Electronics Repair Shop Running Costs
Expect monthly running costs of $20,400–$25,000 in the first year This guide breaks down rent, payroll, inventory, utilities, marketing, and other operating expenses so you understand what it really costs to run an Electronics Repair Shop
7 Operational Expenses to Run Electronics Repair Shop
| # | Operating Expense | Expense Category | Description | Min Monthly Amount | Max Monthly Amount |
|---|---|---|---|---|---|
| 1 | Payroll & Wages | Fixed | Largest fixed expense covering 25 full-time employees (FTEs) in 2026, totaling $162,500 annually. | $13,542 | $13,542 |
| 2 | Parts & Refurbishment COGS | Variable | Cost of Goods Sold for parts starts at 200% of revenue in 2026, dropping to 160% by 2030 as scale improves. | $0 | $0 |
| 3 | Retail Location Rent | Fixed | Retail location rent is a fixed $3,500 per month, representing a significant non-negotiable fixed overhead. | $3,500 | $3,500 |
| 4 | Customer Acquisition (CAC) | Budgeted Fixed | The annual marketing budget starts at $15,000 in 2026, aiming for a Customer Acquisition Cost (CAC) of $50 per new customer. | $1,250 | $1,250 |
| 5 | Utilities & Insurance | Fixed | Combined utilities ($600/month) and business insurance ($450/month) total $1,050 in monthly fixed operating costs. | $1,050 | $1,050 |
| 6 | Fleet Operating Costs | Variable | Fleet operating costs are variable, estimated at 30% of revenue in 2026, covering maintenance for the $30,000 delivery vehicle. | $0 | $0 |
| 7 | Software & Professional Fees | Fixed | Monthly recurring costs for software subscriptions ($300) and professional services ($500) total $800, essentail for operations and compliance. | $800 | $800 |
| Total | All Operating Expenses | $20,142 | $20,142 |
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What is the total operational budget required to cover the first 12 months?
The first 12 months for the Electronics Repair Shop require covering $204,000 in monthly fixed operating expenses, leading to a projected Year 1 EBITDA deficit of -$143,000, primarily driven by variable costs consuming 255% of revenue.
Monthly Cash Burn
- You need to budget for $204,000 in fixed operating expenses every month just to keep the lights on for the Electronics Repair Shop.
- This high fixed base means revenue needs to scale fast to cover overhead; honestly, this is the first thing to model.
- Before worrying about ongoing operations, check the initial setup costs; What Is The Estimated Cost To Open And Launch Your Electronics Repair Shop? provides that initial capital requirement.
- If customer onboarding takes 14+ days, churn risk rises defintely.
Profitability Hurdle
- Variable costs are the real killer here, projected at 255% of your total revenue over the first year.
- This means for every dollar earned from repairs or sales, you spend $2.55 on direct costs like parts and labor.
- This cost structure results in a Year 1 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) deficit of -$143,000.
- You must aggressively manage cost of goods sold (COGS) to get that variable ratio under 100% quickly.
Which running cost categories represent the largest percentage of monthly expenses?
The largest monthly expense drivers for your Electronics Repair Shop are Payroll at $135k and Rent at $35k among fixed items, though variable costs are the real issue, as Parts/COGS is running at 200%, which means you must review your sourcing defintely before scaling; understanding these levers is crucial, so review What Are The Key Steps To Write A Business Plan For Your Electronics Repair Shop?.
Fixed Cost Snapshot
- Payroll accounts for $135,000 monthly spend, setting the floor.
- Rent is a steady fixed drain of $35,000 per month.
- These two categories set your minimum required monthly revenue.
- You need to know your break-even point based on these figures.
Variable Cost Alarm
- Parts and COGS are reported at 200% of revenue.
- This means for every dollar you bring in, you spend two on materials.
- This variable cost ratio is the primary threat to profitability.
- You must cut this ratio down to under 50% quickly.
