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Key Takeaways
- The baseline monthly operating burn rate before revenue generation is established at $49,192, heavily weighted by fixed management payroll of $44,792 per month in 2026.
- Profitability hinges on revenue scaling faster than variable costs, as VA compensation alone starts at 180% of revenue, representing the largest expense category.
- A substantial working capital buffer of $599,000 is required to cover operations until the forecasted breakeven point, which is projected to occur after 14 months in February 2027.
- The two dominant costs requiring constant tracking are fixed management payroll ($44,792/month) and variable VA compensation (180% of revenue), which together dictate cash flow management.
Running Cost 1 : VA Compensation
VA Cost Shock
Virtual Assistant (VA) compensation is your primary cost driver, starting at an alarming 180% of revenue in 2026. This means you are paying out $1.80 for every $1.00 earned just for delivery labor. The goal is to drive this ratio down to 140% by 2030 through process refinement.
Labor Cost Inputs
This cost covers the wages for the US-based professionals delivering the administrative and technical support. Estimating requires your projected revenue, the assumed service margin, and the efficiency factor applied to hourly utilization. Honestly, starting at 180% suggests current pricing or scaling assumptions are misaligned with delivery costs.
- Projected revenue growth rate.
- Target utilization rate per VA.
- Average blended hourly VA wage.
Driving Efficiency
Reducing this massive cost relies entirely on improving how fast VAs complete tasks without sacrificing quality. Focus on standardizing repeatable workflows and automating triage tasks that currently consume billable time. If client onboarding takes 14+ days, churn risk rises, impacting the efficiency curve.
- Standardize 75% of repetitive admin tasks.
- Implement internal knowledge bases quickly.
- Ensure high utilization across the team.
Margin Pressure Point
The 40-point reduction in compensation percentage from 2026 to 2030 is aggressive but necessary for viability. If process improvements lag, you will need to immediately raise subscription prices or cut service scope to avoid operating at a structural loss, defintely.
Running Cost 2 : Management Payroll
Fixed Payroll Baseline
Management payroll is a significant fixed drain in 2026, totaling $44,792 monthly. This covers the core team of 40 FTEs plus two part-time roles (0.5 FTE each) handling HR and Accounting functions. This cost hits before variable service delivery costs scale.
Payroll Cost Coverage
This $44,792 monthly expense is fixed overhead for 2026, funding the leadership structure. It includes 40 full-time equivalents and two specialized 0.5 FTE roles for HR and Accounting oversight. This must be covered by contribution margin before variable VA compensation scales up.
- Fixed cost starts at $537,504 annually.
- Covers core operational oversight.
- Must be covered by service revenue contribution.
Managing Fixed Headcount
Avoid hiring for the two 0.5 FTE roles until client volume absolutely requires it; outsource initial compliance needs instead. A common mistake is paying for management capacity that isn't utilized by billable work. Defintely keep management span of control high early on.
- Delay hiring specialized support roles.
- Outsource initial compliance tasks.
- Ensure high productivity per manager.
Fixed vs. Variable Pressure
Management payroll is a high-leverage fixed cost. Since VA Compensation is projected at 180% of revenue in 2026, this $44,792 must be supported by strong gross profit first. If revenue lags, this fixed cost pressures working capital severely.
Running Cost 3 : Online Marketing
Marketing Spend Baseline
Your initial marketing outlay for 2026 is budgeted at $50,000 annually, translating to $4,167 per month. This spend is designed to support a $300 Customer Acquisition Cost (CAC). This budget dictates the pace of initial customer onboarding volume.
Marketing Budget Inputs
This $50,000 covers all paid online advertising efforts needed to secure new subscribers for the virtual assistant service. To hit this target, you need to acquire roughly 14 new customers monthly ($4,167 divided by $300 CAC). If your actual CAC exceeds $300, the volume of new clients slows down immediately.
- Annual spend starts at $50,000.
- Target CAC is $300.
- Monthly spend is $4,167.
Managing CAC Risk
The primary risk here is scaling spend before proving the $300 CAC is sustainable. Don't over-invest in channels that push your cost above $350 quickly. Focus initial spend on high-intent channels where conversion rates are proven, defintely using smaller, targeted tests first.
- Test channels before scaling spend.
- Watch conversion rates closely.
- Avoid letting CAC creep past $350.
Connecting Spend to Revenue
Remember, this marketing cost must be justified by the lifetime value (LTV) of the client. If your subscription revenue generates significantly more than $300 per acquired customer over time, this budget is sound. If LTV is low, even $4,167 monthly spend is too much.
Running Cost 4 : Fixed G&A Overhead
Baseline Overhead
Fixed General and Administrative (G&A) overhead sets your baseline cost floor at $4,400 monthly. This amount covers essential infrastructure like your virtual office lease, baseline software licenses, and supporting professional services required just to keep the lights on before any revenue generation begins. It’s the irreducible minimum expense.
