How Increase Commercial Site Selection Service Profitability?
Commercial Site Selection Service Running Costs
Expect monthly running costs in 2026 to start around $103,000, driven primarily by specialized payroll and fixed technology licenses Your first-year revenue of $859,000 results in a $607,000 EBITDA loss, meaning you need significant working capital The largest expense category is specialized staff salaries, totaling $715,000 annually, followed by fixed overhead like the $12,000 monthly HQ Office Lease This guide breaks down the seven core running costs-from data subscriptions to professional insurance-so you can accurately model cash flow and plan for the 21 months required to reach breakeven by September 2027
7 Operational Expenses to Run Commercial Site Selection Service
#
Operating Expense
Expense Category
Description
Min Monthly Amount
Max Monthly Amount
1
Staff Payroll
Fixed Overhead
Annual payroll starts at $715,000 in 2026, covering roles like Managing Director ($185k) and two Geospatial Analysts ($190k total).
$59,583
$59,583
2
Office Lease
Fixed Overhead
The fixed monthly cost for the HQ Office Lease is $12,000, representing a significant portion of the $24,000 total fixed overhead.
$12,000
$12,000
3
Data Subscriptions
COGS
These are variable costs, starting at 80% of revenue in 2026, covering essential market and demographic data required for site analysis.
$0
$0
4
GIS Licenses
Fixed Overhead
Essential Geographic Information System (GIS) licenses cost a fixed $4,500 monthly, enabling complex spatial analysis for client projects.
$4,500
$4,500
5
Project Travel
Variable OpEx
Travel expenses are variable, budgeted at 100% of revenue in 2026, covering site visits and client meetings necessary for project delivery.
$0
$0
6
Insurance/Legal
Fixed Overhead
Fixed monthly costs include $2,500 for Professional Liability Insurance and $3,000 for the Legal and Accounting Retainer, totaling $5,500.
$5,500
$5,500
7
Tech/Comms
Fixed Overhead
Fixed monthly technology costs include $1,200 for Marketing Tools and CRM, plus $800 for Telecommunications, supporting business development efforts.
$2,000
$2,000
Total
All Operating Expenses
$83,583
$83,583
What is the total monthly running budget needed to sustain operations before revenue stabilizes?
The total required monthly budget to keep the Commercial Site Selection Service running before revenue stabilizes is $813,000. This figure combines high personnel costs with necessary operational expenses. To plan for this runway, you need clear milestones; for instance, review How To Write A Business Plan For Commercial Site Selection Service?
Payroll is the Main Drain
Monthly payroll alone hits $596,000, driving the majority of the burn.
This reflects the need for specialized analysts using the LocusIQ platform.
If talent acquisition takes longer than expected, you must extend this cash runway.
Payroll represents about 73% of your total required monthly spend.
Operational Cost Breakdown
Fixed overhead costs are relatively low at $24,000 per month.
Variable costs, tied to project execution, are substantial at $193,000.
Your combined non-payroll burn is $217,000 monthly, defintely a key area for early cost control.
You need revenue generation to cover this burn rate quickly.
Which recurring cost categories represent the largest percentage of total monthly spend?
The labor expense is clearly the largest recurring cost category for the Commercial Site Selection Service, dwarfing technology spending, so cost control efforts must prioritize optimizing the efficiency of the team delivering the analytics and consulting hours, which is critical when assessing operational success-you can read more about related metrics in What Are The 5 KPIs For Commercial Site Selection Service?
Labor Cost Dominance
Annualized labor costs are $715,000.
This translates to roughly $59,583 in monthly payroll expenses.
Technology and data costs are defintely secondary to personnel.
Labor is about 13 times larger than the stated monthly tech spend.
Tech Spend vs. Utilization
GIS Software Licenses cost $4,500 per month.
Check utilization rates on the LocusIQ platform licenses.
If analysts aren't using the software daily, that $4,500 is wasted overhead.
Focus on billable utilization rates for the high-cost labor pool.
How much working capital is required to cover the projected $607,000 EBITDA loss in Year 1?
You need a minimum cash buffer of $185,000 to ensure the Commercial Site Selection Service survives its deepest negative cash position before hitting breakeven in September 2027. This required runway covers the 21 months until profitability, which is critical when assessing milestones like those detailed in What Are The 5 KPIs For Commercial Site Selection Service? Honestly, if you can't secure this base funding, the $607,000 Year 1 EBITDA loss projection becomes an immediate insolvency risk.
Bridging the Cash Trough
Minimum cash low point projected at -$185k.
Breakeven timeline is 21 months away (September 2027).
This buffer funds operations until positive cash flow starts.
If client ramp-up slows, this runway shrinks fast.
Funding the Year 1 Loss
Total projected EBITDA loss for Year 1 is $607,000.
Working capital must cover this cumulative burn rate.
The $185k is the minimum liquidity needed for survival.
You defintely need more than $185k to cover the full $607k loss.
If revenue falls short of the $859,000 Year 1 target, how will we cover fixed costs?
