Break-even includes more than receipts
Materials are only one part of cost. Include loaded labor, subcontractors, equipment or permits you are responsible for, a consistent share of overhead, and a deliberate risk allowance where appropriate.
Profit begins above the boundary
A $2,700 break-even cost with a 30% target margin requires a $3,857.14 selling price. The $1,157.14 difference is the target gross profit before any cost that was omitted from the calculation.
Use break-even as a decision guardrail
- Flag any negotiated price below break-even before agreeing to the work.
- Separate a deliberate loss-leader decision from an accidental underquote.
- Update the estimate when scope, labor hours, material pricing, or schedule risk changes.
- Compare completed-job cost with the original boundary to improve the next estimate.
Questions people ask
What is a job's break-even price?
It is the selling price that exactly covers the loaded costs assigned to the job. At break-even, the job contributes no profit beyond those entered costs.
Is overhead included in break-even?
It should be included when the job is expected to recover an allocated share of general business costs. Use one consistent allocation method and avoid counting the same cost as both direct cost and overhead.
Is contingency or risk the same as profit?
No. A risk allowance covers expected uncertainty or exposure. Profit is what remains after the costs and allowances represented in the estimate are covered.