Remodeling Service Running Costs: $35k Base Monthly Budget

Remodeling Service Running Costs

Expect base monthly running costs (fixed overhead and payroll) for a Remodeling Service to start around $35,000 in 2026 This figure excludes project-specific materials, which are usually billed to the client but includes critical operational expenses Your total monthly burn rate, including variable costs tied to revenue (COGS and marketing), can easily exceed $68,000 once projects scale The financial model shows you hit breakeven quickly—in just 3 months (March 2026)—but you need a substantial cash buffer The minimum cash required is $790,000 by February 2026 to cover initial capital expenditures (CapEx) and early operational gaps This guide breaks down the seven core recurring expenses you must track to maintain profitability and scale effectively

7 Operational Expenses to Run Remodeling Service

#	Operating Expense	Expense Category	Description	Min Monthly Amount	Max Monthly Amount
1	Wages and Salaries	Fixed OpEx	Payroll for 45 FTEs averages $26,667 per month, representing the largest fixed operational expense.	$26,667	$26,667
2	Facility Overhead	Fixed OpEx	Office/Showroom Rent is a fixed $4,500 per month, demanding a clear justification based on lead generation.	$4,500	$4,500
3	Client Acquisition Costs	Variable OpEx	Digital Advertising and Lead Generation is a variable cost starting at 100% of revenue in 2026.	$0	$0
4	Business Insurance	Fixed OpEx	Business Insurance is a critical fixed cost set at $1,200 monthly, covering liability and workers' compensation.	$1,200	$1,200
5	Direct Project COGS	Direct Cost	Project Specific Permits & Fees are a direct cost budgeted at 50% of revenue in 2026, decreasing later.	$0	$0
6	Logistics & Fleet	Fixed OpEx	Vehicle Maintenance & Fuel is a fixed operational cost of $1,000 per month to support field teams.	$1,000	$1,000
7	Tech Stack Subscriptions	Mixed OpEx	Project Management Software Licenses are variable, plus $250 monthly for fixed Website Hosting costs.	$250	$250
	Total	All Operating Expenses		$33,617	$33,617

What is the total monthly operating budget required to sustain the Remodeling Service before achieving positive cash flow?

The total monthly operating budget required for the Remodeling Service to sustain operations before reaching positive cash flow is estimated at $68,000, which helps frame the discussion around Is The Remodeling Service Currently Generating Consistent Profits?. This figure represents the necessary cash burn covering all overhead, labor, and direct project costs incurred each month. To achieve profitability, the service must consistently generate revenue significantly exceeding this baseline expense level.

Monthly Expense Breakdown

The $68,000 budget includes four main buckets of spending.
Fixed overhead costs, like rent and software subscriptions, are estimated at $18,000.
Payroll expenses must cover administrative staff and project managers.
Variable costs and COGS (Cost of Goods Sold, like materials) fluctuate with project load.

Cash Flow Threshold

If the average project yields a 40% gross margin after COGS, you need $170,000 in billed revenue.
This means the sales team must consistently close enough work to cover the $68k burn plus profit.
If onboarding takes 14+ days, churn risk rises defintely due to the high fixed cost base.
Focusing on improving job density per service zip code is critical for margin improvement.

Which cost category (Labor, Fixed Overhead, or Project-Specific COGS) represents the largest recurring expense, and how can it be optimized?

For the Remodeling Service, direct labor costs are typically the largest recurring expense, far outpacing variable project costs like permits and tool rentals, so understanding this split is key to profitability; you should defintely check Is The Remodeling Service Currently Generating Consistent Profits?

Biggest Expense Slice

Salaried Wages usually account for 60% to 70% of total direct project costs.
Project-Specific COGS, like Permits and Tool Rental, consistently run under 15% of the total job cost.
This means labor efficiency, not material purchasing, drives margin outcomes.
Fixed Overhead must be covered before variable costs impact net income.