If Year 1 revenue for the Commercial Site Selection Service misses the $859,000 goal, you must immediately control non-essential fixed spending, focusing on delaying planned hires and aggressively renegotiating the $12,000 monthly office commitment.
Control Immediate Fixed Burn
If revenue hits $800,000 instead of $859,000, that's a $59,000 gap before variable costs hit.
The largest immediate fixed drain is the HQ Office Lease at $12,000 per month; you need to confirm terms defintely.
If you can't cut that $12k, you need about 100 additional billable hours just to cover the rent shortfall over 12 months.
Personnel costs are the next big lever, even if the Geospatial Analyst hiring spike isn't until 2027.
Delaying one analyst hire planned for Q2 saves roughly $71,500 in salary and overhead for that year.
Tie hiring to confirmed revenue milestones, not just optimistic projections.
The planned increase from 20 to 30 Geospatial Analyst FTEs later on must be paused until cash flow supports it.
Key Takeaways
The initial monthly running cost for a Commercial Site Selection Service starts high at $103,000, driven primarily by specialized payroll and fixed technology licenses.
Achieving operational stability requires a significant runway, as the business is projected to reach breakeven only after 21 months of operation, specifically by September 2027.
Specialized staff payroll, totaling $715,000 annually in 2026, constitutes the single largest expense category that must be managed closely.
Due to a projected $607,000 EBITDA loss in Year 1 and a minimum cash low point of -$185,000, substantial working capital is mandatory to cover the initial operational deficit.
Running Cost 1
: Specialized Staff Payroll
Payroll Baseline
Your 2026 specialized staff payroll hits $715,000 annually, driven by essential analytical leadership. This figure supports the Managing Director at $185k and two Geospatial Analysts costing $190k combined. This is your primary fixed operational cost before revenue starts flowing.
Cost Inputs
This payroll estimate requires defining headcount and fully loaded costs (benefits, taxes). The $715,000 base covers key roles like the MD and analysts, setting the minimum operational burn rate for 2026. You need firm salary quotes for specialized roles to lock this down.
MD salary: $185,000
Two Analysts total: $190,000
Remaining staff coverage: $340,000
Managing Staff Burn
Managing specialized payroll means avoiding premature hiring or underpaying experts. Since these roles drive client value, cutting salary too deep increases churn risk. Consider phasing hiring based on booked revenue milestones.
Don't hire analysts before Q3.
Use equity sparingly for senior hires.
Benchmark salaries against consulting firms.
Utilization Risk
This $715k payroll is fixed and must be covered by consulting revenue, which depends on project volume. If utilization drops below 75% for your analysts, the cost per billable hour spikes fast. It's a high-leverage cost, so watch utilization defintely closely.
Running Cost 2
: HQ Office Lease
Lease Dominates Overhead
The HQ office lease is a major fixed drain, costing $12,000 monthly. This single expense accounts for exactly 50% of your total $24,000 fixed overhead before specialized staff payroll kicks in. You need to watch this cost closely.
Cost Structure Input
This $12,000 covers your physical space, a bedrock fixed cost. It sits alongside $4,500 for GIS software licenses and $5,500 for insurance/legal retainers. To set this, you need signed lease terms. What this estimate hides is the build-out cost, which isn't included here.
Fixed monthly cost: $12,000
Share of total fixed costs: 50%
Budgeted against $715k annual payroll
Managing Fixed Space
Since this lease is 50% of overhead, optimizing it directly impacts break-even point calculations. Negotiate term length or look at smaller, flexible space now. If you hire fast, you might outgrow a small space quickly, so plan for expansion clauses in the agreement.
Avoid long commitments early on
Check for subleasing options
Factor in utility increases
Lease vs. Burn Rate
Because the lease is $12,000, your project revenue must cover this before anything else. Compare this against the $715,000 annual payroll starting point. You need high-value projects flowing consistently to absorb this fixed burden, defintely.
Running Cost 3
: Data Subscription Fees (COGS)
Data Cost Hit Rate
Data Subscription Fees are a major variable cost, set to consume 80% of revenue in 2026. These fees pay for the critical market and demographic data your LocusIQ platform needs to perform site analysis. You need to model this expense aggressively against project intake, as it dictates your gross margin floor.
Modeling Variable Data Costs
These fees are your Cost of Goods Sold (COGS), meaning they scale directly with billable work. They cover the essential third-party market and demographic datasets required for every site selection project. To estimate this, you multiply projected revenue by the 80% rate. It's a huge chunk of your gross margin right away.
Covers market data access.
Scales with project revenue.
Benchmark: 80% in Year 1.
Controlling Data Spend
Managing this 80% variable cost requires tight control over data utilization. You must negotiate annual volume tiers with data providers before signing contracts. Don't pay for data sets you won't use on every single project; defintely audit usage monthly. If you hit scale, look into bundling multiple data sources.
Negotiate volume discounts early.
Audit data usage quarterly.
Avoid over-licensing niche data.
Impact on Profitability
If your hourly consulting rate doesn't adequately absorb this 80% COGS, your gross margin vanishes quickly. This high variable cost means you need a high average revenue per project to cover fixed overhead like the $715,000 specialized staff payroll. You must price for data dependency.
