Why Break-Even Analysis Matters for Contractors
Every contractor has a magic number: the minimum number of jobs per month needed just to keep the lights on. Below that number, you are losing money no matter how good your work is. Above it, every additional job contributes directly to profit. Break-even analysis gives you that number so you can make informed decisions about pricing, marketing spend, and whether to take on additional overhead like a new truck or employee.
The calculation divides your monthly fixed costs by the contribution per job. Fixed costs are expenses you pay regardless of how many jobs you complete: rent, insurance premiums, truck payments, phone bills, tool subscriptions, and loan payments. Variable costs change with each job: materials, fuel to the job site, disposable supplies, and any subcontractor fees. The contribution per job is what is left from each job's revenue after paying variable costs, and that contribution goes toward covering your fixed costs.
Understanding the difference between fixed and variable costs is critical. Many contractors mistakenly classify some variable costs as fixed (like fuel) or forget to include some fixed costs (like annual license renewals divided by 12). The more accurately you categorize your costs, the more reliable your break-even number will be. Review your bank statements for the past 3-6 months to build an accurate picture of your real monthly fixed costs before using this calculator.