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Key Takeaways
- The total estimated monthly running cost for Professional Development services is projected to be around $46,350 in 2026, dominated by high fixed expenses.
- Payroll is the largest single expense, consuming $28,333 monthly to cover the salaries of 35 full-time equivalent staff members.
- Founders must secure a significant cash buffer of $878,000 to cover fixed costs until the projected break-even date in February 2026.
- Variable costs are extremely high, with Cost of Goods Sold reaching 120% of revenue due to instructor fees accounting for 100% of sales.
Running Cost 1 : Payroll
2026 Salary Load
Your 2026 payroll commitment for 35 full-time employees (FTEs), including the $120,000 Founder/CEO base, settles at $28,333 per month. This fixed overhead anchors your baseline operating expenses before revenue starts flowing. That's a defintely cost you must cover every 30 days.
Fixed Staff Cost Basis
This $28,333 monthly figure represents the base compensation for 35 FTEs planned for 2026 operations. It includes the $120,000 annual salary for the CEO, which translates to $10,000 monthly. The remaining $18,333 covers the other 34 staff members' average salaries.
- Total FTE Headcount: 35
- CEO Annual Salary: $120,000
- Monthly Fixed Payroll: $28,333
Controlling Headcount Burn
Since payroll is a fixed cost, you must scale revenue-generating roles (like instructors) carefully against enrollment targets. Avoid hiring administrative staff until cohorts are consistently hitting 90% capacity. Hiring too early inflates your burn rate fast.
- Delay non-essential hiring by 6 months
- Use contractors for overflow support
- Tie hiring milestones to revenue triggers
Payroll Burn Rate Check
With $28,333 in fixed payroll, you need significant revenue just to cover salaries before accounting for rent ($2,500) and marketing costs. If instructor fees are 100% of revenue, this payroll must be covered by non-program revenue sources or retained earnings until you secure corporate contracts.
Running Cost 2 : Instructor Fees
Instructor Cost Structure
Instructor Fees are your primary variable expense, directly tied to sales volume. This cost category consumes 100% of revenue because it pays external trainers delivering the programs. If revenue hits $50,000 this month, instructor payments are exactly $50,000. That's a tough margin structure to manage.
Estimating External Trainer Costs
This expense covers all payments to external coaches and trainers providing the actual instruction. You must calculate this based on the number of active participants multiplied by the agreed-upon per-seat fee structure. It dwarfs all other variable costs, making gross margin effectively zero before fixed overhead.
- Seats filled Per-seat instructor rate
- This is a 100% Cost of Goods Sold (COGS) item.
- Zero contribution margin before fixed costs.
Managing 100% Variable Pay
Since this cost is 100% of revenue, reducing it requires changing the delivery model or pricing strategy. Internalizing key instructors or shifting to a revenue-share model with lower upfront guarantees helps stabilize costs. Watch out for minimum guarantees that lock in high payments even if enrollment dips.
- Negotiate lower per-seat rates for larger cohorts.
- Avoid upfront instructor retainers if possible.
- Hire one key trainer FTE instead of relying solely on contractors.
The Core Viability Check
With instructor fees at 100% of revenue, your business is fundamentally a pass-through service unless you drastically raise prices or reduce reliance on external experts. You defintely need to re-engineer the cost structure immediately to cover the fixed overhead, like the $2,500 rent and $500 professional services retainer.
Running Cost 3 : Content Licensing
Licensing Cost Weight
Content licensing is a major operating expense, set to consume 20% of total 2026 revenue. This cost covers all external materials needed for your cohort-based training programs. Managing this percentage against program pricing is critical for margin health.
Licensing Inputs
This expense is purely variable, linked directly to top-line sales projections for 2026. To estimate the dollar amount, you multiply your projected 2026 revenue by 0.20. This covers usage rights for external trainers or proprietary content.
- Input: 2026 Revenue forecast.
- Calculation: Revenue $\times$ 20%.
- Nature: 100% variable based on sales.
Control Licensing Spend
Since this is 20% of revenue, reducing it means either negotiating better per-use rates or shifting content creation in-house over time. Avoid paying for unused material rights in licensing agreements; defintely push for seat-based pricing structures where possible. A good target is aiming for 15% by year three.
Margin Context
Content licensing at 20% is significant, but it’s dwarfed by Instructor Fees, which consume 100% of revenue. You must ensure the value provided by licensed content justifies its cost, especially when Instructor Fees are already consuming everything else.
Running Cost 4 : Office Space
Fixed Rent Stability
Your fixed office rent is a predictable $2,500 per month, a cost that remains flat even if you scale to the projected 500% occupancy in 2026. This low overhead is a major advantage when variable costs, like instructor fees at 100% of revenue, are high.
Rent Cost Inputs
This $2,500 monthly rent covers the physical space for your training cohorts. It is a fixed cost, meaning it doesn't scale with revenue or enrollment numbers. You must budget $30,000 annually for this, which is significantly less than the $28,333 monthly payroll for 35 FTEs in 2026.