Managing Utilization

Track the ratio of billable hours to total salaried payroll monthly.
If utilization falls below 82%, fixed labor costs start eating into potential profit.
Use 3D visualization tech to lock scope early, cutting unplanned labor time spikes.
Standardize material packages to reduce time spent sourcing variable permits or rentals per job.

How much working capital is absolutely required to cover the initial 3-month runway until the March 2026 breakeven date?

The total working capital required for the Remodeling Service must cover the initial Capital Expenditures (CapEx) plus the operational cash burn needed to survive the three months leading up to the March 2026 breakeven, defintely ensuring you maintain at least a $790,000 cash buffer in February 2026, which ties directly into What Is The Most Critical Indicator Of Success For Your Remodeling Service Business?

Covering Initial Outlay

Calculate the total initial CapEx for tools, software licenses, and office setup.
This initial spend is the first draw on your working capital pool.
If your initial CapEx is $300,000, this amount must be secured before operations start.
Treat CapEx as a sunk cost that must be covered by the initial funding round.

Securing The Runway Floor

The runway must bridge operations until March 2026.
You need enough cash to cover the burn rate through February 2026.
The target minimum cash balance entering March 2026 is $790,000.
Total working capital equals Initial CapEx plus (Monthly Burn Rate multiplied by 3 months).

If projected revenue is 20% lower than expected in the first six months, what specific cost levers can be pulled to maintain solvency?

If the Remodeling Service sees a 20% revenue drop in the first six months, you must immediately attack variable spending while freezing non-essential fixed commitments to maintain solvency, as detailed in What Is The Most Critical Indicator Of Success For Your Remodeling Service Business? Honestly, this is where cash flow gets tight defintely fast. You need to know which costs move when project volume drops and which ones keep burning cash regardless of sales.

Attack Variable Spending First

Immediately halt all non-essential digital advertising spend until lead conversion rates improve.
Review material purchasing buffers; order materials only when firm contracts are signed.
Negotiate payment terms with suppliers to extend Accounts Payable (AP) from 30 days to 45 days.
Pause hiring for non-billable roles, like administrative support, until utilization hits 85%.

Lock Down Fixed Overhead

Your office rent commitment is non-negotiable in the short term; budget for the full 100% monthly payment.
Keep core liability insurance active; cutting this exposes you to catastrophic risk.
Audit software subscriptions; cancel any visualization tools not directly used on active projects.
If the current office space costs $5,000/month, that is your minimum monthly burn before labor costs.

Key Takeaways

The base monthly running cost, encompassing fixed overhead and payroll, for the remodeling service is projected to start at approximately $35,000 in 2026.
The total monthly operating burn rate, including variable costs tied to revenue like COGS and marketing, can quickly climb to exceed $68,000 once projects are underway.
Achieving the modeled breakeven point in just three months requires securing a minimum working capital buffer of $790,000 to cover initial CapEx and early operational gaps.
Payroll represents the single largest fixed expense category at $26,667 monthly, while initial customer acquisition costs (CAC) are high at $1,500 per client.

Running Cost 1 : Wages and Salaries

Payroll Baseline

Payroll is your biggest fixed cost heading into 2026. Staffing 45 full-time employees (FTEs), which includes key roles like the General Manager (GM) and Project Manager (PM), requires $26,667 monthly in salary expenses. This number sets the baseline for your monthly burn rate before revenue starts flowing consistently.

Staffing Inputs

Estimating this cost requires totaling all planned salaries, including benefits loading. For 2026, the baseline includes the $120k annual salary for the GM and $80k for the PM. You need to budget for 45 FTEs total, factoring in the blended average rate to hit the $26,667/month payroll target.

Total FTE count: 45
GM annual salary: $120,000
PM annual salary: $80,000

Managing Payroll

Managing this large fixed cost means tightly controlling headcount growth until project volume justifies it. Avoid hiring administrative staff too early; use contractors initially. A common mistake is forgetting the full burden rate; remember payroll taxes and benefits often add 20% to 30% above base salary. If onboarding takes 14+ days, churn risk rises.

