Construction Break-Even Calculation: The Turnover You Need
The short answer
Break-even turnover = fixed overheads (including your own wage) ÷ gross margin %. £8,000 a month of overheads at a 30% margin needs £26,667 of work a month.
- The formula: monthly overheads ÷ gross margin % = break-even turnover a month.
- Put your own wage in overheads. Leave it out and you'll 'break even' while working for nothing.
- Gross margin moves break-even most. At 20% margin the same business needs 50% more turnover than at 30%.
- Margin of safety: keep your normal month at least 20% above break-even, and recheck it every quarter.
Ask most builders what turnover they need each month just to cover their costs and they'll guess. Some guess high and panic about every quiet week. Most guess low, take on work that doesn't cover the overheads, and wonder why a busy year left nothing in the bank.
Your break-even is one number, and the construction break even calculation takes ten minutes. Here's how, with a worked example and what to do with the answer. If you'd rather work it out on your real numbers with us, book a free strategy call.
The break-even formula
Break-even turnover = fixed overheads ÷ gross margin %
Two numbers go in:
- Fixed overheads: everything you pay whether or not you're on a job this month, including your own wage.
- Gross margin %: what's left of each £1 of turnover after the job's direct costs, divided by turnover. Direct costs are materials, labour on the job, subcontractors, skips and plant.
The gross margin is what each pound of work contributes towards your overheads. Break-even is the turnover where those contributions exactly cover them.
Still not sure where your break-even is?
Book a free call with our team. We'll work out your break-even, your real margins and the turnover you need for the profit you want.
A worked example
An illustrative building company with these monthly overheads:
| Overhead | Per month |
|---|---|
| Owner's wage | £4,000 |
| Office or yard, phone, software | £900 |
| Vans and fuel (not charged to jobs) | £1,300 |
| Insurance, accountant, memberships | £700 |
| Admin support (part-time) | £800 |
| Marketing | £300 |
| Total fixed overheads | £8,000 |
Now divide by the gross margin:
| Gross margin | Break-even turnover a month | A year |
|---|---|---|
| 35% | £22,857 | £274,286 |
| 30% | £26,667 | £320,000 |
| 25% | £32,000 | £384,000 |
| 20% | £40,000 | £480,000 |
Same business, same overheads. At 20% margin it needs £40,000 of work a month to stand still; at 30% it needs £26,667. That's why gross margin moves your break-even more than anything else. See what profit margins UK builders should aim for.
Leaving your own wage out of overheads. You'll hit "break-even" while working for free, and the business will look healthier than it is.
Your break-even day rate
If you're still on the tools, turn it into a day rate. Days you can actually bill are fewer than you think:
| Line | Days a year |
|---|---|
| Weekdays in a year | 260 |
| Less holidays and bank holidays | −36 |
| Less quoting, admin, weather, sick days | −34 |
| Billable days | 190 |
Illustrative sole trader: £12,000 a year of overheads (van, insurance, phone, tools, accountant) plus the £36,000 wage he wants = £48,000. Divided by 190 days = £253 a day before materials and before any profit. If he's charging £220 a day, he's losing money on every job and doesn't know it.
Not sure your prices cover your break-even? Book a free strategy call and we'll work it out on your real numbers.
What to do with the number
Compare your normal month with break-even. The gap above it is your margin of safety.
| Your normal month vs break-even | What it means | What to do |
|---|---|---|
| Below break-even | Every month loses money, however busy | Raise prices or cut overheads before you take more work |
| 0–20% above | One bad job or a quiet month puts you under | Fix margin on the next quotes; build a cash reserve |
| 20–50% above | Healthy, with room for a bad month | Grow carefully; check before adding fixed costs |
| 50%+ above | Strong; you can afford to invest | Add people or marketing, re-check break-even after each addition |
Three levers move break-even. In order of impact:
- Gross margin. Price from your own costs, to a target margin, not a markup. A 25% markup is only a 20% margin. Our pricing guide shows how.
- Overheads. Every new van, hire or office raises the turnover you need. Before you add one, work out the extra turnover it needs: £600 a month at 25% margin needs £2,400 a month of extra work.
- Mix of work. Jobs that earn a better margin lower break-even without any extra turnover.
If you're already busy and still short, read busy but no profit next.
Before you hire, work out the new break-even. A £3,000-a-month hire at a 25% margin needs £12,000 a month of extra work just to pay for itself.
Leave with a plan for your next 90 days
A few short questions about your business, then 45 minutes, free, 1-on-1 with our team. Your next 90 days, even if we’re not a fit.
Check it with the other numbers
Break-even is one of the numbers that tell you whether a construction business is healthy. Our 12 KPIs for UK builders covers the rest: gross and net margin, overheads, win rate, pipeline, cash reserve and debtors. To score your business against all six areas in 4 minutes, take the free Construction Business Scorecard.
Ghennadi, a decorator from Northampton, went from £2K to £13.5K a month profit in 60 days, largely by pricing jobs properly and presenting quotes live. Individual results, not typical or guaranteed.
Break-even checklist
In 1-to-1 mentoring with Sviat, who runs Craftex today, these numbers are the starting point. We find where your margin leaks and build on what you're already good at. We aim for results in about 4 months rather than a 1–3-year program. On the tools and under £500K a year? Watch our free training first.
This quarter
- Monthly overheads listed, including your own wage
- Real gross margin worked out from finished jobs
- Break-even turnover and day rate calculated
- Normal month compared with break-even
- New break-even worked out before any new hire, van or office