- Fixed cost: $2,500/month
- Annualized cost: $30,000
- Independent of occupancy rate
Managing Fixed Space
Because this cost is fixed, the primary lever is maximizing utilization, not reducing the rate itself. Avoid signing long-term commitments until revenue stability is defintely proven. Since instructor fees eat 100% of revenue, keeping this fixed cost low is crucial for margin expansion.
- Focus on high cohort density
- Prioritize flexible lease terms
- Do not overpay for unused square footage
Overhead Absorption
The $2,500 rent is effectively absorbed as your program scales, especially given that Customer Acquisition Costs are 50% of revenue. Your immediate action should be ensuring cohort density is high enough to cover the $28,333 in payroll before this fixed rent becomes a meaningful percentage of your total overhead.
Running Cost 5 : Customer Acquisition
Acquisition Cost Shock
Customer acquisition costs are your biggest lever outside direct instruction fees. Starting Marketing & Advertising at 50% of revenue means every dollar earned is immediately cut in half before covering other operational needs. This high initial spend demands rapid scaling to cover fixed costs like payroll.
CAC Calculation
This 50% variable expense covers all Marketing & Advertising spend needed to bring in new participants. You calculate this by applying 50% to gross revenue monthly. Because it scales with sales, this cost dictates how quickly you can cover the $18,000 in monthly fixed overhead (Payroll + Rent + Legal).
- Input: Monthly Revenue.
- Calculation: Revenue 0.50.
- Benchmark: Must beat Instructor Fees (100%).
Cutting Acquisition Spend
Reducing this 50% marketing burn requires shifting focus immediately toward organic growth and referrals. Since Instructor Fees are already 100% of revenue, every dollar saved here directly boosts contribution margin. Target lowering this to 35% within 18 months via strong cohort retention.
- Prioritize corporate contracts.
- Optimize conversion rates first.
- Focus on word-of-mouth.
CAC vs. COGS
Honestly, the 50% Marketing & Advertising cost is secondary to the 100% Instructor Fees variable cost. You need revenue growth just to cover instructors, making customer acquisition profitability dependent on high participant lifetime value (LTV) or securing corporate contracts early on.
Running Cost 6 : Tech Subscriptions
Tech Spend vs Revenue
Platform subscriptions are pegged at 20% of revenue, funding the Learning Management Systems and delivery tools. This is a critical variable cost tied directly to sales volume, meaning higher revenue automatically increases this expense line item.
Inputs for Tech Costs
This 20% covers software infrastructure, including the Learning Management System (LMS) and delivery tools. Inputting projected monthly revenue multiplied by 0.20 sets the budget. It sits behind Instructor Fees (100% of revenue) as the primary variable operating cost that scales with every new participant seat sold.
- Estimate based on projected enrollment volume.
- Track per-user licensing tiers carefully.
- Factor in annual contract discounts.
Managing Platform Spend
Avoid paying for unused seats or premium features before scaling up cohort size. Negotiate annual commitments if enrollment stability is reached by Q2. A common mistake is paying for redundant features across multiple platforms; consolidate tools where possible to save money, defintely look for bundled pricing.
- Audit feature usage quarterly.
- Consolidate overlapping software functions.
- Prioritize tools based on cohort needs.
Variable Cost Pressure
With Instructor Fees at 100% and Tech Subscriptions at 20% of revenue, gross margin is heavily pressured before fixed costs like payroll ($28,333/month) are considered. If you can't lower the 100% fee, every software dollar must drive substantial enrollment growth to cover the high variable cost basis.
Running Cost 7 : Legal & Accounting
Fixed Compliance Cost
Your ongoing compliance foundation is set with a fixed $500 per month Professional Services Retainer. This predictable cost covers essential legal documentation and routine accounting tasks necessary for operating the academy smoothly. That’s $6,000 annually budgeted for governance.
Budgeting Legal & Accounting
This $500 monthly retainer is your baseline for compliance, covering necessary legal reviews and standard accounting entries. It is a fixed cost, unlike variable expenses like instructor fees or customer acquisition. This amount needs to be covered every month, regardless of how many cohorts you run.
- Fixed cost: $500/month
- Annualized cost: $6,000
- Covers: Legal and accounting needs
Managing Professional Fees
Keep this cost predictable by clearly defining the scope of work upfront with your provider. Avoid scope creep by batching non-urgent items rather than paying for ad-hoc requests. If you scale rapidly, review the retainer structure annually to ensure it still reflects your volume. It’s defintely worth checking.
- Define scope to prevent creep
- Batch requests for efficiency
- Review structure upon major growth
Focus on Variable Costs
Since instructor fees are 100% of revenue, this small fixed cost is immediately overshadowed by operational leverage. Focus intensely on maximizing cohort utilization; every dollar saved here is crucial when variable costs eat almost everything else. Your primary financial lever isn't cutting this retainer, but driving enrollment.
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Frequently Asked Questions
Total monthly running costs are approximately $46,350 in 2026, including $28,333 in wages and $5,000 in fixed overhead Variable costs, like instructor fees and marketing, account for the remaining $13,015 based on projected revenue;