The minimum revenue or billable hours needed to cover all fixed and variable costs, resulting in zero profit and zero loss.
Your agency has €40,000 in monthly fixed costs — rent, software, admin salaries. You bill clients €100/hr, and your average variable cost (developer salaries, freelancers) is €45/hr. That leaves €55 of gross contribution per billable hour. Divide €40,000 by €55 and you get 728 hours. That's your break-even point: the team needs to bill 728 hours every month before the agency makes a single euro of profit.
Break-even hours = Fixed costs / (Billing rate - Variable cost per hour)
Or if you think in man-days: 728 hours / 8 = 91 billable man-days per month. With 10 people on staff, that's roughly 9.1 billable days each — out of ~21 working days. Sounds comfortable, right? Until you subtract time off, public holidays, internal meetings, and admin overhead. Suddenly that cushion gets thin.
The most common mistake is ignoring overhead costs entirely. If you only calculate against salaries, you'll think you're profitable when you're actually bleeding cash on rent and tooling. The second mistake is assuming a flat hourly rate across all projects — in reality, your retainer clients might be at €85/hr while new projects bill at €120/hr.
WrkSched's break-even analysis pulls your actual company fixed costs — which can change over time using effective-date records — and compares them against your real allocation data and project rates. The result: a clear monthly target in billable man-days. Fall below it and you're losing money, no matter how busy the team looks. Combine this with your profitability forecast and utilization rate to see the full picture.
Put these concepts into practice with WrkSched — drag-and-drop scheduling and capacity planning.
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