Break-Even Driver

Because payroll is your largest fixed expense, achieving scale means increasing revenue density per job site quickly. If you can reduce the number of required FTEs by optimizing workflows—perhaps by using better project management software—you directly improve your bottom line. This is defintely where efficiency counts.

Running Cost 2 : Facility Overhead

Fixed Facility Cost

Your fixed facility overhead starts at $4,500 monthly for the office and showroom space. This cost must directly drive client acquisition or significantly improve presentation quality to justify its place in the budget. That's the simple reality of fixed overhead.

Rent Inputs

This $4,500 rent is a true fixed cost, separate from variable COGS like permits. You must track how many leads are sourced directly from the showroom versus other channels. It covers the physical space needed for your 3D visualization tech demos.

Track showroom-influenced revenue.
Compare rent to total fixed costs.
Ensure space supports client meetings.

Overhead Management

Since this is fixed, reducing it requires renegotiation or downsizing the footprint. Avoid leasing space larger than needed for design presentations. If the showroom doesn't close deals, you're paying too much for square footage.

Test remote consultations first.
Negotiate a shorter lease term.
Benchmark rent against local rates.

Justification Threshold

If your 3D visualization presentations don't significantly shorten the sales cycle or increase Average Contract Value (ACV), the $4,500 monthly spend is not earning its keep. Defintely review the payback period on this physical asset.

Running Cost 3 : Client Acquisition Costs

CAC Reality Check

Your initial client acquisition strategy is extremely expensive. In 2026, digital advertising costs are budgeted at 100% of revenue, meaning every dollar earned goes to marketing initially. To make this model work, you must ensure your average Customer Acquisition Cost (CAC) settles near $1,500 per client. That’s a high bar for a new remodeling service.

Ad Spend Breakdown

This variable cost covers digital advertising and lead generation efforts aimed at homeowners aged 35-60. The model assumes a starting CAC of $1,500, which must be covered before accounting for other variable costs like permits (50% of revenue) or tech stack (40%). If CAC is 100% of revenue, you're funding growth entirely through equity until efficiency improves.

Input: Target market outreach.
Benchmark: CAC of $1,500 needed.
2026 Budget: 100% of gross revenue.

Reducing Ad Waste

Spending 100% of revenue on acquisition is not sustainable past the launch phase. The immediate focus must shift to improving lead quality to drive down the effective CAC. Avoid spending heavily on broad channels that don't target the core demographic of older homeowners. You need conversion rates that defintely justify that high $1,500 entry cost.

Focus on referral loops.
Test smaller ad budgets first.
Cut spending if CAC exceeds $1,500.

Profitability Hurdle

Reaching profitability depends entirely on rapidly improving marketing efficiency; if CAC stays at 100% of revenue, you are operating at zero gross margin before factoring in labor or overhead. The goal is to drop this acquisition percentage fast, likely below 20% of revenue, to cover the $18k fixed overhead plus payroll.

Running Cost 4 : Business Insurance

Insurance Fixed Cost

Business Insurance sets a mandatory $1,200 fixed cost every month. This covers critical liability and workers' compensation, which you absolutely need for every construction job you undertake.

Cost Breakdown

This $1,200 monthly expense is fixed overhead, not tied to project volume. It ensures compliance by covering general liability and workers' compensation, which are non-negotiable requirements when performing renovation work. Factor this into your base operational budget immediately.

Covers liability protection.
Includes workers' comp.
Fixed at $1,200/month.

Managing Premiums

You can't cut this cost, but you can manage the premium efficiently. Review your coverage limits annually against actual project risk exposure; sometimes, bundling general liability with commercial auto policies saves money. A common mistake is underinsuring high-risk jobs, defintely.

Bundle policies for savings.
Review limits yearly.
Don't skimp on comp coverage.

Project Gatekeeper

This fixed cost must be covered before you sign any contract; without proof of insurance, you can't legally start construction. If your projected margins can't absorb this $1,200 fixed cost plus the 50% variable COGS, the project isn't viable. It's a hard gate.

