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Key Takeaways
- The baseline fixed operating expense (OpEx) required to run this wholesale business monthly in Year 1 is approximately $38,000, excluding inventory costs.
- To cover the initial operational burn rate until profitability stabilizes, a minimum working capital buffer of $464,000 is necessary by January 2027.
- Based on the current financial trajectory, the business is projected to reach its breakeven point after 14 months of operation, specifically in February 2027.
- Staff payroll, totaling $22,083 monthly, represents the single largest fixed operating expense threatening early profitability.
Running Cost 1 : Staff Payroll
2026 Payroll Baseline
Your 2026 staffing expense is fixed at $265,000 annually, breaking down to $22,083 per month for 30 FTE positions. This cost covers all salaries, including the CEO and the critical Warehouse Manager role needed to run logistics for the wholesale platform.
Payroll Inputs
This $265,000 annual payroll represents a core fixed operating expense for 30 FTE roles required to manage sourcing, sales, and fulfillment in 2026. To budget this accurately, you must calculate the fully loaded cost per employee, which includes employer-side payroll taxes and benefits above the base salary figure provided here.
- Calculate fully loaded employee cost.
- Factor in salaries for CEO and Warehouse Manager.
- This fixed cost drives the break-even volume.
Manage Headcount
Managing this fixed cost means focusing intensely on output per person before adding headcount; hiring too early burns cash fast. Since the Warehouse Manager and CEO are included in the 30 FTEs, ensure those specific roles are essential for day one operations. Watch the average FTE cost closely; unexpected salary creep directly impacts your monthly burn rate.
- Hire based on proven workload, not projections.
- Track output per full-time worker efficiency.
- Avoid adding staff before sales volume supports it.
Payroll Weight
Payroll, at $22,083 monthly, is the single largest fixed operating cost, making up about 60.8% of your total fixed overhead in 2026 ($22,083 / $36,333 total fixed costs). Defintely focus on sales velocity to generate gross profit dollars needed to cover this large base before factoring in variable costs like shipping.
Running Cost 2 : Facility Leases
Fixed Lease Costs
Your facility leases are a core fixed expense for 2026. The combined monthly cost for warehouse space and office rent hits exactly $8,500. This figure is locked in regardless of sales volume, making it critical for calculating your break-even point. We need to track this precisely.
Lease Input Math
This $8,500 monthly facility spend covers two distinct needs: product storage and administrative work. To verify this, check your signed agreements for the $6,000 warehouse lease and the $2,500 office rent, both set for 2026. This fixed overhead directly impacts your required sales volume to cover costs.
- Warehouse: $6,000 monthly
- Office: $2,500 monthly
- Total Fixed: $8,500
Lease Management Tactics
Managing these leases means avoiding early termination penalties or getting locked into too much space too soon. For a growing wholesale operation, consider a short-term warehouse lease initially, maybe six months, before signing a long-term deal. Also, check if your office space can be reduced by 10% by moving to a flexble coworking setup.
- Avoid long lock-ins early.
- Negotiate renewal clauses now.
- Verify utility inclusion in rent.
Fixed Cost Context
Remember, this $8,500 is pure fixed overhead. Compared to your $22,083 monthly payroll, facility costs are substantial but predictable. If you scale slowly, this fixed base means you need higher contribution margin per order just to stay afloat before hitting volume targets. It's a heavy lift.
Running Cost 3 : Platform & Software
Tech Overhead Snapshot
Monthly technology overhead is fixed at $3,200 for platform operations. This cost, covering essential digital infrastructure, must be covered by gross profit before you can service larger fixed expenses like payroll or leases.
Cost Components
This $3,200 fixed monthly spend covers two main buckets of technology needs. E-commerce Platform Licenses are budgeted at $1,800 monthly. The remaining $1,400 covers necessary Cloud Hosting and Accounting Software subscriptions for the wholesale operation.
- Platform Licenses: $1,800
- Cloud Hosting & Software: $1,400
- Total Overhead: $3,200
Controlling Software Spend
Since this is a fixed cost, you can't cut it based on daily sales, but you can optimize the rate. Negotiate annual commitments for licenses to secure better pricing, defintely avoiding month-to-month creep as you scale users.
- Audit all necessary software seats now.
- Lock in 12-month platform contracts.
- Ensure hosting tiers match actual transaction load.
Fixed Cost Hurdle
This $3,200 is a baseline requirement every month, acting as a floor for your operating expenses. It sits above your Cost of Goods Sold (COGS) but below major personnel costs, making it a key factor in your initial break-even calculation.
Running Cost 4 : Shipping & Fulfillment
Fulfillment Cost Trajectory
Shipping and fulfillment fees are your largest variable cost, starting at 60% of revenue in 2026, but scaling volume should drive this down to 40% by 2030. This cost structure means margin expansion depends entirely on throughput efficiency.
Cost Inputs
This 60% variable cost covers shipping fees paid to carriers for delivering bulk orders to your retail clients. To model this accurately, you need projected 2026 revenue multiplied by the expected average fulfillment rate per dollar of sales. Honestly, this percentage dwarfs other early costs. It's a defintely huge lever.
