Life Coaching Running Costs
Expect monthly running costs for a Life Coaching firm in 2026 to range between $15,000 and $25,000, depending on staffing and revenue volume Your fixed overhead starts at $5,450 per month, covering rent and software, but the main cost driver is staffing, which begins at $10,000 monthly for the Founder/Lead Coach Variable costs, including commissions (120%) and marketing (80%), add another 235% to 265% of revenue Given the initial EBITDA loss of $38,000 in Year 1, you must budget for at least 9 months of operation before reaching the September 2026 breakeven date Focus on maximizing billable hours per customer, which averages 45 hours in the first year, to offset the $400 Customer Acquisition Cost (CAC)
7 Operational Expenses to Run Life Coaching
| # | Operating Expense | Expense Category | Description | Min Monthly Amount | Max Monthly Amount |
|---|---|---|---|---|---|
| 1 | Staff Payroll | Fixed Overhead | Largest fixed cost; starts at $10,000/month, rising to $13,541.67/month when the Senior Life Coach starts in July 2026. | $10,000.00 | $13,541.67 |
| 2 | Coach Commissions | Variable (COGS) | These are COGS, budgeted at 120% of revenue in 2026, dropping to 100% by 2030 as scale improves. | $0.00 | $0.00 |
| 3 | Client Acquisition | Variable | Marketing costs are variable, set at 80% of revenue in 2026, targeting a Customer Acquisition Cost (CAC) of $400. | $0.00 | $0.00 |
| 4 | Office Space Rent | Fixed Overhead | Fixed office rent is $2,500 monthly and must be paid regardless of physical utilization across the 2026-2030 period. | $2,500.00 | $2,500.00 |
| 5 | Technology Subscriptions | Fixed Overhead | Fixed technology subscriptions for CRM, scheduling, and video conferencing total $800 monthly. | $800.00 | $800.00 |
| 6 | Payment Processing | Variable | Variable payment processing fees start high at 35% of revenue in 2026, but are expected to drop to 25% by 2030. | $0.00 | $0.00 |
| 7 | Professional Services | Fixed Overhead | Fixed overhead for legal and accounting services totals $1,100 monthly ($600 legal + $500 accounting). | $1,100.00 | $1,100.00 |
| Total | All Operating Expenses | $14,400.00 | $17,941.67 |
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What is the total minimum monthly running budget required to sustain operations?
The minimum monthly budget required just to keep the Life Coaching operations running, ignoring variable expenses, is $15,450. This figure combines your baseline overhead and essential staffing costs, giving you the hard floor before you even consider customer acquisition costs or how much the owner should expect to draw, which you can compare here: How Much Does The Owner Of Life Coaching Business Typically Make?
Fixed Cost Foundation
- Minimum payroll commitment sits at $10,000 monthly.
- Fixed overhead costs are set at $5,450.
- Your total fixed operating floor is $15,450.
- This budget excludes costs tied to revenue generation.
Hitting the Hurdle Rate
- You need revenue to cover $15,450 before paying staff or showing profit.
- If onboarding takes 14+ days, churn risk rises defintely.
- This number is your immediate break-even threshold.
- Variable expenses will push this required revenue much higher.
Which single expense category represents the largest recurring monthly cost?
The variable coach commissions, set at an unsustainable 120% of revenue, will immediately dominate and destroy profitability before fixed payroll even becomes the primary concern. You need to address this cost structure first, which is a major consideration when planning startup costs, like those detailed in How Much Does It Cost To Open And Launch Your Life Coaching Business?
Variable Cost Dominance
- Variable coach commissions are 120% of revenue.
- If monthly revenue is $40,000, coach payouts cost $48,000.
- This results in a negative 20% contribution margin before any overhead.
- You are losing $0.20 for every dollar earned, making scale impossible.
Fixed Payroll vs. Negative Margin
- Fixed payroll costs are a constant, like $15,000 monthly salaries.
- However, fixed costs are secondary when variable costs exceed revenue.
