Your break-even panel is the number of members whose payments cover every monthly cost of the practice. To find it, divide your fixed monthly costs by what each member brings in after the costs that come with that member.
The formula
Break-even members = fixed monthly costs / (average monthly revenue per member minus variable cost per member)
- Fixed costs are the bills that don't change with your member count: rent, staff pay, software, insurance and loan payments.
- Revenue per member is what the average member pays you each month. Here's how to calculate it.
- Variable cost per member is what each member costs you: card fees, included labs, supplies and any per-member software charges.
Use monthly numbers for all three parts so they line up.
A made-up example
Say your fixed costs are $24,000 a month. Your average member pays $80, and variable costs are $8 per member. Each member leaves $72 toward fixed costs.
$24,000 / $72 is about 334 members. At 334 members, the practice covers its bills. It hasn't paid you yet.
Add yourself to the math
Break-even on the bills isn't the number that matters to you. If you want to pay yourself $10,000 a month and set aside $2,500 for taxes, add $12,500 to fixed costs. Add your reserve deposit too, if you're still building one.
$36,500 / $72 is about 507 members. That's your real target. If that number feels far off, the levers are price, costs and how fast you add members. This post shows how to test a price increase.
Check it against your bank
Once you know the number, compare it with the last three months. If you were above break-even but your cash still fell, look at loan principal, equipment and owner draws. Those leave your account without showing up as expenses. This post covers that gap.
Use the calculator
You can run your own numbers in our free panel break-even calculator.
Things that throw the number off
- Using last year's costs after a new hire or a rent increase.
- Leaving out loan payments because they're not on the P&L.
- Using your list price instead of what members pay after family discounts and promotions.
- Forgetting that every member who leaves has to be replaced before the panel grows.
- Counting members who signed up but haven't paid yet.
- Leaving out your own pay, which makes the practice look healthier than it is.
What I'd do this week
- Total your fixed costs from last month's bank statement, including loan payments.
- Work out your real average revenue per member.
- Calculate your break-even panel, then the panel that pays you.
- Compare both to where you are today.
Common questions
Should I use revenue from my P&L or my membership platform?
Use what was collected. Your P&L from reconciled books is the most reliable source.
How often should I recalculate it?
Any time costs or prices change, and at least every quarter.
What if I'm far from break-even?
That's common in the first year. Check how many months of cash runway you have, and focus on the lever you can move fastest.
Want your break-even panel worked out for you?
We close your books every month, and our Fractional CFO work keeps your break-even panel and owner pay target up to date. If that's what you need, apply to work with us.