How much working capital is needed to survive until break-even?
The Electronics Repair Shop needs a minimum cash buffer of $598,000 to cover operations until it reaches break-even in 25 months, which is projected for February 2028; if you're tracking runway, understanding this timeline is defintely key, and you can check related profitability metrics here: Is Your Electronics Repair Shop Profitable?
Runway Requirement
- Target survival runway is exactly 25 months.
- Minimum required cash on hand is $598,000.
- This buffer must last until Feb-28 projection.
- This capital covers all overhead until profitability hits.
Managing Cash Burn
- Focus intensely on reducing monthly cash burn rate now.
- Every month delayed past Feb-28 increases capital needs.
- Secure funding to cover the full $598k buffer immediately.
- Review fixed costs to ensure they align with the 25-month plan.
If revenue targets are missed, which costs can be cut immediately without halting operations?
When revenue targets for the Electronics Repair Shop are missed, immediately trim the $15,000 annual marketing budget and reduce the 0.5 FTE Admin Assistant before considering technician payroll or rent.
Quick Marketing Triage
- Cutting the $15,000 annual marketing budget offers immediate savings without stopping service delivery.
- If growth stalls, you must focus on organic customer acquisition strategies, like understanding How Can You Effectively Launch Your Electronics Repair Shop To Attract Customers Quickly?
- This spend is usually discretionary and the first place to pause or reduce by 50% temporarily.
- Ensure any remaining spend targets high-intent customers needing immediate smartphone or laptop repair.
Admin Headcount Flexibility
- The 0.5 FTE Admin Assistant is support staff, not a billable technician generating direct repair revenue.
- Reducing this role saves salary and benefits right away, but you need a plan for customer intake.
- Consolidate scheduling duties for on-site repairs into existing management or technician workflows.
- Protecting core technician payroll is crucial because they handle the lifetime guarantee repairs and service work.
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Key Takeaways
- The fixed monthly running costs for an electronics repair shop start around $20,400, with total expected monthly expenditures often exceeding $25,000 when factoring in variable costs.
- Payroll, totaling $162,500 annually, is the largest fixed expense, while Cost of Goods Sold (COGS) for parts and refurbishment represents the dominant variable cost at 200% of revenue.
- Based on projections showing a -$143,000 EBITDA loss in the first year, the business requires a significant 25-month runway to reach its break-even point in January 2028.
- To survive the initial period of losses, a minimum working capital buffer of nearly $600,000 is necessary to cover operational deficits until sustained profitability is achieved.
Running Cost 1 : Payroll & Wages
Payroll Dominance
Payroll is your largest fixed drain going into 2026. You need to budget $162,500 annually to cover 25 FTEs. This hits your P&L at roughly $13,542 every month. That monthly figure is the benchmark you must cover before making a dime of profit.
Staffing Budgeting
Estimating this cost requires knowing the headcount and average salary burden. For your 25 FTEs, the total annual cost is fixed at $162,500. This number usually includes base salary plus employer-side taxes and benefits, often called the fully loaded cost. If you hire fewer people, this fixed cost drops immediately.
- Headcount: 25 FTEs
- Annual Budget: $162,500
- Monthly Fixed Cost: $13,542
Managing Labor Costs
Since this is your largest fixed expense, control hinges on productivity per employee. Avoid hiring too early based on optimistic revenue projections. For a repair shop, ensure technicians are booked solid, minimizing downtime between jobs. If you hire 25 people too soon, you’re paying $13.5k monthly just to sit idle, defintely hurting cash flow.
- Benchmark utilization rates.
- Tie hiring to utilization thresholds.
- Review benefits packages annually.
Fixed Cost Weight
This $13,542 monthly payroll is the primary driver of your break-even point. You must generate enough gross profit from repairs and accessory sales to cover this large fixed item before any other overhead like rent or marketing gets paid.