- The business must generate enough revenue to cover the 20% loss first.
- If revenue is $100,000, you pay $120,000 to coaches, leaving a $20,000 hole; then you pay fixed costs on top of that.
How many months of cash buffer are needed to cover the negative EBITDA during ramp-up?
For your Life Coaching venture, you need a working capital reserve sufficient to cover the projected $38,000 Year 1 EBITDA loss, specifically ensuring you have runway through the 9-month breakeven period; before you finalize this, review How Much Does It Cost To Open And Launch Your Life Coaching Business? to understand initial capital needs. This means setting aside enough cash to absorb an average monthly operating deficit of roughly $4,222 until positive cash flow begins, which is why founders often target 12 months of coverage, not just 9.
Buffer Sizing for Deficit Coverage
- The target buffer must cover the full $38,000 projected Year 1 EBITDA loss.
- If breakeven hits exactly at month 9, you defintely need $38,000 in working capital reserve.
- A $4,222 monthly cash burn rate ($38,000 / 9 months) is the minimum required coverage.
- If client onboarding takes longer than 9 months, the cash requirement rises sharply.
Accelerating Cash Flow Positive
- Focus sales efforts on securing multi-month packages upfront to front-load revenue.
- Increase the average client engagement value (ACV) above the current implied rate.
- Reduce non-essential fixed costs, like software subscriptions, until Month 10.
- Speed is crucial; every month past the 9-month target adds $4,222 to your required cash buffer.
If revenue targets are missed, which variable costs can be immediately reduced without impacting service quality?
When revenue targets are missed for your Life Coaching business, immediately scrutinize the 80% marketing spend, as this area offers the fastest reduction potential without directly impacting the quality of client coaching sessions, unlike payment processing fees which are tied directly to service delivery.
Optimize Marketing Spend
- Pause ad campaigns where Cost Per Lead exceeds $75.
- Renegotiate vendor contracts for shorter, performance-based terms.
- Shift budgets from broad awareness campaigns to bottom-of-funnel conversion efforts.
- Scrutinize affiliate payouts; ensure they align with long-term client value.
Address Processing Fees
- A 35% fee suggests this includes more than just standard card interchange costs.
- Request a detailed breakdown of the fee structure from your payment gateway.
- If package sales are high volume, push for tiered pricing discounts immediately.
- Explore integrating a lower-cost ACH transfer option for clients paying large package fees.
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Key Takeaways
- The minimum required monthly budget starts at $15,450, combining fixed overhead ($5,450) and minimum necessary payroll ($10,000) before variable expenses are factored in.
- Coach commissions, budgeted at 120% of revenue, represent the largest variable expense category, significantly dominating the profit and loss statement as the firm scales.
- A substantial cash buffer is required to cover the initial $38,000 negative EBITDA during the ramp-up period necessary to reach the projected 9-month breakeven date.
- Sustainability hinges on managing the total variable costs, which reach 265% of revenue, especially optimizing the 80% marketing spend dedicated to maintaining the $400 Customer Acquisition Cost.
Running Cost 1 : Staff Payroll
Payroll Commitment
Staff payroll drives your fixed expense structure, representing the single largest overhead commitment for 2026. You start 2026 with the Founder/Lead Coach salary at $10,000/month. This cost escalates significantly in July when the Senior Life Coach joins, pushing total payroll to $13,541.67/month.
Budgeting Staff Costs
Budgeting staff payroll requires locking down salary rates and hiring timelines. This cost covers base compensation plus employer-side payroll taxes and benefits, which aren't detailed in the running costs table. For 2026, you must model the $10,000 baseline until July, then account for the step-up to $13,541.67. Missing the true tax burden inflates your actual required cash flow.
- Establish firm salary rates now
- Factor in employer tax liability
- Map hiring date to revenue milestones
Managing Fixed Payroll
Managing payroll means treating hiring as a strategic lever, not just filling seats. Since this is fixed overhead, every dollar added directly impacts your break-even point, unlike variable commissions. Avoid hiring before client volume clearly justifies the expense. Remember, payroll is unavoidable once the contract is signed, so timing is critical for cash management.
