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Bookkeeping••12 min read

How to Calculate Your Break-Even Point as a Contractor

Your break-even point is the amount of revenue you need each month just to keep the lights on without making a dime of profit. For most contractors running $1M-$3M annually, that number sits between $60K and $150K per month.

Cory Salisbury
Cory Salisbury
Founder & Fractional CFO • Salisbury Bookkeeping

How to Calculate Your Break-Even Point as a Contractor

The Formula

Break-Even Revenue = Fixed Costs / Gross Profit Margin

Example: Residential Remodeling Company

Fixed monthly costs: $19,750. At 30% gross margin: $19,750 / 0.30 = $65,833/month just to break even.

Example: Commercial GC

Fixed costs: $43,000/month. At 22% gross margin: $43,000 / 0.22 = $195,455/month ($2.3M annually).

Using Break-Even for Better Decisions

Every job, hire, and expense decision changes. Adding a PM at $65K/year raises break-even by $18K/month at 30% margin. Can they help deliver that extra revenue?

The Link to Pricing Strategy

Knowing break-even and target margin lets you reverse-engineer what to charge. Most contractors underprice by thinking only about direct costs—forgetting every job must carry its overhead share.

When to Recalculate

Quarterly, or whenever making significant cost structure changes. Seasonal contractors need different break-even thinking for revenue months vs. off months.

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