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Key Takeaways
- The initial monthly running cost required to sustain Portable DNA Testing operations is projected to start at approximately $130,000 in 2026.
- Payroll for 155 full-time employees, amounting to $102,292 monthly, represents the dominant fixed operating expense.
- The financial model projects a significant 26-month runway is necessary, with the break-even point not anticipated until February 2028.
- The business requires substantial upfront capital expenditures exceeding $760,000, alongside working capital to cover negative cash flow until profitability is achieved.
Running Cost 1 : Payroll
Wage Bill Dominance
Payroll is your primary financial pressure point heading into 2026. The projected monthly wage bill hits $102,292, supporting 155 full-time equivalents (FTEs). This expense dwarfs all other operating costs, so managing headcount efficiency is job number one for profitability.
Cost Breakdown
This $102,292 covers salaries, benefits, and payroll taxes for the 155 FTEs needed to staff the mobile testing service. The input is the required headcount for practitioner deployment and administrative support, multiplied by the blended loaded rate per employee. What this estimate hides is the ramp-up timeline.
- 155 FTEs projected for 2026.
- Largest expense line item.
- Requires accurate loaded cost modeling.
Controlling Wages
Since personnel is the biggest spend, optimize utilization immediately. If practitioners are underutilized, that $102k is burning cash fast. Focus on driving utilization rates above 85% to justify the current staffing level. Also, review benefits packages for cost savings, defintely look at self-funding options.
- Boost practitioner utilization rates.
- Scrutinize non-salary burden costs.
- Consider phased hiring based on revenue milestones.
Headcount Risk
If projected revenue of $87,200 doesn't materialize, carrying 155 FTEs creates massive negative operating leverage. You must tie hiring schedules directly to confirmed client contracts, not just sales projections, to avoid immediate cash flow distress.
Running Cost 2 : Consumables (COGS)
Zero Gross Margin Risk
Your DNA Reagents and Consumables are the only variable cost tied to service delivery, equaling exactly $8,720 monthly against $87,200 in projected revenue for 2026. This means your gross margin is zero until you reduce reagent cost or increase service price. You're essentially trading dollars on every test performed.
Reagent Cost Structure
This cost covers the DNA Reagents and Consumables necessary for every on-site analysis performed by your practitioners. Since these are 100% of revenue, the monthly estimate is fixed at $8,720 based on $87,200 revenue. This cost scales directly with service volume, making it your Cost of Goods Sold (COGS).
- Units tested multiplied by reagent unit price.
- Must track usage per test kit precisely.
- This drives the gross margin calculation.
Managing Reagent Spend
Because consumables are 100% of revenue, managing this spend is vital for profitability, even though it's technically COGS. Look for bulk purchasing discounts or explore alternative, validated reagent suppliers now. Waste reduction is key; check calibration schedules to prevent premature reagent expiration.
- Negotiate volume tiers with primary suppliers.
- Implement strict inventory tracking protocols.
- Benchmark reagent cost per test against industry standards.
Margin Reality Check
Having 100% of revenue as COGS means your gross profit is zero before accounting for $102,292 in payroll or other overhead. You must either increase the fee per test or drastically lower reagent costs to achieve any positive contribution margin. This is defintely a structural risk you need to address early.
Running Cost 3 : Fixed Overhead
Overhead Baseline
Your monthly fixed facility and general overhead costs settle at $10,200. This baseline expense must be covered before variable costs like reagents or payroll kick in. Since this cost is static, maximizing utilization across your 155 planned full-time employees (FTEs) is crucial to absorb it efficiently.
Cost Components
This $10,200 covers the non-variable costs of keeping the doors open, including the $3,500 dedicated to office rent. You estimate this monthly spend based on signed leases and standard operating agreements. It sits below payroll ($102k) but above fleet costs ($2.5k), setting the minimum revenue floor.
- Rent is a fixed facility cost.
- General operating expenses are bundled here.
- This amount is independent of test volume.
Managing Fixed Spend
Fixed costs are hard to adjust quickly, but $3,500 in rent is negotiable upon renewal. Avoid over-committing to large physical footprints early on, especially since practitioners are mobile. If you scale down office space by 20%, you save $700 monthly. Defintely review software bundles too.
- Lock in longer lease terms for discounts.
- Challenge every non-essential recurring charge.
- Use remote work to reduce facility needs.
Overhead Leverage
Because fixed overhead is $10,200, every dollar of revenue above variable costs immediately contributes to covering this base. Your primary lever isn't cutting rent today, but ensuring practitioner utilization drives enough gross profit dollars monthly to clear this hurdle quickly.
Running Cost 4 : Vehicle Fleet
Fleet Mobility Cost
The monthly cost for leasing and maintaining the vehicle fleet is a fixed $2,500. This expense directly enables your practitioners to deliver on-site DNA analysis, making it non-negotiable for service delivery. If you skip this, the core value proposition fails.
Fleet Budgeting Input
This $2,500 covers leases and maintenance required for the mobile units serving practitioners. To budget accurately, you need quotes based on the number of required vehicles times the monthly lease payment, plus projected maintenance reserves. This is a foundational fixed cost against your $10,200 fixed overhead.
