Break-Even Job Size Calculator

The number every contractor should have memorized

If I ask you “what's your minimum job size to break even at current volume,” you should have an answer inside three seconds. Most contractors don't. That's why they take the $4k kitchen faucet job that blows up into three visits and ends up costing them $800 to complete — because they never asked whether the job was worth taking in the first place.

Break-even job size tells you exactly where the line is: at your monthly job volume, given your fixed overhead and variable cost structure, what does each job need to gross on average for the company to cover everything? Below that: you're losing money. At that: you're paying your bills but building no wealth. Above that: you're growing the business.

The components

• Fixed costs per month — Office, software, admin salaries, insurance, marketing, utility base load, owner salary base — the stuff that hits whether you do 1 job or 20.
• Variable cost % of revenue — Direct labor (burdened), direct material, equipment rental, subcontractors, consumables. The costs that scale directly with jobs you take on. Usually 55-75% of revenue.
• Target net margin — What you want to keep, after everything, per revenue dollar. 10-20% is healthy-to-excellent for most contractors.
• Jobs per month — Realistic average count of jobs you're running in a typical month.
• Bid conversion rate — What % of your bids turn into signed contracts. Most contractors run 20-40%; if yours is <20% you have a pricing or sales problem, if >60% you're leaving money on the table by pricing too aggressively.

The math

Contribution margin = 1 − variable cost ratio. If variable is 65%, contribution margin is 35% — meaning 35 cents of every revenue dollar flows through to cover fixed costs and profit.

Break-even monthly revenue = fixed costs ÷ contribution margin. $12,000 fixed ÷ 35% = $34,286. To hit break-even at 8 jobs/month, each job needs to gross $4,286 on average.

Target monthly revenue = fixed costs ÷ (contribution margin − target net margin). $12,000 ÷ (0.35 − 0.15) = $60,000. At 8 jobs/month, average job needs to gross $7,500 to deliver 15% net margin.

Applying it in practice

Knowing your break-even lets you make three fast decisions:

1. Should I bid this job? If it won't clear your target job size, bid only if it's a strategic relationship job, learning opportunity, or gap-filler.
2. How many bids do I need out? If you need 8 jobs at 35% conversion, you need ~23 bids a month. Slow month? Check your bid pipeline.
3. Does my pricing leave me profitable? If you're regularly booking jobs below target size and your volume isn't compensating, you have a pricing problem upstream — not a volume problem.

A worked example

Small residential contractor: $12k/month fixed overhead, variable costs at 65% of revenue (labor 45% + material 20%), wants 15% net margin, does 8 jobs/month, closes 35% of bids.

Contribution margin: 35%. Break-even monthly revenue: $34,286 — which at 8 jobs is $4,286 per job minimum. Target revenue for 15% net: $60,000/month or $7,500/job average. Bids needed per month to land 8 jobs: 8 ÷ 0.35 = ~23 bids.

Now you know: every bid below $7,500 eats into your target margin. Every bid below $4,286 loses money outright. And you need 23 bids a month in the pipeline, not 10 — so marketing and estimating capacity matter.

What kills contractors on break-even math

• Not recalculating yearly. Fixed costs creep. Variable costs move with wages. Your break-even from 2 years ago is almost certainly wrong today.
• Ignoring seasonality. A 12-month average can hide a three-month slow period where you bled $40k. Stress-test break-even against your slowest quarter, not your best.
• Confusing job count with job size. Doing more jobs doesn't help if average job size is below break-even. Bigger is often better; volume alone is a trap.
• Not tracking bid conversion. If you don't know your conversion rate, you don't know how much you have to bid. That makes every slow month a surprise.