Running Cost 2 : Parts & Refurbishment COGS
Parts COGS Shock
Parts Cost of Goods Sold (COGS) is your primary financial challenge starting out. In 2026, expect material expenses to hit 200% of revenue, meaning you pay $2 for every $1 earned from repairs. This ratio only improves to 160% by 2030 due to necessary scale improvements. That’s a tough starting margin.
What Drives Part Costs
This COGS covers replacement components and inventory used in selling refurbished electronics. You must track unit costs against final repair billings precisely. Honestly, starting at 200% of revenue means your initial gross margin is deeply negative until volume acquisition savings kick in.
- Unit part acquisition cost tracking.
- Inventory holding costs impact.
- Refurbished sale price realization.
Cutting Material Drag
Managing this high initial cost demands aggressive sourcing and inventory control. Since you offer a lifetime guarantee, quality can’t suffer, but carrying too much stock drains cash fast. You need to secure better pricing now, not later.
- Negotiate tiered pricing with multiple suppliers.
- Use just-in-time ordering for expensive components.
- Boost the margin on refurbished device sales.
Cash Flow Implication
That 200% COGS figure eats cash immediately, especially when paired with $162,500 in 2026 payroll and $3,500 in fixed rent. Your operational focus must be reducing part lead times and pushing the average repair value up to cover these material expenses. This is defintely where you’ll feel the burn first.
Running Cost 3 : Retail Location Rent
Fixed Rent Hit
Your physical storefront rent is a fixed $3,500 monthly commitment. This is non-negotiable overhead that must be covered before you make a dime on service revenue. It sets a high baseline requirement for monthly operational stability.
Rent Inputs
This $3,500 covers your primary retail space lease for the Electronics Repair Shop. It is a pure fixed cost, meaning it doesn't change whether you repair 10 phones or 100. You need the signed lease agreement date to start tracking this expense in your cash flow projections immediatey.
- Covers primary retail footprint.
- Fixed at $3,500/month starting day one.
- A baseline requirement for operations.
Rent Management
Since this rent is fixed, optimization focuses on maximizing revenue density per square foot. If you rely heavily on on-site repairs, you might negotiate a smaller back-office footprint. Avoid signing leases longer than three years initially, as flexibility is key if sales targets aren't met.
- Negotiate tenant improvement allowances.
- Keep initial lease term short.
- Ensure location drives enough foot traffic.
Overhead Weight
This $3,500 rent is a major component of your $18,892 total fixed monthly overhead, which includes payroll of $13,542. You must generate enough gross profit to cover this before paying staff or COGS. If your blended gross margin is 40%, you need approximately $8,750 in monthly revenue just to cover rent alone.
Running Cost 4 : Customer Acquisition (CAC)
CAC Target Reality
Your 2026 marketing budget is set at $15,000, aiming to acquire customers at a $50 CAC. This means you are planning for exactly 300 new customers in the first year. That's a lean budget for building local awareness.
Budget Inputs
This $15,000 annual spend is the total fuel for customer acquisition in 2026. To achieve the $50 CAC, you must track every dollar spent against the resulting customer count; the math is simple: $15,000 divided by $50 equals 300 customers. This covers local outreach and initial digital efforts.
- Budget starts at $15,000.
- Target: $50 per new client.
- Implies 300 annual signups.
Controlling Acquisition
Since $50 CAC might eat up profit on a small initial repair, you need high conversion on follow-up services. Defintely prioritize word-of-mouth marketing and leveraging that lifetime guarantee to drive organic growth past the initial 300 paid acquisitions. Avoid expensive, untargeted local ads.
- Boost referrals post-repair.
- Focus on high-margin services.
- Track channel cost rigorously.
Profitability Check
If your parts cost is 200% of revenue initially, that first repair job likely loses money before overhead. A $50 CAC is only sustainable if the average customer returns quickly or buys a protection plan, covering that initial acquisition cost fast. Don't confuse volume with profit here.
