Numbers & Capacity
The revenue you need before you make a dollar.
Breakeven is the floor. Below it, the lights stay on by burning savings. Above it, every dollar of gross profit drops to the bottom line.
The formula
Breakeven revenue = fixed costs ÷ gross margin %.
$25,000 a month of fixed overhead. 42% gross margin. Breakeven = $25,000 ÷ 0.42 = $59,524 of revenue per month. Anything less and you are losing money. Anything more and your gross profit on those extra dollars flows straight to operating profit.
A new truck moves the floor
One asset, $1,650/mo of new fixed cost.
A new crew truck: $850 a month payment, $400 insurance, $250 fuel, $150 maintenance. $1,650 a month added to fixed overhead before the truck has hauled a single log.
New breakeven = $26,650 ÷ 0.42 = $63,452. That truck has to generate $3,928 more in monthly revenue just to be neutral. If the route it runs cannot, you bought a debt with wheels.
Every fixed-cost decision moves the floor
Run the math before you sign.
- 01
A new hire
Wages, payroll tax, workers comp, benefits, vehicle seat. Calculate the monthly burden, divide by gross margin, that’s the revenue lift they must produce.
- 02
A new truck or chipper
Payment, insurance, fuel, maintenance, depreciation. The total operating cost is what moves breakeven, not the sticker price.
- 03
A new office or yard
Rent, utilities, internet, security. A $2,000/mo yard at 42% margin needs $4,762 more revenue every month, forever.
- 04
A new software stack
CRM, scheduling, accounting, comms. Small line items stack up fast and they are sticky once installed.
The bottom line
If you don’t know your breakeven, you’re guessing.
Calculate it. Update it whenever fixed costs change. Then every hiring, leasing, and buying decision gets honest very quickly.