What Is a Break-Even Point?
By BRIX Editorial Team · Updated
A break-even point is the sales level where total revenue equals total costs, so the business makes no profit and no loss. Break-even jobs = Fixed costs ÷ (Average price − Variable cost per job). A plumber with $30,000 of monthly fixed costs and $360 of contribution per job breaks even at 84 jobs a month.
Key takeaways
- Break-even units = Fixed costs ÷ (Price − Variable cost per unit). For a trades business, the unit is usually a job.
- Break-even revenue = Fixed costs ÷ Contribution margin ratio. It's the monthly sales number below which you lose money.
- Divide by working days to get a daily target the whole team can see: jobs per day to keep the lights on.
- Techs paid whether or not they're busy behave like a fixed cost, which raises break-even sharply in slow months.
- Add your profit goal to fixed costs to turn break-even into a target: jobs needed to make the money you planned.
How does the break-even point work?
Every job brings in its price and costs you its variable costs, such as parts, burdened tech time and card fees. What's left, the contribution margin, goes toward fixed costs like rent, office staff, trucks and insurance. Once enough jobs have paid off the month's fixed costs, you're at break-even. Every job after that is profit.
The U.S. Small Business Administration defines the break-even point as "the point at which total cost and total revenue are equal" and gives the formula as fixed costs divided by price minus variable costs, which yields break-even in units. For a service company, a unit is a job, a visit or a billable hour.
Break-even jobs = Fixed costs ÷ (Average ticket − Variable cost per job) | Break-even revenue = Fixed costs ÷ Contribution margin ratio
- Fixed costs
- monthly costs that don't change with the number of jobs: rent, office wages, trucks, insurance, software, owner's salary
- Average ticket
- average revenue per job; see average ticket
- Variable cost per job
- costs that rise with each job: parts, burdened field labor if paid per job or hour worked, card fees, commissions
- Contribution margin ratio
- (Average ticket − Variable cost per job) ÷ Average ticket
Run your own numbers with the break-even calculator. If you don't know your fixed costs yet, start with overhead.
How many jobs do I need to break even?
Divide your monthly fixed costs by the contribution each job brings in. The answer is the number of jobs per month you need before the business makes money. Raising the average ticket or cutting variable cost per job lowers that number; adding fixed costs raises it.
| Change | Contribution per job | Fixed costs | Break-even jobs a month |
|---|---|---|---|
| Starting point | $360 | $30,000 | 84 |
| Average ticket up $50 (to $650) | $410 | $30,000 | 74 |
| Variable cost up $40 (parts prices rise) | $320 | $30,000 | 94 |
| Add a CSR at $4,500 a month | $360 | $34,500 | 96 |
| Add $10,000 profit goal | $360 | $40,000 (incl. profit) | 112 |
What if techs are paid whether they're busy or not?
Then their wages act like a fixed cost in the short run, and your break-even point is higher than the simple formula suggests. Hourly techs on a 40-hour week get paid on a slow Tuesday too. Only costs that truly disappear when a job doesn't happen belong in variable cost.
Break-even point by trade
The math is the same in every trade. What changes is the unit you count, how lumpy the jobs are, and how much the season moves your volume.
| Trade | Natural unit | What makes break-even tricky | Practical tip |
|---|---|---|---|
| HVAC | Service calls and replacements, tracked separately | Shoulder seasons can fall below break-even while peak months carry the year | Calculate a monthly break-even and plan maintenance work for the slow months |
| Plumbing | Jobs or billable hours | Steadier demand, but many small tickets | Watch average ticket closely; a $50 drop adds a lot of jobs |
| Electrical | Billable hours or jobs | Bid work arrives in big, irregular chunks | Use break-even revenue and track backlog against it |
| Roofing | Roofs (or squares) sold | Few, large jobs; weather stops production | Break-even may be a handful of roofs a month, so one lost deal matters |
| Landscaping | Crew-days or visits | Winter fixed costs with little revenue | Compute break-even for the year, then divide by working months, not 12 |
| Cleaning | Visits or labor hours | Thin contribution per visit, so volume is everything | Count recurring visits per week against a weekly break-even |
Break-even point vs. profit target
Break-even tells you the floor; a profit target tells you the goal. To get from one to the other, add the profit you want to fixed costs and divide by contribution per job. With $30,000 of fixed costs, a $10,000 monthly profit goal and $360 of contribution per job, you need (30,000 + 10,000) ÷ 360 = 111.1, or 112 jobs. The gap between where you are and break-even is your margin of safety: at 110 jobs ($66,000 of revenue), sales could fall about 24% before hitting the $50,000 break-even.