Running Cost 5 : Utilities & Insurance
Fixed Utility & Insurance Burden
Your shop has $1,050 in baseline monthly fixed costs covering essential services. This covers $600 for utilities and $450 for necessary business insurance policies. This amount hits your P&L regardless of repair volume. It's a defintely fixed burden.
Cost Inputs for $1,050
Estimate this by getting quotes for the physical location's estimated usage. Utilities ($600) include power for diagnostic tools and climate control. Insurance ($450) must cover general liability and potential errors and omissions (E&O) insurance for handling expensive client electronics.
- Get three quotes for commercial liability coverage.
- Project utility usage based on square footage.
- Insurance is non-negotiable for device handling.
Managing Fixed Overhead
You can control utilities by upgrading lighting to LED and optimizing HVAC scheduling. For insurance, shop the $450 premium annually; don't auto-renew. Raising your deductible slightly can cut premiums, but check if the risk is worth the savings.
- Audit HVAC systems for efficiency gains.
- Shop insurance quotes every 12 months.
- Avoid raising deductibles too high.
Fixed Cost Threshold
This $1,050 must be covered before you count any profit. Since it's fixed, every repair order contributes directly to covering this base layer of overhead. If payroll is $162,500 annually, this $1,050 is just the starting line for operating expenses.
Running Cost 6 : Fleet Operating Costs
Fleet Cost Snapshot
Fleet operating costs are estimated to consume 30% of revenue in 2026 due to servicing the on-site repair model. This variable cost covers maintenance and operations for your $30,000 delivery vehicle fleet. That's a significant operational drag.
Cost Inputs
This 30% variable cost directly supports your on-site repair service, which is a key differentiator. To model this accurately, you need projected revenue and the number of $30,000 vehicles in use. It acts as a direct cost driver, unlike fixed rent or payroll.
- Inputs: Revenue projections, vehicle utilization rates.
- Context: Directly scales with service calls.
- Budget Fit: A major chunk of the Cost of Service delivery.
Controlling Mobile Spend
Managing this cost means optimizing service density, especially since the vehicle is $30,000. Focus on maximizing jobs per route to lower the effective cost per delivery. Don't scale the fleet faster than your service demand warrants.
- Bundle on-site visits when possible.
- Negotiate maintenance contracts upfront.
- Prioritize high-margin repair types for mobile jobs.
Profit Linkage
Because fleet costs are 30% of revenue, they must be managed alongside your 160% to 200% Parts COGS estimate. If you can't reduce the maintenance burden, you must push the Average Order Value (AOV) on mobile repairs to absorb the expense.
Running Cost 7 : Software & Professional Fees
Fixed Fee Baseline
Software and professional fees total $800 monthly, covering critical compliance and operational tools. This fixed outlay must be covered before any variable costs are considered.
Cost Inputs
This $800 covers essential digital tools and expert advice for the repair shop. Software subscriptions run $300 monthly for point-of-sale (POS) and scheduling systems. Professional fees, about $500, pay for essential tax compliance and legal reviews.
- Software: $300 for daily operations.
- Pros: $500 for compliance.
- Total fixed cost: $800/month.
Managing Fees
Review software tiers annually to ditch unused features; many founders overpay for enterprise functionality they don't need. For professional services, consolidate work with one firm to potentially negotiate a lower monthly retainer instead of ad-hoc billing.
- Audit software licenses quarterly.
- Bundle legal/accounting work.
- Avoid premium support tiers early on.
Compliance Cost
While $800 seems small next to $13,542 in monthly payroll, skipping professional compliance invites massive future fines. Treat this as insurance; it’s a necessary fixed cost to protect the entire operation from regulatory surprises.
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Frequently Asked Questions
Fixed costs start around $20,400 monthly in Year 1, including $13,542 payroll and $5,650 in fixed overhead; variable costs add another 255% of revenue, so plan defintely for over $25,000 total