Cost Coverage
This $4,400 includes non-variable expenses necessary for operation. Think about the monthly cost for your virtual office space and the baseline licenses for essential administrative software, excluding the variable VA tools. If you hire 40 FTEs, this overhead must remain stable to support scaling operations defintely.
- Audit all core software seats now.
- Negotiate annual terms for savings.
- Ensure virtual office use is optimized.
Cost Control
Managing this fixed cost means scrutinizing every subscription. Since this covers core software, review usage rates quarterly; avoid paying for licenses that aren't fully utilized by management or core staff. Scaling volume doesn't automatically lower this figure, so watch for unnecessary software creep.
Overhead Ratio
Since management payroll is $44,792 monthly, this $4,400 G&A represents about 9.8% of that fixed management cost base. Keep this ratio low; if G&A grows faster than payroll, your infrastructure efficiency is declining, which eats into contribution margin quickly.
Running Cost 5 : Professional Services
Fixed Compliance Spend
Your $1,000 per month for legal and accounting support is a fixed overhead cost critical for regulatory safety. This baseline expense ensures compliance, which is non-negotiable when you are managing US-based client contracts and payroll obligations. Don't let this slip.
Cost Inputs
This $1,000 fixed cost covers essential professional services like yearly audits or ongoing legal counsel review. You need quotes for registered agent services and standard contract templates to estimate this accurately. This budget supports the $44,792/month management payroll by keeping governance clean. It’s a small price for operational security.
- Legal contract review costs
- Monthly accounting oversight
- State compliance filings
Cost Control
Control this $1k spend by locking in a fixed monthly retainer with a CPA firm rather than paying high hourly rates for basic oversight. If you grow past 100 clients, you will likely need to increase this budget to cover more complex tax structures. A common mistake is delaying necessary corporate filings to save a few hundred dollars now; that’s a defintely bad trade.
- Seek fixed-fee CPA agreements
- Bundle legal review services
- Review needs annually
Operational Context
This $1,000 is separate from the 15% of revenue spent on direct VA tool subscriptions. It is a fixed base layer of overhead that must be covered before you even pay your VAs or market the service. If your monthly revenue is low, this fixed cost eats disproportionately into your contribution margin.
Running Cost 6 : Platform/Tool Subscriptions
Tool Cost Structure
Tool expenses for this service have two parts: variable costs tied directly to sales volume and fixed overhead. You must budget for variable platform costs starting at 15% of revenue, plus an additional $800 per month for essential fixed software like your CRM and accounting systems.
Variable Tool Budgeting
The 15% of revenue figure covers the direct tools needed by your virtual assistants (VAs) to perform their work, like project management software or specialized industry platforms. This scales instantly with sales. What this estimate hides is the specific tool stack cost per VA hour, which you need to map out defintely.
- Input: Monthly Revenue
- Calculation: Revenue × 0.15
- Impact: Direct Cost of Goods Sold (COGS) element
Managing Fixed Overhead
The fixed cost component is $800 per month for core operational software, mainly the Customer Relationship Management (CRM) system and accounting platform. This cost is incurred whether you have one client or one hundred. You must ensure your subscription tiers cover this baseline expense quickly.
- Input: Monthly Fixed Overhead
- Calculation: $800 / month
- Impact: Fixed General & Administrative (G&A)
Optimization Tactics
Manage the fixed $800 by auditing your core software stack annually; often, unused seats or overlapping functionality can be cut. For the variable 15%, negotiate volume discounts with your primary software vendors as your service scales past $100,000 in monthly revenue.
Running Cost 7 : Payment Processing Fees
Fee Consistency
Payment processing fees are locked in at 25% of revenue through 2030. This cost is purely variable, meaning every dollar earned carries this exact expense. This constant rate directly erodes your gross margin year over year, regardless of scale improvements elsewhere. That’s a heavy lift.
Fee Calculation
This 25% covers the cost of accepting client payments, usually via card or ACH transfer. You calculate this by multiplying total monthly revenue by 0.25. Since it’s tied to revenue, it scales perfectly with growth but also scales perfectly with any revenue dips.
- Input: Total Monthly Revenue
- Calculation: Revenue x 25%
- Impact: Zero margin protection
Margin Defense
Since the rate is fixed at 25%, reducing this cost requires changing payment methods or negotiating volume tiers. For a service business, pushing clients toward lower-cost options like ACH transfers instead of credit cards is key. Don’t just accept the default rate.
- Push clients to ACH payments.
- Benchmark against industry standards.
- Review processor contracts annually.
Growth Drag
Because VA Compensation drops from 180% to 140% of revenue, this 25% processing fee becomes a much larger piece of the remaining gross profit. You need revenue growth to cover high labor costs, but this fee eats into that margin consistently, slowing down profitability.
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Frequently Asked Questions
You need at least $599,000 in cash reserves, as the model shows this minimum is required by February 2027, the month before reaching breakeven;