Chartered Financial Analyst with 15+ years experience in small business finance and skilled trades management.
Find your carpentry business’s breakeven point. Enter any three variables—Monthly Fixed Costs, Avg. Price per Project, Variable Cost per Project, or Breakeven Projects—to solve for the fourth.
Carpentry Breakeven Calculator
Carpentry Breakeven Formula
The breakeven formula for a carpentry business finds the total number of projects (Q) you must complete each month for your total revenue to cover all fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Price per Project (P):
P = (F / Q) + V
Solve for Variable Cost per Project (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your total, recurring monthly overhead. This includes workshop rent, tool payments, business insurance, vehicle payments, and marketing.
- Avg. Price per Project (P): Your average revenue from a single customer project (e.g., building a cabinet, installing trim, a custom furniture piece).
- Variable Cost per Project (V): The average cost directly tied to one project. This is primarily lumber and materials (hardware, stain, glue) and any hourly labor paid specifically for that job.
- Breakeven Projects (Q): The total number of projects you need to complete each month to reach $0 in profit.
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What is a Carpenter’s Breakeven Point?
A **Carpenter’s Breakeven Point** is the exact number of projects (Q) you must complete each month to cover all your business expenses. It is the minimum volume of work needed to pay for your fixed costs (like shop rent and tool payments) and your variable costs (like lumber) for each job. Any project you finish *after* this point is pure profit.
**Fixed Costs (F)** are your consistent monthly overhead, even if you have no projects. This includes your workshop rent, liability insurance, payments on your truck and major tools, website hosting, and any marketing expenses.
**Variable Costs (V)** are the costs incurred *only* when you take on a project. This is almost entirely your materials: lumber, hardware (hinges, pulls), fasteners (screws, nails), and consumables (sandpaper, stain, glue). If you pay an assistant hourly *only* for that job, their wage is also a variable cost.
The **Contribution Margin** (P – V) is the profit from a single project that goes toward paying your fixed costs. If you charge $1,200 (P) for a custom bookshelf and your materials (V) cost $400, your contribution margin is $800. This calculator finds how many $800 “profit chunks” you need to cover your total fixed costs.
How to Calculate Carpentry Breakeven (Example)
Let’s calculate the breakeven point for a custom woodworker.
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Identify Monthly Fixed Costs (F):
Your monthly shop rent ($1,500), insurance ($300), truck payment ($400), and tool payments ($300) total $2,500.
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Identify Avg. Price per Project (P):
Between small jobs and large built-ins, your average project price is $1,200.
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Identify Variable Cost per Project (V):
You calculate that the average project costs $400 in lumber, hardware, and supplies.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per project: $1,200 (P) – $400 (V) = $800.
Next, divide the fixed costs by this margin:
Q = $2,500 / $800 = 3.125 -
Conclusion:
You must complete 4 projects (rounding up) each month to cover all costs. Your 4th project will generate your first profit for the month.
Frequently Asked Questions (FAQ)
Yes, you should pay yourself a fixed monthly salary. Include this “owner’s draw” in your (F) to ensure your business can support you. If you don’t, you are technically breaking even, but *you* are not getting paid.
You should add a buffer to your **Variable Cost (V)** to account for waste. If you know you typically waste about 10% of your lumber, increase your (V) by 10% to get a more accurate breakeven number.
Look at your last 3-6 months. Take your **Total Revenue** and divide it by the **Total Number of Projects** you completed. This gives you a reliable average (P) and smooths out the differences between large and small jobs.
Enter your (F) (e.g., $2,500), your (V) for the new job (e.g., $600 in materials), and set (Q) to 1. The calculator will solve for (P), telling you the *minimum price* ($3,100) you must charge for that *one job* to cover all your month’s fixed costs. Any price above that is your profit.