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Independent machine intelligence · Research before the decision
THE MACHINEBLUE BOOKResearch · Market · Ownership
MBB Explains · Film 10

Utilization and Break-Even

A full calendar of imaginary orders remains, regrettably, imaginary.

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MBB Explains · 64.8 secondsOriginal MBB animation · English captions

About this film

A full calendar of imaginary orders remains, regrettably, imaginary.

Bronto works through utilization, contribution and operating break-even, with the cash forecast kept properly separate.

Example assumptions

Single-service monthly teaching model. 80/160 = 50% utilization. $100-$40 = $60 contribution per billable hour. $6,000/$60 =100 operating break-even hours;100/160=62.5%. Fixed operating costs exclude interest, tax and financing principal; reflect operating depreciation only if included in the stated operating-cost model. A separate cash forecast must reverse noncash costs and include actual debt service without double-counting.

Educational boundary

General educational information only, not an offer of financing, a recommendation to borrow, or individual financial, tax, legal, engineering or safety advice. All dollar amounts are USD. Bob, the finance representative and their situations are fictional. Numerical examples are hypothetical, not current offers, market benchmarks, normal rates, quotes or promises of approval or return. Eligibility, terms, fees, tax treatment, ownership rights and laws depend on the actual agreement, jurisdiction and circumstances. MBB is an independent information resource, not a law firm, and is not acting as your lender, broker, attorney, accountant, financial adviser or site engineer. Consult appropriately qualified professionals and read the actual written terms before deciding. Commercial equipment credit does not automatically receive consumer mortgage protections.

An MBB Explains short, narrated by Bronto. Fictional illustrations turn machinery questions into something a little easier to understand.

Independent machinery knowledge. Understand the numbers before deciding.

Original MBB animation with synthetic Bronto narration. Narration: synthetic Bronto voice. The film uses English captions as a separate track, so they can be turned off.

Read the complete transcript

Bob’s machine is available for a hundred and sixty hours this month. Customers buy eighty. Availability is splendid. Paid work is considerably more useful. For this example, utilization means billable hours divided by available hours. Eighty out of a hundred and sixty is fifty percent. Define your hours consistently. Suppose each billable hour earns a hundred dollars and consumes forty in variable costs. That leaves sixty dollars towards fixed costs. Revenue itself is not the amount left over. With six thousand dollars of monthly fixed operating costs, operating break even is one hundred billable hours, or sixty two and a half percent utilization. Debt service needs a separate cash forecast. Imaginary orders remain, regrettably, imaginary. Explore ownership questions at Machine Blue Book, then test your circumstances with qualified professionals. General education, not individual advice.