This figure is pure overhead; it covers space but ignores the variable per-unit costs associated with picking, packing, and shipping your curated lifestyle products.
Base Fee Coverage
This $1,500 warehousing base fee covers the minimum space rental and operational setup with your 3PL provider, regardless of how many units you move. It’s a fixed overhead line item, unlike the variable fulfillment costs tied directly to your 50% revenue share starting in 2026. You must budget this amount monthly starting January 1, 2026.
- Fixed monthly space rental.
- Excludes per-unit picking fees.
- Budgeted starting $1,500/month.
Managing Space Costs
Since this is a fixed fee, reducing it requires negotiating lower minimum volume commitments or seeking providers who bundle this into a reduced tier. Avoid signing long-term contracts based on overly optimistic volume projections, as you’ll be paying for unused space. Defintely review quarterly if your actual unit volume justifies the current tier level.
- Negotiate volume tiers.
- Watch minimum commitment length.
- Don't overpay for empty space.
Overhead Impact
The danger here is confusing this fixed $1,500 charge with your variable fulfillment cost, which starts at 50% of revenue. If your initial sales volume is low, this fixed fee creates a high floor for your Cost of Goods Sold (COGS) structure, pressuring your gross margin until volume scales up.
Running Cost 7 : Accounting & Legal
Fixed Compliance Costs
Accounting and legal costs are a non-negotiable fixed overhead of $1,000 monthly, starting January 1, 2026. This budget line covers essential statutory compliance and foundational financial structure needed before revenue generation begins. You need this oversight immediately. That’s just the cost of doing business right.
Inputs for Legal Budgeting
This $1,000 monthly covers necessary compliance tasks, like tax filings and corporate governance maintenance, which are fixed costs. To budget accurately, you need quotes from a CPA (Certified Public Accountant) or law firm for the initial setup phase and ongoing monthly retainer. This cost is independent of sales volume, so plan for it regardless of Q1 performance. It’s defintely a baseline.
- Get CPA quotes now.
- Define required compliance scope.
- Budget $12,000 annually.
Controlling Legal Spend
Initially, keep legal and accounting lean by using fractional services rather than full-time hires. Focus only on state registration and basic bookkeeping setup; avoid over-engineering early structures. If you use basic payroll software, you might reduce some administrative accounting fees, but don't skimp on critical tax advice. Savings here are minimal but worth tracking.
- Use outsourced bookkeeping first.
- Delay complex entity structuring.
- Review service scope quarterly.
Impact on Runway
Since this cost is fixed at $1,000/month, it directly reduces your initial cash runway before sales start on 01012026. If your launch slips by one month, you immediately burn an extra $1,000 in overhead before earning revenue. This expense is a hard floor for your pre-revenue operating costs.
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Frequently Asked Questions
Initial monthly running costs are approximately $23,000 to $35,000, driven by $10,000 in marketing and $8,333 in payroll, plus 185% variable costs on revenue