Break-Even Point

What is the break-even point?

The break-even point is the moment when your business has made just enough money to cover all its costs. You haven't made a profit yet, but you haven't lost money either. Everything you earn beyond this point goes into your pocket.

For contractors and small business owners, knowing your break-even point tells you exactly how much you need to bill each month just to keep the lights on.

How to calculate break-even

The basic break-even formula is:

• Break-Even Point = Fixed Costs ÷ (Price per Job - Variable Cost per Job)

For example, if your monthly fixed costs (rent, insurance, subscriptions) are $3,000, you charge $500 per job, and each job costs you $100 in materials, you need to complete 7.5 jobs per month to break even: $3,000 ÷ ($500 - $100) = 7.5 jobs.

Why break-even matters

Understanding your break-even point helps you:

• Set prices — Know the minimum you can charge and still survive
• Plan for profit — See how many additional jobs mean actual profit
• Evaluate costs — Understand how new expenses affect your bottom line
• Make decisions — Know if taking on overhead like a new truck makes sense