Chartered Financial Analyst and former Management Consultant at a Big Three firm.
Find out how many projects (or billable hours) you need to cover your monthly overhead. Enter any three variables—Monthly Fixed Costs, Avg. Project Fee, Avg. Project Cost, or Number of Projects—to solve for the fourth.
Consulting Breakeven Calculator
Consulting Firm Breakeven Formula
The breakeven formula for a consultant or firm finds the number of projects (Q) required for total fee income to equal all fixed overhead and variable project costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Project Fee (P):
P = (F / Q) + V
Solve for Avg. Project Cost (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your total monthly overhead (e.g., office rent, software, insurance, base salaries) that you pay regardless of client work.
- Avg. Project Fee (P): The average fee you collect for one client project.
- Avg. Project Cost (V): The direct costs to deliver one project (e.g., subcontractor fees, travel, materials, sales commission).
- Breakeven Projects (Q): The number of projects you must complete per month to reach $0 in operating profit.
Related Calculators
- Freelancer Breakeven Calculator
- Service Business Breakeven Calculator
- Consultant Hourly Rate Calculator
- Project Profitability Calculator
What is a Consulting Breakeven Point?
A **Consulting Breakeven Point** is the number of projects a consultant or firm must sell each month to cover all business expenses. It is the dividing line between losing money and making a profit. This number is critical for setting fees and managing overhead.
**Fixed Costs (F)** are your monthly overhead. For a solo consultant, this might be your E&O insurance, CRM software, and home office costs. For a firm, it includes rent, utilities, and administrative salaries. These costs are “fixed” because you pay them whether you have 0 clients or 10 clients.
**Variable Costs (V)** are the direct costs tied to *delivering* a project. If you hire a junior consultant for $500 to help with a $5,000 project, that $500 is a variable cost. If you travel to the client’s site, the flight and hotel are variable costs.
The **Contribution Margin** (P – V) is the profit you make from one project *before* paying your fixed overhead. This calculator finds how many projects, each contributing this margin, are needed to pay for all your fixed costs.
How to Calculate Consulting Breakeven (Example)
Let’s calculate the breakeven point for a small independent consulting practice.
-
Identify Monthly Fixed Costs (F):
The consultant’s total monthly overhead (software, insurance, marketing, virtual assistant) is $8,000.
-
Identify Avg. Project Fee (P):
The consultant charges an average flat fee of $5,000 per project.
-
Identify Avg. Project Cost (V):
For each project, the consultant pays a 10% commission ($500) to a sales partner. The (V) is $500.00.
-
Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per project: $5,000 (P) – $500 (V) = $4,500.
Next, divide the fixed costs by this margin:
Q = $8,000 / $4,500 ≈ 1.78 -
Conclusion:
The consultant must complete 1.78 projects per month to break even. This means they need to close 2 projects per month to be profitable. (Or 3 projects one month, 1 the next).
Frequently Asked Questions (FAQ)
You can still use this! Set (Q) as “Breakeven Billable Hours”. (P) becomes your “Hourly Rate”. (V) becomes your “Variable Cost per Hour” (e.g., software fees per hour of use, which is often $0).
Yes, absolutely. Your (F) should include the minimum salary you need to draw from the business to live. If your personal bills are $6,000/mo and business overhead is $2,000/mo, your (F) is $8,000.
They are very similar. This “Consulting” calculator is geared toward a business model (projects, fees, overhead), while a “Freelancer” model is often more focused on personal income (hours worked, hourly rate).
Work backward. Determine your monthly Fixed Costs (F), your per-project cost (V), and how many projects (Q) you can realistically handle in a month (e.g., Q=2). Then, solve for (P). This tells you the *minimum fee* you must charge. `P = (F / Q) + V`.