- Delay hiring until Q3 volume is certain
- Model payroll against required revenue targets
- Keep variable costs (commissions) tight
Action Point
The jump from $10,000 to $13,541.67 in July is a hard fixed cost increase you must cover. Ensure your revenue pipeline is robust enough to absorb that 35% monthly payroll hike before the Senior Life Coach starts.
Running Cost 2 : Coach Commissions
Commission Shock
Coach commissions are your primary Cost of Goods Sold (COGS), budgeted at 120% of total revenue in 2026, meaning you pay out more than you earn initially. The goal is to drive this cost down to 100% of revenue by 2030 as you scale operations and gain leverage.
COGS Structure Input
Commissions pay the coaches delivering the one-on-one and group services. Since this cost is set at 120% of revenue in year one, you must generate significant revenue just to cover the variable cost of delivery. You need your projected total monthly revenue and the commission percentage to calculate the raw dollar expense for the P&L statement.
- Input: Total Revenue projection.
- Input: Commission rate (1.2x in 2026).
- Impact: Defines negative gross margin start.
Managing Payout Ratios
Managing commissions means negotiating the rate or shifting the service delivery mix toward higher-margin offerings. Focus on increasing the average billable rate or pushing clients into multi-month packages to improve the effective rate paid per dollar earned. If onboarding takes 14+ days, churn risk rises, locking in high acquisition costs against low realized commission savings. Defintely focus on package adoption.
- Negotiate fixed fee vs. percentage.
- Shift clients to higher-margin packages.
- Improve coach utilization rates.
The Starting Hurdle
When commissions hit 120% of revenue, you are paying out $1.20 to earn $1.00 before even considering fixed overhead like payroll or rent. This structure demands immediate operational focus on increasing pricing or reducing that commission percentage paid per session to achieve a positive gross profit margin quickly.
Running Cost 3 : Client Acquisition
Acquisition Spend Target
Maintaining a $400 CAC requires setting marketing spend at 80% of revenue in 2026. This aggressive spend level must translate directly into sufficient client volume to cover your fixed monthly overhead, which starts around $18,500.
Acquisition Cost Basis
Client acquisition is budgeted as a variable expense, set at 80% of total revenue in 2026. This covers all marketing and advertising needed to hit the target CAC of $400 per new client. You must track new client volume against this budget line item closely.
- New clients acquired
- Target CAC: $400
- Revenue percentage: 80%
Cutting Acquisition Spend
Reducing the 80% spend means lowering the effective $400 CAC through better channel performance. Given high initial COGS (120% commissions), efficiency here is paramount for early profitability. Defintely test channel attribution now.
- Improve channel attribution accuracy
- Focus on high-LTV leads
- Test referral programs early
Spend vs. Margin Check
If the actual CAC climbs above $400, or if revenue growth lags, this 80% spend will quickly overwhelm cash flow. This high variable cost demands rigorous, daily monitoring against booked revenue.
Running Cost 4 : Office Space Rent
Fixed Rent Commitment
Office rent is a $2,500 fixed monthly cost covering 2026 through 2030. This commitment remains due even if client meetings move entirely online or utilization drops. It hits your operating expenses before you book a single coaching hour.
Inputs for Rent Cost
Estimating rent requires locking down the actual lease agreement details. You need the $2,500 monthly rate and the five-year term (2026-2030). This total commitment across the period is $150,000 ($2,500 x 60 months). This cost is independent of revenue or client volume.
- Lease term duration (60 months)
- Monthly base rate ($2,500)
- Total committed outlay ($150k)
Managing Space Overhead
Since this is a hard commitment, optimization means challenging the necessity of the space itself. For a coaching firm, physical space might be optional. Avoid signing a long lease if you can secure a flexible, month-to-month agreement first. Defintely question if you need dedicated space versus using client locations or co-working hubs.
- Prioritize flexible, short-term leases.