Running Cost 5 : Direct Project COGS

Permits Cost Structure

Project permits are a big initial direct cost, hitting 50% of revenue in 2026. You must drive volume and efficiency to hit the 30% target by 2030 through scale. That’s a 20 point margin swing.

Permits as Direct COGS

Permits and fees are direct costs tied to every job's legal approval. To budget this, you must model revenue growth against the known percentage. Expect 50% of revenue dedicated to these fees in 2026. This cost is variable, directly scaling with project count, not overhead. If onboarding takes 14+ days, churn risk rises.

Estimate based on revenue projections.
These scale directly with job volume.
They are not covered by the $1.2k insurance fee.

Cutting Permit Drag

Achieving the 30% target requires process standardization, not just volume. As you scale, negotiate preferred vendor status or pre-approve common permit packages for efficiency gains. Avoid scope creep mid-project, which often triggers unexpected, high-fee amendments. Honesty helps here.

Standardize permit applications early.
Track amendment fees closely.
Focus on process control to realize the 20 point margin swing.

COGS Visibility

Permits represent a massive initial drag on gross margin. If revenue targets are missed, this 50% direct cost erodes profitability quickly. You defintely need granular tracking linking fees back to specific project types for better forecasting.

Running Cost 6 : Logistics & Fleet

Fleet Fixed Cost

Vehicle Maintenance & Fuel is a predictable $1,000 monthly fixed cost supporting all site logistics. This baseline must be covered before variable job costs, making fleet efficiency key to overall margin protection for your remodeling service.

Cost Coverage

This $1,000 covers essential Vehicle Maintenance & Fuel for your field teams and moving materials across job sites. It’s a fixed operational expense, so it hits your budget regardless of project volume. You need this number locked in when calculating minimum required monthly revenue to cover overhead. Honestly, it's a non-negotiable baseline.

Fixed cost: $1,000/month.
Covers field travel and materials transport.
Essential for supporting 45 FTEs.

Managing Mileage

Since this is fixed, you can't cut it per job, but you can reduce the need for transport. Optimize routes using mapping tools to minimize mileage between sites. A common mistake is letting drivers idle trucks unnecessarily. Grouping material runs saves fuel dollars defintely.

Map routes for maximum density.
Enforce strict anti-idling policies.
Review fleet size vs. current job load.

Overhead Stack

Since this $1,000 is fixed, it acts like a minimum monthly hurdle. This cost combines with $4,500 rent and $1,200 insurance, totaling $6,700 in non-payroll fixed overhead you must cover every month just to keep the trucks running and the lights on.

Running Cost 7 : Tech Stack Subscriptions

Tech Spend Snapshot

Tech subscriptions are a major drag because project management software scales directly with your sales volume. Starting at 40% of revenue in 2026, this variable cost, plus fixed hosting, requires immediate focus on efficiency. You can’t afford to let software eat your margins.

Cost Drivers

This tech expense bundles fixed overhead with volume-based fees that grow with every project you schedule. You need $250 per month for Website Hosting, which is static. The big lever is Project Management Software Licenses, set as a variable cost equal to 40% of revenue starting in 2026. This percentage scales directly with your booking rate.

Licenses: 40% of revenue (variable).
Hosting: $250/month (fixed).
Input needed: Active user counts vs. project volume.

License Control

Managing a 40% variable cost means you must track license usage religiously; paying for unused seats is pure waste. Negotiate tiered pricing based on active field teams or project managers, not just a flat high percentage. Audit seats quarterly. If you optimize license allocation, you might realistically cut 10% to 15% from this line item.

Avoid paying for dormant users.
Tie license tiers to active project count.
Benchmark against industry standard of 5%–8%.

Margin Warning

A 40% variable software cost severely compresses your gross margin, especially when paired with 50% Direct Project COGS in 2026. This cost is defintely too high to absorb without adjusting your fixed-price contract calculations upfront. You must know the software cost per project to price profitably.