Professional services
Law Practice Break-Even Calculator
Works practice break-even, where the fixed base is small and stubborn.
Result
Break-even, not a target. It is the point where the business stops losing money, which is a floor rather than a plan. Owner's pay only counts here if it is inside the fixed costs you entered.
Get a Free Business AuditHow the calculation works
Fixed costs divided by contribution per matter gives the matters needed monthly. For a small practice the fixed base includes premises, insurance, research subscriptions, practice management software and any support salary, and almost none of it reduces in a quiet month, which is what makes break-even in a small practice inflexible rather than low.
What moves the number
- Fixed costs, which barely vary with volume.
- Contribution per matter after direct costs.
- Matter mix, since contribution varies widely by type.
- Whether the owner's wage is in fixed costs.
Where this one goes wrong
Include a wage for the owner in fixed costs, because a break-even figure that assumes the owner works for nothing tells you the point at which the practice stops losing money rather than the point at which it supports its owner, and the second is the number that matters. Contribution per matter also varies enough by type that a blended figure misleads, so running break-even separately for the practice's main matter types gives a more usable answer.
Before you quote
- Include a wage for the owner in fixed costs.
- Use contribution per matter by type, not blended.
- Recheck when any fixed commitment is added.
Questions
About this calculator
Should the owner's wage be in break-even?
Yes, otherwise the figure tells you when the practice stops losing money rather than when it supports its owner. The second is the number that matters for any decision about whether to continue, hire, or take on commitments.
Why is small practice break-even inflexible?
Because almost the whole fixed base, meaning premises, insurance, research and software, continues in a quiet month and does not scale down. The base is small in absolute terms and stubborn, which is a different problem from a large but variable cost structure.
How many matters do I need per month?
Fixed costs divided by contribution per matter, calculated per matter type rather than blended, since contribution varies widely between a quick transactional matter and a contested one. A single average produces a target that fits no actual month.
The formula
break-even matters = fixed costs / (average fee per matter x gross margin%)
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How to use this calculator
- Monthly fixed costs ($). Rent, office wages, insurance, vehicle payments, software, advertising.
- Average fee per matter ($). Enter your own figure; the page starts at $2,600.
- Gross margin per matter (%). Enter your own figure; the page starts at 58%.
The result updates as you type, so you can try a figure, see what it does to matters needed per month, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Monthly fixed costs | $24,000 |
| Average fee per matter | $2,600 |
| Gross margin per matter | 58% |
What comes out
| Result | Value |
|---|---|
| Matters needed per month main result | 16 |
| Revenue needed per month | $41,600 |
| Gross profit per matter | $1,508 |
| Matters per working day | 0.7 |
You need 16 jobs a month, about 0.7 a working day, to cover $24,000 of fixed cost. That is $41,600 of revenue before the business earns anything.
How sensitive the answer is
Holding everything else steady and changing only monthly fixed costs, this is what happens to matters needed per month. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Monthly fixed costs ($) | Matters needed per month |
|---|---|
| $12,000 | 8 |
| $18,000 | 12 |
| $24,000 example above | 16 |
| $36,000 | 24 |
| $48,000 | 32 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Monthly fixed costs ($)
- Rent, office wages, insurance, vehicle payments, software, advertising.
- Average fee per matter ($)
- A money amount, starting at $2,600.
- Gross margin per matter (%)
- A percentage, between 0 and 95, starting at 58%.
What the results tell you
| Result | What it is |
|---|---|
| Matters needed per month | The headline result. A number. |
| Revenue needed per month | A money figure. |
| Gross profit per matter | A money figure. |
| Matters per working day | A decimal figure. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.