- Analyze remote work adoption rates.
- Avoid long-term physical overhead early.
Hurdle Rate Impact
This $2,500 fixed expense must be covered by contribution margin before any payroll or marketing spend. If revenue is low, this rent acts as a high hurdle rate, requiring you to secure enough billable hours just to cover the lease.
Running Cost 5 : Technology Subscriptions
Fixed Tech Overhead
You must budget $800 per month for essential software, covering CRM, scheduling, and video conferencing tools. This is a non-negotiable fixed overhead that hits your books before you book your first session. It needs to be covered by early revenue.
Essential Software Spend
This $800 monthly technology expense covers the core digital infrastructure needed for Momentum Coaching Partners to operate. It includes the Customer Relationship Management (CRM) system, client scheduling software, and necessary video conferencing licenses. This cost is locked in, unlike variable costs like commissions or client acquisition.
- CRM license fees
- Scheduling platform access
- Video conferencing seats
Taming Software Costs
Don't just pay the list price for every tool. Audit usage quarterly to cut unused seats, defintely. Many platforms offer annual discounts that can save 10% to 20% versus month-to-month billing. Avoid premium tiers until client volume truly justifies the feature creep.
- Negotiate annual prepayment discounts
- Downgrade to lower feature tiers
- Audit licenses every 90 days
Tech ROI Check
If your scheduling software doesn't automate 80% of booking admin, you're paying $800 for inefficiency, not productivity. Ensure these tools directly support revenue generation, otherwise, they are just overhead pulling down your contribution margin.
Running Cost 6 : Payment Processing
Processing Fee Drag
Payment processing starts as a major variable drag at 35% of revenue in 2026. While this rate is high for a service business, expect it to normalize down to 25% by 2030. This cost directly reduces the cash hitting your bank account from every client payment.
Cost Breakdown
This 35% fee covers transaction costs for accepting client payments. Since it is a variable cost, it scales directly with revenue, unlike fixed overhead like office rent ($2,500/month). If revenue hits $50,000 in 2026, processing costs are $17,500 immediately. Defintely factor this into your contribution margin analysis.
Optimization Levers
You must control how clients pay to manage this. High initial rates suggest reliance on expensive channels. Push clients toward lower-cost bank transfers (ACH) for large package payments if possible. Negotiate flat-rate tiers once volume justifies it, but don't overcommit to complex pricing schemes early on.
Immediate Margin Check
The immediate risk is the 35% starting fee stacked against 120% coach commissions, crushing early gross margins. Focus on locking in lower processing tiers or shifting revenue mix to lower-fee options before payroll increases in July.
Running Cost 7 : Professional Services
Fixed Compliance Overhead
Your baseline overhead includes $1,100 monthly for core compliance. This covers $600 legal and $500 accounting services, which you must fund regardless of sales volume in 2026.
Cost Inputs and Structure
This fixed overhead covers essential legal and accounting compliance for your Life Coaching practice. You need quotes locking in $600 monthly legal retainer and $500 for bookkeeping/tax prep. This total is a baseline expense you must cover before earning your first dollar.
- Legal retainer: $600/month.
- Accounting/Tax prep: $500/month.
- Fixed cost applied monthly.
Managing Professional Fees
Managing compliance costs means avoiding reactive, expensive hourly billing when issues arise. Lock in fixed monthly retainers to control spend predictability. If you scale rapidly, review if the $500 accounting fee defintely covers all necessary filings.
- Negotiate fixed monthly legal fees.
- Use software to reduce basic bookkeeping hours.
- Review scope annually as revenue changes.
Break-Even Impact
Since this $1,100 is a fixed cost, it directly increases your monthly break-even point. You need revenue to cover this cost, plus $10,000 payroll and $2,500 rent, before you see any operating profit.
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Frequently Asked Questions
Monthly running costs start around $15,450 for fixed overhead and minimum payroll Variable costs add 265% of revenue, driven by commissions and marketing You defintely need a cash buffer to cover the initial $38,000 EBITDA loss