blog-intro">You're pulling in decent revenue. But at the end of the month, there's barely anything left. You're not sure where it's going — just that it keeps going.

That's not a revenue problem. That's a fixed cost problem. And the first step to fixing it is knowing exactly what you're paying every single month before you earn a dollar.

What Are Fixed Costs for a Small Business?

Fixed costs are the expenses you pay regardless of how much work you do. Busy month or slow month — they show up the same.

Insurance. Software subscriptions. Loan payments. Vehicle leases. Phone plans. Storage units. The accounting software you forgot you signed up for two years ago.

These are your fixed costs — and for most trades and service businesses doing $300K to $2M in revenue, they're the least-examined line item on the books.

Compare that to variable costs, which scale with your workload: materials, subcontractors, fuel. Those fluctuate. Fixed costs don't. That's what makes them dangerous when business slows down — and what makes understanding them so important year-round.

If you've been digging into your burn rate, fixed costs are a big part of that number. You can't manage one without understanding the other.

Why Most Trades Owners Don't Actually Know Their Fixed Costs

Here's what I see constantly: owners who can quote their hourly rate, their material markup, even their gross margin — but have no idea what their monthly fixed overhead actually is.

It's not laziness. It's that fixed costs accumulate quietly. A $49 software subscription here. A $120 storage unit there. A vehicle lease that auto-renews. None of it feels significant in isolation.

But add it up, and you're often looking at $8,000 to $15,000 a month in fixed costs before your first job is even booked.

That number matters because it sets your break-even point. If you don't know it, you can't price properly, plan for slow seasons, or make smart decisions about growth. I wrote about this in the post on understanding your profitability — it all starts with knowing your baseline.

How to Calculate Your Monthly Fixed Costs

This is a one-time exercise that takes about 45 minutes. Do it once, then review it quarterly.

Open your bank statements and credit card statements for the last three months. Go line by line. Every recurring charge that doesn't change based on job volume gets flagged.

Here's what you're looking for:

• Rent or office/shop lease
• Vehicle lease or loan payments
• Equipment financing
• Insurance premiums (liability, vehicle, WCB)
• Accounting and bookkeeping fees
• Software subscriptions (CRM, scheduling, invoicing, estimating)
• Phone and internet plans
• Storage units
• Loan repayments
• Any retainer-based services (marketing, IT, etc.)

Add them up. That's your monthly fixed cost baseline. That number is the minimum you need to earn just to keep the lights on.

Once you have it, divide by your average job revenue. Now you know how many jobs per month you need before you break even. That's a number every owner should know cold.

The Fixed Costs That Are Worth Every Dollar

Not all fixed costs are bad. Some are investments in stability and efficiency. Here's how I think about it with clients.

A fixed cost is worth keeping if it:

• Saves you more time than it costs in dollars
• Protects you from a risk that could cost far more
• Directly enables you to deliver your service or win more work
• Replaces a task you'd otherwise have to hire someone to do

Your liability insurance? Non-negotiable. A solid CRM that keeps your leads organized? Worth it if you're using it. A bookkeeper who keeps your financials clean so you can make real decisions? Absolutely worth it.

The waste isn't usually in the big stuff. It's in the pile of small stuff nobody's reviewed in 18 months.

The Fixed Costs That Are Quietly Bleeding You

Every business owner I've worked with finds something in this exercise. Usually several somethings.

The most common offenders:

• Software tools that overlap in function and nobody uses both
• A storage unit full of equipment that should have been sold or written off
• A vehicle lease on a truck that sits idle most of the week
• A marketing retainer that was set up two years ago and never reviewed
• Multiple phone plans when one would do
• A shop or office space that's too large for current headcount

I've seen trades businesses cut $1,500 to $3,000 a month just by doing this audit once. That's $18,000 to $36,000 a year — not from working harder, but from paying attention.

If you want a framework for thinking about this more broadly, the post on smarter ways to cut costs goes deeper on the mindset side.

How to Decide What to Cut

Here's the rule I use at TradeBrain: if you can't name the specific value a fixed cost delivers in the next 30 days, it's a candidate for the chopping block.

Not "it might be useful." Not "we used it last spring." What is it doing for you right now?

For anything you're unsure about, put it on a 30-day watch list. Use it intentionally for 30 days and evaluate. If you can't make yourself use it in 30 days, cancel it.

For bigger fixed costs — leases, retainers, financing — the question is different. Ask: what would it cost to replace this with a variable alternative? Sometimes a fixed lease is actually cheaper than renting equipment job by job. Sometimes it's not. Run the math.

This kind of thinking is exactly what good operations management looks like in practice. It's not glamorous. It's just money staying in your pocket instead of leaving it.

Build a Fixed Cost Review Into Your Routine

The audit isn't a one-time thing. Fixed costs creep back up. New subscriptions get added. Old ones don't get cancelled. Contracts auto-renew.

Here's what I tell every client: schedule a fixed cost review every quarter. Put it in your calendar right now. It takes 20 minutes once you've done the first full audit.

Pair it with your quarterly financial review. If you don't have one of those yet, the post on financial SOPs every small business needs is a good place to start building that habit.

Do This This Week

1. Pull your last three months of bank and credit card statements.
2. Highlight every recurring fixed charge — no matter how small.
3. Add them up. Write the total number down somewhere visible.
4. Flag anything you can't immediately justify with a specific, current use.
5. Cancel or pause at least one thing this week. Start there.
6. Set a calendar reminder to repeat this review in 90 days.

If you want help mapping your fixed costs and figuring out where the real profit leaks are, reach out to us at TradeBrain — this is exactly the kind of work we do with trades and service businesses every day.