Diagnostic Tool
Fixed Cost Exposure Calculator
This diagnostic measures how much fixed operating cost load your revenue must carry before profit turns negative. It calculates break-even revenue and the operating profit buffer created by your current contribution margin.
In practice, fixed costs like salaries, rent, and contracted services stay in place while orders fluctuate. When volume softens, the same fixed base is absorbed by fewer invoices, and profitability can disappear quickly even if pricing is unchanged.
This matters because cost structure determines how a downturn converts into cash pressure, staffing decisions, and supplier terms stress. Operators need to know whether the business can flex costs fast enough when revenue moves.
Use average revenue from the last three months.
Rent, salaries, software, insurance, and other fixed overhead.
Direct costs that scale with orders and fulfilment.
Principal and interest paid monthly from operating cash.
Cash that can fund losses without breaking payment terms.
Set a single downturn assumption for the Scenario state.
Estimated overhead cuts achievable within 60 days.
Increase or decrease variable cost % under disruption.
Many of the inputs requested by this diagnostic are metrics that disciplined operators typically monitor through internal management reporting. If a number requested here is not immediately available it often indicates that the current reporting structure does not isolate that metric clearly. Businesses operating with strong financial visibility normally track these figures regularly because they influence pricing decisions, supplier negotiations, operational planning, capital allocation, and risk management. Part of the work performed by MJB Strategic often involves helping companies design internal reporting structures that surface these metrics consistently so management can make better operational decisions.