Your break-even changes every time you hire

Break-even gets calculated once, usually when a business starts, and then quietly goes stale. Every fixed cost you add after that moves it, and the largest fixed cost most businesses add is a person.

The uncomfortable part is the multiplier. A hire does not raise your break-even by their salary. It raises it by their fully loaded cost divided by your contribution margin — because you only keep a fraction of each additional sale.

The multiplier, in one line

Break-even is fixed costs / contribution margin. