How many jobs does your service business need to break even?
Revenue can look healthy while the business still struggles. Contribution per job explains the difference.
Quick formula: Break-even jobs = monthly fixed costs ÷ (average job price − average variable job costs). Always round up to a whole job.
First separate fixed from variable costs
Fixed costs are expenses you generally incur regardless of whether you complete one more job this month: software subscriptions, insurance, rent and other baseline overhead. Variable costs rise with work performed: materials, job-specific subcontractors, certain processing fees and travel that occurs only when a job happens.
Owner labour belongs in your economic cost model even when you do not transfer that wage to yourself every week. If wages vary by job, include them in variable costs. If you pay a regular fixed salary, keep it in fixed costs rather than counting it twice.
Example: a mobile service operator
Imagine a typical job sells for $240 before sales tax. Direct labour is $75, and job-related materials and travel are $65. Contribution per job is $240 − $75 − $65 = $100. If monthly fixed expenses total $1,200, break-even volume is $1,200 ÷ $100 = 12 jobs.
If the owner wants another $1,800 in pre-tax operating profit after the costs already included, the target volume is ($1,200 + $1,800) ÷ $100 = 30 jobs. That is an average of about 7.5 jobs per week in a four-week planning month.
How the answer changes with job mix
Not every project contributes $100. A large job might make $250 after direct costs; a small, distant job might make only $45. For a business that completes several service types, calculate contribution for each category, then use a sales-weighted average rather than assuming one typical job represents the whole month.
Common mistakes to avoid
- Using revenue instead of contribution in the break-even formula.
- Forgetting payment processing charges, returns, fuel or consumables.
- Double-counting wages in both fixed and variable costs.
- Ignoring seasonal demand and cancellations.
- Assuming the business can physically perform the required job volume.
A weekly 10-minute check
Track completed jobs, average selling price, average direct cost, and fixed costs already committed. If your projected workload is below break-even, check price, job mix, overhead and scheduling capacity before deciding to add more marketing.
Try the break-even calculator →
This model is for planning. Actual accounting profit, taxable profit and cash flow can differ.