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Key Takeaways
- The average monthly operating expense (OpEx) for the oilfield supply business is projected at $107,550 in 2026, excluding the significant cost of goods sold (COGS).
- Staff payroll represents the largest recurring cost driver, consuming $66,250 per month, which is more than three times the cost of the primary warehouse lease.
- To sustain operations until the projected break-even point in February 2027 (14 months post-launch), a critical minimum cash buffer of $303,000 must be secured.
- The business model is highly capital-intensive, resulting in a projected negative EBITDA of $394,000 in Year 1 despite achieving $12 million in initial revenue.
Running Cost 1 : Staff Wages and Salaries
Payroll Dominance
Payroll is your biggest fixed outlay, hitting $66,250 monthly in 2026. This covers 8 full-time equivalent (FTE) roles, including the CEO and two essential Delivery Drivers. That's serious overhead before you sell a single Drill Bit.
Staff Cost Inputs
This $66,250 figure represents the total monthly burden for your core team structure planned for 2026. It includes salaries for the CEO, administrative staff, and the two Delivery Drivers who fuel your 24/7 rapid response guarantee. You need firm salary quotes for all 8 FTEs, plus employer taxes and benefits, to lock this number down.
- Get salary quotes for all 8 roles.
- Factor in employer payroll taxes.
- Estimate benefits costs per FTE.
Managing Headcount
Since this cost is fixed, managing it means optimizing role efficiency, not cutting variable costs later. If sales lag, this large expense eats cash fast. Avoid hiring non-essential staff too early; use contractors for specialized IT or accounting until volume justifies a full-time hire. Honestly, staffing too lean creates service risk.
- Stagger hiring past initial launch phase.
- Use fractional roles for admin needs.
- Keep Delivery Drivers lean initially.
Fixed Cost Pressure
Compared to the $20,000 Warehouse Lease and $5,000 software fee, payroll consumes nearly three times the fixed operating budget. If revenue doesn't scale to cover this, you’ll need $91,250 in monthly gross profit just to cover these three major fixed buckets alone. That’s the hurdle rate.
Running Cost 2 : Warehouse Lease
Lease is Fixed Cost
The warehouse lease is your primary fixed facility commitment, costing $20,000 monthly. This expense hits before you sell a single Drill Bit, meaning initial capital must cover this outlay plus overhead until revenue stabilizes. It’s a non-negotiable pre-operation hurdle for your supply chain hub.
Covering Facility Costs
This $20,000 covers the physical space needed to house inventory and support your 24/7 rapid-response delivery guarantee. Compared to Staff Wages at $66,250, the lease is about 30% of your largest fixed payroll expense. You defintely need to factor this into your initial runway calculation.
- Fixed monthly commitment.
- Pre-operational funding required.
- Essential for inventory staging.
Lease Negotiation Tactics
Since this is a fixed cost, optimization centers on lease structure, not usage. Push for longer terms to lock in the $20,000 rate, avoiding renewal shocks. Avoid signing for space exceeding immediate needs; unused square footage is pure drag on your contribution margin.
- Negotiate longer fixed terms.
- Ensure favorable exit clauses.
- Verify utility inclusion details.
Lease Security Priority
Securing the facility lease is the absolute first trigger point for operational launch. Without that $20,000 per month commitment locked in, your proprietary smart inventory system and delivery network cannot function to meet client expectations for uptime.
Running Cost 3 : Inventory Acquisition
Inventory Cost Trap
Your inventory acquisition structure is currently unprofitable because costs exceed revenue. Direct product acquisition plus inbound freight totals 150% of revenue, averaging $15,000 per month in 2026. You must fix this gross margin issue before scaling.
Inventory Cost Breakdown
This cost aggregates the price paid for goods and the expense of getting them to your facility. To estimate this, you need unit cost quotes and projected sales volume to calculate the 150% total. This figure sits outside the 30% variable logistics cost tied to outbound delivery.
- Direct cost is 130% of revenue.
- Inbound freight is 20% of revenue.
- Total cost is $15,000 monthly in 2026.
Cutting Acquisition Drag
Operating at 150% COGS means you lose money on every sale before factoring in staff or rent. Negotiate supplier pricing aggressively to get the direct acquisition cost well below 100% of your selling price. Defintely, you need to audit freight carriers for better bulk rates.
- Target direct cost under 90% of revenue.
- Consolidate inbound freight shipments.
- Avoid small, frequent purchase orders.
Critical Financial Lever
This 150% inventory cost is your primary financial bottleneck, overshadowing the $66,250 monthly payroll. Until this ratio reverses, every sale generates a loss, making inventory management the single most important operational focus for achieving positive unit economics.
Running Cost 4 : Proprietary Software
Software Fixed Cost
The proprietary smart inventory system is a non-negotiable fixed cost of $5,000 monthly. This expense underpins your ability to track and manage high-value inventory, like Drill Bits, which directly impacts service reliability. Honestly, without this system, rapid response guarantees fail.