- Projected Sales Revenue (2026)
- Average Shipping Rate per Dollar Sold
- Target Cost Percentage (60%)
Driving Efficiency
Achieving the 40% target by 2030 requires aggressively negotiating carrier contracts based on committed volume tiers immediately. Avoid paying retail rates; secure tiered discounts early. Also, look at consolidating shipments where possible to cut the per-unit fulfillment expense as you grow.
- Negotiate carrier volume tiers now.
- Audit packaging density vs. dimensional weight.
- Centralize carrier management for leverage.
Immediate Margin Pressure
With fulfillment at 60% and inbound freight at 50% of revenue, your gross margin is immediately stressed below 10% before factoring in payroll or rent. You must secure better inbound freight terms or increase your markup substantially to cover fixed overhead.
Running Cost 5 : Inbound Freight
Freight as Core COGS
Inbound freight and customs are your biggest variable cost driver, eating up half your sales income next year. This 50% of revenue projection for 2026 means managing these logistics costs directly controls your gross margin potential. This isn't just overhead; it's defintely core to what you sell.
Landed Cost Inputs
This cost covers moving inventory from your overseas or domestic suppliers to your warehouse. To model this accurately, you need the landed cost per unit, which includes freight rates, duties, and customs brokerage fees. If revenue hits $5 million in 2026, expect $2.5 million dedicated just to getting goods ready for sale.
- Freight rates quoted per container or pallet
- Customs duties based on HTS codes
- Brokerage fees per shipment
Margin Protection Tactics
Since this is 50% of revenue, small percentage improvements yield huge dollar savings. Negotiate container utilization rates or shift sourcing to closer suppliers to cut transit time and cost. Avoid paying rush fees for customs clearance. A 5% reduction here saves $125,000 on that $2.5 million spend.
- Consolidate smaller shipments
- Pre-clear documentation
- Review Incoterms agreements
COGS Impact Warning
Because inbound freight is part of COGS, it directly reduces your gross profit margin, unlike overhead costs like rent. If your target gross margin is 40%, and freight is 50%, you have zero margin left before accounting for packaging or fulfillment fees. Watch this metric like a hawk.
Running Cost 6 : Customer Acquisition
Budget Reality Check
You have a $20,000 annual marketing budget planned for 2026, which must secure 200 new customers if you hit the target $100 CAC. This spend is small relative to your $265,000 payroll, so efficiency in customer acquisition is absolutely key.
CAC Inputs
This $20,000 marketing budget is specifically for acquiring new B2B buyers in 2026. To calculate the actual cost, you divide the total spend by the number of new customers you onboard. If you spend exactly $20k targeting 200 customers, your CAC hits the $100 goal. This budget must cover all advertising and sales development resources used to convert a new retailer.
- Total annual marketing spend: $20,000
- Target new customers: 200
- Required CAC: $100
CAC Efficiency
For a wholesale platform, CAC must be justified by high Customer Lifetime Value (LTV). Spending $100 to acquire a retailer who only places one small order isn't sustainable. Focus acquisition efforts on channels that bring in high-volume buyers early on. A common mistake is overspending on broad awareness ads instead of targeted outreach to established SMBs.
- Prioritize referral programs.
- Measure ROI by order density.
- Use sales team for high-value leads.
Margin Hurdle
If your average initial order size is low, hitting $100 CAC means you need quick repeat business. If the average gross margin per order is only $50, you need at least two orders just to break even on acquisition costs. That’s a tight window for a new B2B relationship.
Running Cost 7 : G&A Overhead
Fixed G&A Baseline
These are the unavoidable monthly costs just to operate the wholesale platform infrastructure. Your General and Administrative (G&A) fixed expenses total $2,550 monthly, which must be covered regardless of how many small retailers you serve. This is the floor for your overhead.
G&A Cost Breakdown
Your $2,550 monthly G&A covers three specific areas necessary for compliance and basic operation. You need signed quotes for insurance and a clear retainer agreement for legal services to lock this number in. Utilities are based on facility estimates. Here’s the quick math:
- Utilities cost $1,200 monthly.
- Business Insurance is set at $750.
- Legal Retainer is $600.
Controlling Overhead
Controlling these fixed costs requires proactive review, as they don't scale down with revenue dips. Shop your business insurance quotes annually to ensure you aren't overpaying for coverage you defintely don't need. Challenge the scope of the legal retainer every quarter.
- Benchmark utility usage rates.
- Review insurance deductibles versus premiums.
- Define legal retainer service limits.
Fixed Cost Leverage
Since G&A is fixed at $2,550, this expense must be absorbed by your contribution margin from sales volume. If your variable costs (like the 60% Inbound Freight) are high early on, this fixed G&A becomes a larger barrier to achieving positive cash flow.
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Frequently Asked Questions
Typically $38,000 per month in fixed operating expenses (payroll, rent, software) in Year 1, plus variable costs like inventory and 60% shipping fees;