I’ve been freelancing for a bit and I’m looking into launching new services. The tricky part is figuring out the break-even point.
I usually guess on pricing, but I’d like to know how long it takes to see some profit instead of just covering my expenses.
Look at your costs then charge more than that.
Price it where you’re comfortable, then count how many jobs you need to pay your bills. But here’s what matters more - can you actually deliver that many jobs without burning out? I see people do the math and think they need 20 clients a month, then realize they can only handle 8 without working weekends. Better to price higher and work less than chase volume you can’t sustain.
I keep it simple. List what it costs me to deliver the service, add what I want to make per hour, then see how many jobs I need to cover my monthly bills.
If a service costs me $100 to deliver and I charge $300, I make $200 profit. If my monthly expenses are $2000, I need 10 jobs to break even.
The real test is whether you can actually get that many clients paying that price.
I just figure out what it costs me and add what I need to live. Then see if people will actually pay that much.
Track everything for a month first. You need real numbers, not guesses.
Write down:
I did this when I added web maintenance to my services. Thought I was making good money until I tracked my time. Turns out I was working for about $15 an hour after all the little fixes and check ins.
Once you have actual data, the math is easier. Take your total costs and divide by profit per job. That tells you how many clients you need.
But here’s the thing nobody mentions - some services take way longer to get profitable. Design work might pay off in month 2. Something like consulting could take 6 months to build up enough clients.
Test with a few clients before you commit to the service fully. Better to find out early if the numbers don’t work.
Start with your fixed costs - rent, software subscriptions, phone bill, all the stuff you pay whether you work or not. Then add your variable costs per project like materials or contractor fees.
For example, when I added bookkeeping services, my fixed costs were $800 monthly. Each client took about 6 hours at $50/hour, so $300 revenue per client. After expenses like software and my time, I cleared about $200 per client.
So I needed 4 clients ($800 ÷ $200) to break even. Month 5 was when I actually started making money.
Don’t forget to factor in how long it takes to land clients. I spent 3 months getting those first 4, so my real break-even was month 8.