Break-Even
Break-even is the point where your revenue exactly covers your costs, with no profit and no loss. Your break-even number, in jobs or dollars, is the minimum you need before earnings become profit.
What it means
Every business has fixed costs that arrive whether you work or not. Examples are insurance, a van payment and software subscriptions. Break-even is the revenue, or number of jobs, that covers those fixed costs. It also covers the variable cost of the work. Only after that does a dollar count as profit.
It is worth working out the actual number. Say you need $2,400 a month in revenue just to break even. Then you know at once if a slow week is fine because you are still ahead for the month. Or you know you need to book something now.
Your fixed monthly costs come to $900. They cover the van, insurance and software. Your average job nets $150 after materials. You need six jobs a month just to break even. Profit starts with the seventh job.
Never working out a break-even number and going by feel. You cannot tell a slow month from a normal one until the bank balance shows it.
See also
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