Break-Even Analysis
Updated 2026-07-07 for Kendra’s salary cut to $4,000/mo and the per-groomer model rebuild in
financial-model.xlsx. This page’s break-even formula still assumes a hypothetical “100% commissioned” reference point (useful as a conservative threshold), but the real month-by-month picture is healthier than this static number suggests once Kendra’s continued production is accounted for - see revenue-projections’s checkpoint table and the spreadsheet’s Dashboard tab.
The Formula
Break-Even Dogs/Month = Fixed Costs / (Average Ticket - Variable Cost Per Dog)
The denominator is the contribution margin - what each dog appointment contributes toward covering fixed costs after variable costs are paid.
A modeling note on “Fixed Costs” here: this strips out everything volume-driven (commission, payroll tax/WC on commission, consumables, laundry, card processing - all in “variable cost per dog” instead) and keeps only what doesn’t change with dog count: rent, utilities, insurance, booking software, phone, Workspace, website, accountant, misc buffer, Kendra’s flat salary, and the FICA/WC owed on just her salary.
Inputs
Basis: the fully-staffed team (Kendra + 3 staff, 4 people), matching ongoing-expenses’s reference case - but see the headline finding in revenue-projections on whether this team can actually run without Kendra grooming.
| Variable | Value | Source |
|---|---|---|
| True fixed costs per month | $8,563 | Rent 2,500 + Utilities 650 + Insurance 175 + Booking software 120 + Phone 45 + Workspace 22 + Website 25 + Accountant 300 + Misc 300 + Kendra's 4,000 salary + FICA/WC on her salary 426, all from [[ongoing-expenses]]. Down from 9,670 at the prior $5,000-salary assumption. |
| Average ticket (blended) | $65 | revenue-projections - still the PetSmart-observation floor, not yet re-based on the confirmed breed-pricing-matrix |
| Variable cost per dog | $45.09 | 50% commission (32.50) + FICA/WC on that commission (3.46) + consumables (7) + laundry (0.34) + card processing (2.6% + 0.10 ≈ 1.79) - unchanged by the salary cut, since commission/consumables/etc. don’t depend on Kendra’s pay |
| Contribution margin per dog | $19.91 | 65 - 45.09 |
Break-Even Calculation
| Metric | Calculation | Value |
|---|---|---|
| Dogs per month to break even | 8,563 / 19.91 | ~430 dogs/month (down from ~486 at the $5,000-salary assumption) |
| Dogs per day (22 operating days) | 430 / 22 | ~19.5 dogs/day (combined, all 4 people) |
| % of the 4-person, 32-dogs/day ceiling | 430 / 704 | ~61% (down from ~92% of the 3-groomer basis previously used - a meaningfully easier bar to clear) |
This threshold assumes 100% of production is commissioned - a hypothetical, not the real per-groomer story. In the actual model, Kendra’s continued production means the business clears this kind of breakeven bar much earlier and more comfortably than a static formula suggests - see revenue-projections’s checkpoint table, which shows real operating profit from Month 4 onward with only a single loss month (the Month-1 launch dip) in the entire 60-month model.
Break-Even Sensitivity Table
| Fixed Costs \ Avg Ticket | $55 (low) | $65 (base) | $75 (high) |
|---|---|---|---|
| $7,400 (optimistic) | 471 dogs/mo | 372 dogs/mo | 307 dogs/mo |
| $8,560 (base case) | 545 dogs/mo | 430 dogs/mo | 355 dogs/mo |
| $9,900 (conservative) | 630 dogs/mo | 497 dogs/mo | 410 dogs/mo |
Every cell in this table is lower than the prior 5,000-salary version - the 1,000/mo salary cut (plus its ~$106.50/mo in avoided payroll tax/WC) shifted the whole table down. Combined with a higher confirmed ticket price (still pending the breed-pricing-matrix), breakeven could come down further still.
Key Insight Prompts
How many days does it take to break even each month? At the 4-person max of 32 dogs/day, ~430 break-even dogs/month works out to ~13.4 of the 22 operating days fully booked at full 4-person capacity - or equivalently, running at ~61% of capacity, not ~92% as the prior version found. Meaningfully more breathing room.
What average ticket price makes us profitable at 50% capacity?
At 352 dogs/month (50% of the 4-person, 704-dog/month capacity), covering the 8,563 fixed cost requires a contribution margin of 8,563 / 352 = 24.33/dog, which solves to an average ticket of **~75.60** - within the realistic range once the breed-pricing-matrix is confirmed (premium positioning was always expected to land above the 65 PetSmart floor). This is a dramatically more achievable bar than the ~105 the prior version found.
What is the impact of adding a second groomer?
Still doesn’t cleanly reduce to the standard formula, for the same reason as before - Kendra keeps producing throughout the buildup, so a “fixed cost step / capacity increase” comparison undercounts what’s really happening. Use financial-model.xlsx’s Monthly Model tab for real hire-timing decisions instead of this static formula.
Runway
Reworked again 2026-07-07 - simplified, because the crunch this was protecting against turned out not to be real. Once Kendra’s continued production was modeled honestly (not “she stops producing the instant a 3rd groomer arrives”), the Month 9-15 “hiring cascade crunch” that drove the prior two-tier 6,000/2,000 cap policy mostly disappeared. The only real cash-risk point left in the whole 60-month model is the Month 1 launch dip.
Current policy: 3,000 starting working capital**, flat **2,000 cash-reserve cap every month thereafter (no tiers needed). Structural minimum (including the Month 9 and Month 15 phased-equipment CapEx hits) is **2,791** - so 3,000 leaves only a ~$209 margin, genuinely “as low as it can go.”
| Month | Operating Net Profit | CapEx | Cash Reserve Balance | Notes |
|---|---|---|---|---|
| 1 | ($2,791) | $0 | $209 | The only real low point in the model |
| 2 | $2,125 | $0 | $2,000 (capped) | Cash recovers immediately and hits the cap |
| 9 | $3,768 | $2,869 | $2,000 (capped) | 3rd-groomer CapEx absorbed same month, still ends at the cap |
| 15 | $3,920 | $3,617 | $2,000 (capped) | 4th-groomer CapEx absorbed same month, still ends at the cap |
| 16 | $4,358 | $0 | $2,000 (capped) | Startup cost fully repaid this month |
| 24+ | $9,445+ | $0 | $2,000 (capped) | Excess now flows to Owner Distributions instead - see revenue-projections |
No negative-cash problem this time. Unlike the prior two-tier cap version (which drove cash negative for 10 straight months), this policy never dips below the Month-1 launch low. The fix wasn’t a better cash policy - it was correctly modeling that Kendra keeps grooming through the buildup, which is real, uncommissioned revenue the old model was discarding.