Glossary term
What is Break-even price?
Short answer
Break-even price is the lowest price for a job that covers all of its costs with no profit left over, found by adding direct costs and a share of overhead.
Break-even price, explained for tree service owners
Break-even price is the point where a job pays for itself but makes no profit. To find it, add up the direct costs of the job, such as crew hours, fuel, equipment wear, disposal and insurance share, then add your share of monthly overhead. For a tree service owner, knowing this number stops you from bidding too low, especially on small trims and small crews. Your quote should always sit above break-even by enough to cover profit and surprises like weather delays. Work out the numbers for common jobs, such as a removal or a stump, so you know your floor before you talk to a customer.
Related terms
- Overhead
Overhead is the ongoing cost of running a business that is not tied to one job, such as insurance, office costs, phone plans, software…
- Gross margin
Gross margin is the share of revenue left after paying direct job costs, such as crew labor, equipment, fuel and disposal, but before…
- Insurance premium
An insurance premium is the price you pay, monthly or yearly, to keep an insurance policy active.
- Markup
Markup is the amount added to a job's direct cost to set its selling price, usually shown as a percentage of cost, such as 40 percent…
- Net margin
Net margin is the share of total revenue kept as profit after every cost of running the business, including overhead, has been paid.
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