Break-Even Revenue for Contractors: What You Need to Bill Just to Survive
Most contractors price jobs based on what they think they need. The problem: they have no idea what they actually need to just break even. Break-even isn't a profit target — it's a survival number. And if you don't know it, every quote you give is a guess.
What Break-Even Actually Means
Your break-even point is the exact revenue your business needs every month to cover all costs — zero profit, but zero loss. It accounts for your fixed overhead (insurance, truck payment, phone, subscriptions), your variable costs (materials on average), and your gross margin percentage.
The formula looks like this:
Break-Even Revenue = Fixed Monthly Overhead ÷ Gross Margin %
If your fixed costs are $6,000/month and your gross margin is 40%, your break-even is $15,000/month. Below that number, you're losing money every day you work.
Why Most Contractors Are Flying Blind
The typical contractor sets a price based on what competitors charge or what "feels right." That works until a slow month, a delayed payment, or an unexpected expense hits — and suddenly there's no money in the account despite billing the same numbers as last year.
The issue is pricing without knowing the floor. If you don't know you need $15,000/month to survive, you can't set a goal to beat it, can't measure whether your schedule supports it, and can't identify which months are actually profitable vs. which ones just looked busy.
Three Numbers You Need
1. Total fixed monthly overhead — everything you pay regardless of how much work you do: insurance, truck, phone, subscriptions, accounting, rent if applicable.
2. Your gross margin percentage — revenue minus direct job costs (labor + materials), divided by revenue. A typical contractor runs 35–50% gross margin depending on trade.
3. Average job value — knowing your break-even revenue tells you how many jobs at your average ticket you need to hit it each month.
What to Do With the Number
Once you know your monthly break-even, you can work backwards: how many jobs per week does that require? Is your current schedule capable of generating that revenue? What happens if you raise your average ticket by 10%?
The break-even number also tells you your minimum viable price on any job. If you're at capacity, every job needs to contribute enough margin to keep you above the floor. Jobs that don't aren't worth taking — even if they look like "revenue."
Use the free break-even calculator to run your numbers. Enter your monthly overhead, gross margin, and average job size — and you'll see exactly what you need to bill every month just to not lose money.