Break-Even Guide

What is break-even?

Break-even is the point where your revenue equals your costs. At that point, the business is not making a profit, but it is not losing money either.

Everything after that point is profit. Until you reach it, your work is still covering overhead and direct job costs.

The two types of costs

These are the costs that stay in the business whether you complete one job or ten.

These costs rise or fall with the job itself. The more work you do, the more these costs move with it.

• Fixed costs
• Variable costs
• Rent
• Insurance
• Salaries
• Software
• Labor
• Materials
• Subcontractors

Why contractors miss this

That is how a business can look busy, keep crews moving, and still feel like there is never enough money left at the end of the month.

• They focus on revenue instead of profit.
• They underestimate what the business really costs to run.
• They do not separate fixed costs from variable costs.

Simple example

Monthly fixed costs: $10,000

Average job profit after variable costs: $1,000

You need 10 jobs just to break even.

In plain language, the first ten jobs are paying for the business to exist that month. The eleventh job is where actual profit starts.

Why this matters

• Pricing decisions become clearer when you know what each job must carry.
• Growth decisions improve because more volume is not always more profit.
• Hiring decisions get more grounded when you know what overhead has to be covered.
• Cash flow becomes more stable when you know the minimum work required each month.

What to do instead

Break-even is not just a calculator result. It is a working number you should use to manage the business month after month.

• Know your fixed costs.
• Know your profit per job after variable costs.
• Track how many jobs you complete.
• Adjust pricing if needed.