Software Budget Line
This $5,000 covers the maintenance of your unique inventory software, which is crucial for tracking specialized, high-cost assets. It’s a fixed monthly commitment, unlike variable logistics costs. You need this baseline to support the 24/7 rapid-response delivery promise.
- Fixed cost: $5,000/month.
- Manages high-value stock.
- Supports speed guarantees.
Controlling Software Spend
Reducing this fixed software cost is tough because it supports your main differentiator. Avoid scope creep by strictly defining what the system tracks, perhaps focusing only on items over a $500 unit cost initially. If you scale rapidly, look into migrating core functions to cheaper, off-the-shelf tools later, but not now.
- Lock in multi-year maintenance rates.
- Strictly control feature requests.
- Benchmark against industry SaaS rates.
Software ROI Check
The ROI for this $5,000 software isn't direct revenue; it’s uptime protection. If downtime costs a client $10,000 per hour, this system pays for itself in less than 30 minutes of prevented outage. You must defintely track client downtime savings attributable to this system.
Running Cost 5 : Variable Logistics
Logistics as Variable Cost
Outbound logistics is a direct variable cost, scaling instantly with every sale made by RigReady Supplies. This transportation expense is budgeted at 30% of total revenue, starting at an estimated $3,000 monthly spend. Managing this cost is critical since it defintely impacts your gross margin on every order shipped to oilfield sites.
Variable Shipment Costs
This 30% variable expense covers the physical movement of sold equipment from your warehouse to the client's well site. To project this accurately, you need the expected monthly revenue multiplied by 0.30. For the initial budget, assume $3,000, but watch closely as sales volume increases; it’s not a fixed burden.
Cutting Delivery Spend
Since this cost scales with sales, efficiency gains come from optimizing routes, not cutting service. Negotiate bulk rates with your primary carrier based on projected quarterly volume. Avoid rush shipments unless the client pays a premium; remember, downtime avoidance is your UVP, so don't trade one delay for another.
Logistics Scaling Risk
If your average order value (AOV) is low, a 30% logistics cost eats margin fast. You must ensure your pricing structure adequately covers the cost of drivers and fuel for remote deliveries in major US oil basins. High initial volume without route density means you're paying premium rates per mile.
Running Cost 6 : Marketing and Commissions
Sales Expense Structure
Your combined sales expense averages $5,000 monthly, built from a fixed $3,000 digital marketing spend and a variable 20% sales commission on revenue. This structure means every dollar of sales directly impacts your variable cost structure here.
Cost Components
This category covers both lead generation and closing costs. To project this accurately, you must forecast revenue, as the 20% commission scales directly with sales volume. The $3,000 fixed marketing spend is your baseline cost just to show up. This spend must generate enough volume to cover your $15,000 inventory acquisition cost.
- Fixed marketing: $3,000 monthly.
- Variable commission: 20% of revenue.
- Total average: $5,000 monthly.
Managing Sales Costs
Since 20% of revenue goes out via commission, sales efficiency is paramount. Focus on closing deals with the highest potential margin rather than just volume. If your sales cycle drags past two weeks, you waste marketing dollars. You defintely need tight tracking on lead source ROI.
- Tie commissions to gross profit, not just top line.
- Audit fixed marketing spend effectiveness quarterly.
- Reduce sales cycle length to improve ROI.
Margin Pressure Alert
The 20% variable commission is substantial. Given that inventory acquisition alone costs 150% of revenue, this commission eats deeply into your contribution margin before overhead hits. Track this ratio against your total gross profit dollar flow.
Running Cost 7 : Fixed Overhead
Base Overhead
Your required monthly fixed overhead for facility upkeep and basic services totals $4,300. This amount is a non-negotiable cost floor you must clear before any revenue contributes to covering larger expenses like payroll or inventory.
Cost Breakdown
This $4,300 covers the baseline necessities to keep your warehouse operational and secure every month. You estimate this by summing fixed quotes for insurance and security, plus a budget for office consumables. It’s the minimum spend to open the doors.
- Utilities & Insurance: $2,500
- Security Services: $1,000
- Office Supplies: $800
Cost Control
Managing this is mostly about locking in favorable annual contracts for security and insurance rather than monthly billing. Office supply costs are easy to overspend on; standardize bulk purchasing across your operations. Don't skimp on insurance, though; downtime from an uninsured incident is defintely worse.
- Bundle utility contracts annually.
- Negotiate security rates based on volume.
- Track supply usage closely.
Overhead Reality
While $4,300 seems small next to your $66,250 staff wages, it is 100% fixed cost that hits your Profit and Loss statement regardless of sales volume. Know this number cold for accurate break-even analysis.
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Frequently Asked Questions
Typically $100,000-$110,000 per month in operating expenses (OpEx) during the first year, plus inventory costs (COGS) This includes $66,250 in payroll and $36,300 in fixed overhead;