Form CMB-007 Financial planning
Break-Even Calculator
Every contracting business has a magic number: the point where monthly revenue exactly covers all fixed costs and you stop losing money. Below that number, every day costs you. Above it, every dollar is profit. Most contractors have never calculated their break-even point, which means they operate without knowing whether a slow month puts them in the red or just makes them less profitable. This calculator takes your monthly fixed costs and your average contribution per job to determine exactly how many jobs or how much revenue you need each month to break even. The math is straightforward but the insight is powerful: knowing your break-even transforms decisions about pricing, marketing spend, and how aggressively you need to fill your schedule.
✓ How It Works
This calculator simplifies complex pricing decisions into clear, actionable numbers. Enter your specific values using the fields above. Trade presets provide industry-standard starting points that you can adjust for your situation. Results update as you type, giving you instant feedback on how each variable affects your bottom line. Every calculation runs in your browser with no data sent to any server. Save your inputs locally for quick access on return visits.
The formulas used are standard business accounting calculations adapted for the contracting industry. They account for the unique aspects of trade work: seasonal variation, weather delays, variable material costs, and the difference between billable and non-billable hours that salaried workers never think about.
✓ When to Use This
Use this calculator when preparing bids for new work, reviewing your current pricing structure, or planning for business changes like hiring employees, adding equipment, or expanding to a new service area. Run the numbers before making commitments that change your cost structure. Contractors who check the math before signing a lease, purchasing a vehicle, or setting new rates consistently make better financial decisions than those who rely on instinct alone.
✓ Frequently Asked Questions
What fixed costs should a contractor include in break-even analysis?
Include every cost that stays the same regardless of how many jobs you do: truck payments, insurance premiums, shop or office rent, phone and internet, loan payments, software subscriptions, marketing retainers, accounting fees, and your own minimum salary. These costs run whether you work one job or twenty. Variable costs like materials, fuel to job sites, and per-job labor are excluded from the fixed cost side because they scale with each job you take.
How many jobs per month does a typical contractor need to break even?
It depends entirely on your fixed costs and average job size. A solo plumber with $4,000 in monthly fixed costs averaging $800 profit per service call needs 5 calls to break even. A remodeling contractor with $12,000 in monthly overhead averaging $3,000 profit per project needs 4 projects. The number is unique to your business, which is why calculating it yourself is more useful than any industry average.
What is contribution margin and why does it matter?
Contribution margin is the amount each job contributes toward covering your fixed costs after its own variable costs are paid. If you charge $2,000 for a job that costs $1,200 in materials and labor, the contribution is $800. That $800 goes toward rent, insurance, truck payments, and everything else. Once your total contributions for the month exceed your fixed costs, you have passed break-even and every additional job is pure profit.
How can I lower my break-even point without cutting prices?
There are two approaches: reduce fixed costs or increase contribution per job. On the cost side, renegotiate insurance annually, evaluate whether you need that office space, audit software subscriptions for unused tools. On the contribution side, reduce material waste, improve labor efficiency, negotiate better supplier pricing, or reduce drive time by clustering jobs geographically. Even small improvements compound: saving $500/month in overhead means one fewer job needed to break even.
Should I calculate break-even monthly or annually?
Monthly gives you the most actionable insight because you can compare it against actual revenue each month and spot problems early. Annual break-even is useful for big-picture planning, like deciding whether to hire an employee or take on a truck payment. Calculate both: monthly break-even tells you how many jobs you need this month, annual break-even tells you whether a major expense is sustainable over the full year.