Running Cost 4
: GIS Software Licenses
GIS License Cost
You need $4,500 monthly for essential Geographic Information System (GIS) licenses. These fixed costs power the complex spatial analysis required by your platform to vet locations for major corporate clients. This software access is non-negotiable for delivering core site selection value.
Cost Inputs
This $4,500 fixed cost covers the necessary software access for spatial modeling. It's calculated as 1 unit of license coverage multiplied by the $4,500 monthly quote. This expense sits within your technology stack, separate from the variable Data Subscription Fees (budgeted at 80% of revenue in 2026).
Fixed monthly expense.
Enables spatial analysis.
$4,500 per month.
Managing Licenses
Reducing this expense means evaluating license tiers carefully. Avoid paying for high-level features you won't use in the initial 2026 phase. A common mistake is over-licensing before client demand justifies the spend. Check if annual prepayment offers a small discount versus the monthly rate.
Audit feature necessity.
Check annual prepayment rates.
Avoid feature creep licensing.
Capacity Risk
If you scale client work rapidly, defintely ensure your current license agreement supports the required concurrent user count. Running into capacity limits mid-project forces emergency upgrades, which are always expensive. This software is critical infrastructure, so plan capacity scaling three months ahead of peak demand.
Running Cost 5
: Project Travel
Travel Cost Exposure
Travel expenses are budgeted at 100% of revenue in 2026, meaning every dollar earned funds the necessary site visits and client meetings. This high variable cost demands rigorous project scoping to maintain profitability on every engagement.
Travel Inputs
This cost covers essential travel for project delivery, like site vetting and client reviews. You need to estimate this based on expected client locations and the required number of site visits per project. Since it's budgeted at 100% of revenue, it directly consumes all gross profit before fixed overhead is covered.
Site visit frequency per project.
Average cost per trip (airfare, lodging).
Client meeting locations.
Controlling Travel Spend
Managing this variable expense requires strict travel policies and maximizing remote review where possible. A common mistake is underestimating travel time allocated to junior staff who might charge lower hourly rates but incur high per-diem costs. We defintely need to track travel cost per active client.
Mandate virtual site previews first.
Negotiate corporate travel discounts.
Track travel cost per active client.
Margin Impact
Because travel hits 100% of revenue, your contribution margin is effectively zero before accounting for fixed costs like payroll and rent. This means revenue growth must be accompanied by immediate, disciplined travel expense control, or you'll just be running faster to stand still.
Running Cost 6
: Insurance and Legal Retainers
Fixed Risk Costs
Your baseline fixed overhead includes $5,500 monthly for critical risk management. This covers your $2,500 Professional Liability Insurance and the $3,000 Legal and Accounting Retainer, funds that must be covered regardless of project volume.
Cost Breakdown
This $5,500 is a non-negotiable fixed expense supporting your site selection work. Professional Liability Insurance protects against errors in your geospatial analysis. The Legal and Accounting Retainer ensures compliance and timely financial guidance for your project-based revenue model. These costs are part of your $24,000 total fixed overhead.
Insurance: $2,500 monthly premium.
Retainer: $3,000 for counsel.
Total fixed risk: $5,500.
Managing Retainers
You can't easily cut the liability insurance, but watch the retainer scope closely. Legal fees can balloon fast if you don't define boundaries for the $3,000 monthly fee. Ask for quarterly reviews of billable hours outside the retainer agreement to spot scope creep early. Defintely lock in annual pricing for the insurance renewal.
Define retainer scope clearly.
Review outside billables quarterly.
Benchmark insurance rates annually.
Breakeven Impact
Since these $5,500 costs are fixed, they directly pressure your gross margin until revenue covers them. If your variable costs, like 100% travel budgeted in 2026, are high, you need more upfront project certainty to absorb these baseline commitments.
Running Cost 7
: Marketing Tools and CRM
Tech Spend Snapshot
Your fixed monthly technology overhead supporting sales is $2,000 total. This bundles $1,200 allocated for Marketing Tools and CRM with $800 dedicated to Telecommunications, both crucial for business development efforts.
Business Dev Tech Stack
This $2,000 monthly figure is a fixed overhead supporting client acquisition. It covers the $1,200 for the Marketing Tools and Customer Relationship Management (CRM) software and $800 for essential phone and data lines. This cost is separate from the $4,500 GIS licenses required for analysis. What this estimate hides is the cost of scaling user seats later on.
Marketing Tools/CRM: $1,200 monthly fixed.
Telecommunications: $800 monthly fixed.
Managing Tech Costs
Reviewing the $1,200 CRM spend annually is smart, especially since revenue is project-based. If client onboarding slows below expectations, you might be paying for unused seats or features. Consolidating communication providers could defintely save 10%, but don't cut service quality needed for site visits.
Watch Sales Tech Ratio
Track this $2,000 monthly spend against the pipeline velocity. Since revenue is hourly billing, this fixed technology cost must be covered by billable utilization quickly. If development stalls, this overhead starts eroding contribution margin fast.
