Run it with less chaos · Every business
Break-Even for a Service Business, Worked Out
The break-even point tells an owner how many jobs or appointments the month has to hold before the business stops losing money, and for most service businesses the honest version of that number includes the owner's own pay.
At a glance
- Break-even is the level of sales at which total revenue equals total cost; the SBA's formula divides fixed costs by what each sale contributes after its variable costs.
- In the Federal Reserve's 2024 survey of small employer firms, 75% named rising costs of goods, services or wages as a financial challenge, and every rise in fixed costs moves the break-even point higher.
- For an illustrative service business with $15,400 in monthly fixed costs and $210 left from each $350 job, break-even is 74 jobs a month, or about $25,667 in revenue.
The number and where it comes from
The SBA defines the break-even point as the point at which total cost and total revenue are equal, and gives the formula as fixed costs ÷ (price − variable cost per unit) = break-even point in units. For a service business the unit is a job, an appointment or a visit, the price is the average ticket, and the variable cost is whatever each job consumes and would not be spent if the job never happened: materials, product, card fees and any labor paid per job.
The part of each ticket left after variable costs is the contribution, and it is the money that pays rent, insurance, software, office wages and the owner. Fixed costs are the ones that arrive whether the calendar is full or empty, and the SBA lists rent, salaries, insurance, interest and depreciation among them.
Owners often leave their own pay out of fixed costs, on the reasoning that I get whatever's left. That version of break-even answers a narrower question, which is how many jobs keep the business from borrowing, while the version that includes owner pay answers the question that matters at home, which is how many jobs it takes for the business to pay the person running it.
A worked calculation
| Rent (Assumption) | $3,000 a month |
|---|---|
| Insurance (Assumption) | $800 a month |
| Software and phones (Assumption) | $400 a month |
| Vehicle costs (Assumption) | $1,200 a month |
| Office wages (Assumption) | $4,000 a month |
| Owner pay (Assumption) | $6,000 a month |
| Total fixed costs (Calculated) | $15,400 a month |
| Average ticket (Assumption) | $350 |
| Variable cost per job (materials, card fees, per-job labor) (Assumption) | $140 |
| Contribution per job (Calculated ($350 − $140)) | $210 |
| Break-even jobs per month (Calculated ($15,400 ÷ $210 = 73.3, rounded up)) | 74 |
| Break-even revenue per month (Calculated ($15,400 ÷ 60% contribution margin)) | $25,667 |
| Break-even jobs without owner pay (Calculated ($9,400 ÷ $210 = 44.8, rounded up)) | 45 |
Illustrative example; replace every assumption with your own numbers.
The gap between 45 jobs and 74 jobs is the owner's paycheck expressed in work; 29 jobs a month, roughly seven a week, are what it takes to pay the owner at that level. A month with 60 jobs would look profitable on a statement that leaves owner pay out, while in fact it leaves $3,200 for the owner out of the planned $6,000 (60 jobs × $210 = $12,600, less $9,400 in other fixed costs).
The average ticket has more pull on break-even than most owners expect, because the variable cost per job does not shrink when the price does.
Dropping the average ticket from $350 to $250, a 29% cut, nearly doubles the number of jobs the month needs, which is why discounts and small add-on decisions show up so sharply in break-even. Costs push the other way; a 5% rise in fixed costs, to $16,170, takes break-even from 74 jobs to 77 at the same ticket.
How you compare
- Rising costs: 75% of small employer firms named rising costs as a financial challenge in the Federal Reserve's 2024 survey, so a break-even figure worked out last year is probably low; refigure it whenever rent, insurance or wages change.
- Your calendar: compare break-even jobs with the jobs you can physically fit in a month. If break-even uses more than about three quarters of your capacity, a single slow week or a sick day puts the month underwater.
- Your own baseline: count the jobs you completed in each of the last six months and mark which months cleared break-even with owner pay included. That count is the most honest measure of whether the business is paying you.
Sources
- U.S. Small Business Administration. Calculate your startup costs (break-even formula and fixed-cost definition).
- Federal Reserve Banks. 2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey. 2025. 7,653 employer firms.
Related reading: How to Calculate Profit Per Service in Five Minutes · What a Discount Really Costs You, Shown in Margin Math · Gross Margin vs. Net Profit, Explained for Owners · Paying Yourself as the Owner: Salary, Draws and What to Set Aside
Work with osNOVA on knowing your break-even
We help owner-run service businesses work out what each job contributes and how many jobs the month needs, then build the pricing, booking and rebooking habits that keep the calendar above that line, starting from what you want more of, whether that is fuller weeks, a higher average ticket or a steadier owner paycheck.
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