Break-even analysis for a home service company

Why break-even matters more in the trades

A home service company carries heavy costs before the first call of the day: trucks, insurance, the shop, the office team, software and, in many companies, techs on guaranteed hours. Break-even analysis tells you how much work you must sell each month just to pay for that base. Everything above the line is profit; everything below it is a loss that has to be funded from cash or credit.

It is also a survival tool. Of US private establishments opened in March 2015, 79.6% were still operating a year later, 50.2% after five years and 34.6% after ten^[2]. Companies that know their break-even point can see trouble coming months before it reaches the bank balance, because they can compare booked work with the line they have to clear.

In the 2025 Small Business Credit Survey, 19% of small employer firms said they were at break-even at the end of 2024 and 34% were operating at a loss^[1]. Many of those owners would have been surprised by where the line actually sat.

Fixed costs, variable costs and contribution margin

Break-even depends on separating costs that stay the same from costs that move with each job.

• Fixed costs for the month: rent, insurance, truck payments and leases, office and dispatch wages, software, base marketing, loan interest, the owner's market-rate salary and the wages of any techs paid for guaranteed hours whether or not they are busy.
• Variable costs per job: materials and parts, commissions and spiffs, hourly field labor paid only for hours worked, fuel, card processing fees, permits and disposal.
• Contribution margin: revenue minus variable costs. It is the share of every sales dollar left to cover fixed costs and then profit.
• Contribution margin ratio: contribution margin divided by revenue, written as a percentage.

The judgment call is field labor, and it is a large block of cost: US private employers spent an average of $46.89 per hour worked on total compensation in June 2026^[3]. If your techs are paid hourly only for hours worked, treat their wages as variable. If they have guaranteed 40-hour weeks, their base pay is fixed for the month and only overtime is variable. Many companies sit in between, and it is fine to split the cost, as long as you do it the same way each month. Our guide on labor burden shows how to cost labor fully before you decide.

The company-level calculation

1. 01

   Total the fixed costs for a normal month

   Use the last three closed months and average them. Add annual items such as insurance premiums and license renewals divided by twelve.

2. 02

   Calculate the contribution margin ratio

   Take the same three months: (revenue − variable costs) ÷ revenue.

3. 03

   Divide

   Break-even revenue = fixed costs ÷ contribution margin ratio.

4. 04

   Convert to jobs

   Divide break-even revenue by your average invoice to get the number of jobs you must complete in the month.

5. 05

   Compare with booked work

   Each week, compare completed plus booked revenue with the break-even line, and act early if the gap is not closing.

Example (fictional): an HVAC company has monthly fixed costs of $168,000. Over the last quarter, variable costs averaged 44% of revenue, so its contribution margin ratio is 56%. Break-even revenue is $168,000 ÷ 0.56 = $300,000 a month. With an average invoice of $600, the company needs 500 completed jobs a month, about 23 per working day across the fleet.

Example margin of safety: in October the company invoiced $360,000. Its margin of safety, the share by which revenue exceeds break-even, is ($360,000 − $300,000) ÷ $360,000 = 17%. Revenue could fall by that much before the company stops making money, which is a useful figure to have in mind before the shoulder season.

Break-even per truck

The company number is for the owner. Dispatchers and service managers need a number for each truck, because that is the unit they schedule. Per-truck break-even answers the question every dispatcher should know: how many paid jobs does this truck need today before it earns anything?

1. Assign each truck its own fixed costs: payment or lease, insurance, GPS, the tech's guaranteed wages and burden, tools and phone.
2. Add an equal share of company overhead, or a share weighted by revenue if trucks differ a lot.
3. Divide by the contribution margin ratio for the kind of work that truck does. Maintenance trucks and install trucks have very different ratios.
4. Divide by working days in the month to get a daily break-even, and by the average invoice for that truck's work to get jobs per day.

Example (fictional): a pest control truck carries $5,600 a month of its own fixed costs, mainly the technician's guaranteed wages, burden and the vehicle, plus a $3,400 share of overhead, for $9,000. Contribution margin on recurring service is 80% once products, fuel and card fees are taken out. Monthly break-even is $11,250; over 21 working days that is about $536 a day, or roughly six stops at a $90 average service.

Seasonal businesses: monthly, not annual

An annual break-even hides the months that hurt. Roofing contractors paid just 20.8% of their 2023 annual payroll in the first quarter, against 25.9% across all industries^[4], a sign of how far winter work falls. Fixed costs do not fall nearly as much.

Calculate break-even for each month using that month's fixed costs and that month's expected margin, then compare with last year's revenue for the same month. The months where expected revenue falls below the line are the ones to plan for: build cash in the peak, schedule vehicle maintenance and training into the gap, sell maintenance agreements that bring work into the slow period, and decide in advance which costs you will pause. A 13-week cash flow forecast turns that plan into dates and dollars.

Decisions break-even helps you make

• Adding a truck: the new truck's fixed costs divided by its expected contribution margin tell you how much extra revenue it must produce. If your booked backlog and missed-call data do not show that demand, wait.
• Hiring an office role: a new dispatcher or customer service rep adds fixed cost. Divide it by the contribution margin ratio to see how much more revenue the hire must help produce or protect.
• Discounting: a 10% price cut on a job with a 50% contribution margin needs 25% more jobs to earn the same contribution. Example figures; run your own before agreeing to a big discount.
• Pricing a service agreement: compare the agreement price with the variable cost of the visits it includes, and count how many agreements cover the fixed cost of the tech who services them.
• Cutting overhead: every dollar of fixed cost removed lowers break-even revenue by more than a dollar, which is why the overhead review is often the fastest way to lower the line.

Common errors

Treating all field labor as variable is the most common mistake. If you pay techs whether or not they are busy, their wages are part of the base you must cover, and a quiet week costs the full amount. Leaving out the owner's salary is the second: break-even that assumes the owner works for free is a line the business cannot actually live on.

The third is using stale margins. If material prices or wages have risen and your prices have not, the contribution margin ratio has fallen and break-even has risen with it. Recalculate after every price change and every pay change, and when collections slow down, remember that break-even is measured in revenue, not in cash. Revenue invoiced but not collected still leaves you short at the bank.

A one-page break-even sheet

Keep the result on a single page that the owner, service manager and bookkeeper all see. It should show this month's fixed costs, the contribution margin ratio from the last quarter, break-even revenue, break-even jobs per working day for the company and for each truck, revenue invoiced to date, booked revenue for the rest of the month and the margin of safety. Update the revenue lines weekly and the cost lines monthly.

Review the sheet at the same meeting each week. When booked revenue for the rest of the month will not clear the line, the team has days, not weeks, to respond: call the unsold estimates, offer open slots to waiting maintenance customers, and push marketing into the job types with the best contribution margin. The point of knowing your break-even is to act before the month is lost, not to explain it afterwards.