How to Calculate Your Break Even Point as a New Contractor

To calculate your break-even point as a new contractor,

you will need to determine your fixed costs and variable costs. Fixed costs are expenses that do not change regardless of the number of jobs you complete, such as rent and equipment purchases. Variable costs are expenses that change based on the number of jobs you complete, such as materials and labor.

To calculate your break-even point, you will need to divide your fixed costs by the difference between your selling price per job and your variable costs per job. The resulting number is the number of jobs you need to complete to break even.

For example, if your fixed costs are $50,000, your variable costs per job are $2,000, and you charge $5,000 per job, your break-even point would be calculated as follows:

$50,000 / ($5,000 - $2,000) = $50,000 / $3,000 = 16.67

This means you would need to complete 17 jobs to break even. Keep in mind, this is a basic formula, you may use other formula depend on your type of business or industry.