- Lease agreements per vehicle.
- Estimated maintenance reserve.
- Total required mobile units.
Fleet Cost Control
Managing fleet costs means optimizing route density and vehicle utilization, not just cutting leases. Poor scheduling forces practitioners to drive more miles, increasing wear and tear. Avoid financing high-end SUVs if standard vans suffice for equipment transport. A common mistake is underestimating annual service costs; you defintely need a buffer.
- Optimize practitioner scheduling.
- Negotiate bulk maintenance deals.
- Review lease terms annually.
Fleet Impact Analysis
Since the fleet cost is fixed at $2,500, it must be covered by service volume before variable costs are hit. If your average revenue per practitioner visit covers $500 in variable costs, you need 5 billable visits just to cover the fleet expense alone.
Running Cost 5 : Data & Software
Fixed Tech Spend
Your monthly spend on essential software and secure data handling hits $1,900. This covers the core technology platform and HIPAA-compliant storage needed for every patient result. This is a non-negotiable fixed cost for running the mobile diagnostic service.
Tech Cost Inputs
This $1,900 fixed cost covers platform operations. You need $1,200 for software licenses, likely for scheduling, billing, and LIMS (Laboratory Information Management System) software. Cloud storage is $700 monthly for protecting sensitive patient genetic data securely. This is budgeted before considering revenue projections.
- Licenses: $1,200
- Storage: $700
- Total Fixed Tech: $1,900
Controlling Tech Overhead
Managing this cost means auditing license usage quarterly. If you scale practitioners quickly, storage costs scale with data volume, so watch your retention policies. Avoid over-provisioning storage tiers; use lower-cost archival storage for older, less accessed results. Defintely review vendor agreements annually.
- Audit licenses every 90 days.
- Archive data older than 5 years.
- Benchmark storage rates against competitors.
Compliance Anchor
Because you handle sensitive genetic information for healthcare clients, compliance costs are baked in here. Do not skimp on storage security standards; a breach immediately voids your value proposition and invites massive regulatory fines. This $1,900 is foundational insurance.
Running Cost 6 : Marketing & Sales
Sales Cost Weight
Marketing and sales activities consume 70% of gross revenue, amounting to $6,104 monthly in 2026 projections. This high variable structure means every dollar earned is heavily earmarked for acquisition costs before covering fixed overhead or payroll. You need tight control over customer acquisition cost (CAC) to ensure profitability.
Cost Breakdown
This 70% expense covers both paying the sales team via 40% variable commission and funding digital advertising at 30% of revenue. To estimate this monthly cost, you must know projected revenue ($8,720 in 2026) and apply the combined rate. It’s a direct function of sales volume.
- Commissions: 40% of unit price.
- Digital Spend: 30% of total revenue.
- Total Variable Sales Cost: 70%.
Managing Acquisition
Because this cost is so high, optimizing CAC is critical for survival; if onboarding takes 14+ days, churn risk rises. Focus on high-value client segments, like corporate wellness, where the average revenue per user (ARPU) justifies the $6,104 spend. Don't let digital campaigns drift without clear return on investment (ROI) tracking, defintely.
- Benchmark CAC against LTV.
- Prioritize direct sales channels.
- Review commission structure quarterly.
Profit Link
If revenue hits the projected $8,720 monthly, the $6,104 marketing spend leaves only 30% to cover all other operating expenses, including payroll of $102,292. This means revenue must scale significantly past $8,720 before you cover fixed costs, let alone payroll.
Running Cost 7 : Maintenance & Calibration
Calibration Cost Impact
Device calibration and maintenance is a significant operational cost, representing 30% of revenue. This mandatory $2,616 monthly expense ensures device accuracy and maintains regulatory compliance for your on-site DNA analysis service. You defintely can't skip this line item.
Estimating Maintenance Spend
This $2,616 monthly cost covers service contracts ensuring the portable DNA analysis devices remain accurate. Estimate this by applying the 30% rate to your projected monthly revenue target. If revenue is low, you still need cash flow to cover this minimum required spend for compliance.
- Base estimate on 30% revenue.
- Covers service contracts.
- Ensures regulatory adherence.
Managing Calibration Fees
Do not cut calibration quality; accuracy is your UVP. Instead, negotiate longer service intervals with the equipment provider or look for volume discounts on reagent servicing. A failed audit due to out-of-spec gear costs far more than the $2,616 monthly fee.
- Negotiate longer service windows.
- Avoid compliance fines.
- Don't compromise accuracy.
Cost Behavior Check
Because calibration is tied directly to revenue at 30%, treat it like a variable cost, even if the underlying service contract is fixed. This means if utilization drops, this cost scales down, but you must budget for the $2,616 minimum to keep the fleet operational and compliant.
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Frequently Asked Questions
Initial monthly running costs are approximately $130,000, with $102,292 dedicated to payroll for 155 FTEs Fixed overhead is $10,200, and variable COGS start at 130% of revenue