Free calculator for consulting firm owners
How many client engagements does a consulting firm need to break even?
Consultants staffed on a client move with the work, while leadership, office and tools stay fixed. Break-even is the number of average engagements that covers the fixed side.
Break-even point
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client engagements a month to cover every cost
Profit at today's level
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per month, before owner pay
Cushion above break-even
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how many you could lose and still cover costs
The starting numbers are an example for a consulting firm. Replace them with yours.
The worked example
Each client engagement brings in $12,000 a month and costs $6,000 to serve. That leaves $6,000 toward fixed costs of $30,000 a month. Divide one by the other and you need 5 client engagements to break even. Every client engagement past that adds $6,000 to profit.
Ways to lower break-even in a consulting firm
- Raise utilization before raising headcount.
- Price engagements by the value delivered.
- Bill monthly in advance instead of at milestones.
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