Common break-even mistakes
- Using gross margin instead of contribution margin. Card fees, commissions and financing costs vary with each job and belong in variable cost.
- Treating salaried or full-week hourly techs as variable. In a slow month, they're fixed.
- Leaving out the owner's salary. Break-even without it means you're working for free at break-even.
- One average for very different jobs. A $450 repair and a $12,000 replacement shouldn't share one average ticket. Split by job type when the mix changes.
- Annual numbers in a seasonal business. A yearly break-even can look safe while three months in a row lose money.
- Confusing break-even with cash. You can be above break-even and short on cash if customers pay late. See cash flow for contractors.
Frequently asked questions
How do you calculate the break-even point for a service business?
Divide monthly fixed costs by the contribution each job brings in: average ticket minus variable cost per job. A business with $30,000 of fixed costs, a $600 average ticket and $240 of variable cost per job breaks even at 84 jobs a month, or $50,000 of revenue.
What is the break-even formula?
Break-even units = Fixed costs ÷ (Price − Variable cost per unit). For revenue instead of units, divide fixed costs by the contribution margin ratio, which is (Price − Variable cost) ÷ Price. The SBA uses the same formula in its guide to calculating startup costs.
What costs are fixed for a contractor?
Costs that don't change with the number of jobs in a month: rent, office and dispatch wages, truck payments, insurance, software, phones, marketing retainers and the owner's salary. Field techs paid for a full week whether or not they're busy also act as fixed in the short run.
How do I lower my break-even point?
Raise contribution per job or cut fixed costs. Higher average tickets, better parts pricing, fewer callbacks and lower card or financing fees all raise contribution. Dropping unused software, renegotiating insurance or delaying a new hire lowers fixed costs.
How many jobs a day do I need to break even?
Divide your monthly break-even jobs by your working days. A company needing 84 jobs a month with 22 working days needs about 3.8 jobs a day across all techs. Posting that number keeps the team focused on the minimum.
Is break-even the same as profitable?
No. At break-even, revenue exactly covers costs and profit is zero. Profit starts with the first job after break-even, and each extra job adds its full contribution margin to the bottom line.
Related
- What Is Contribution Margin?Contribution margin is price minus every variable cost of a job. See the formula, how it differs from gross margin, and how to use it before you discount.
- What Is Overhead, and How Do Contractors Calculate It?What counts as overhead in a trades business and how to calculate your overhead rate per revenue dollar, billable hour, job and day, with a worked example.
- What Is Average Ticket?Average ticket is revenue divided by jobs invoiced. Learn how to calculate it by job type, why a blended number misleads, and how trades shops raise it.
- What Is Net Profit Margin?Net profit margin is what's left of each revenue dollar after job costs and overhead. See the formula, a contractor example and how to set your target.
- Cash Flow for Contractors: Why Profitable Shops Run Out of MoneyWhy profitable contractors run out of cash, how to forecast 13 weeks ahead, runway math with worked examples, seasonal patterns by trade, and fixes.
- Break-Even Calculator for Service BusinessesFind how many jobs and how much revenue your service business needs each month to break even, and what it takes to hit your profit target.
- Overhead Rate CalculatorCalculate your overhead rate as a % of revenue, % of direct labor and $ per billable hour. See what to count as overhead and how to price it into jobs.
- How to Price Contracting Jobs for Profit: The Complete GuideHow to price trades jobs: true labor cost, overhead per billable hour, profit margin, materials markup and flat rates, with worked numbers.
- Maintenance Agreement Pricing CalculatorPrice HVAC, plumbing, pest control and lawn care maintenance agreements from your real costs. Get yearly and monthly prices, margin and tech hours needed.
- Markup and Margin CalculatorConvert markup to margin and margin to markup, or find both from cost and price. Free calculator with a markup-to-margin chart and trade examples.
Sources
- U.S. Small Business Administration: Calculate your startup costs (break-even point) (checked October 12, 2026)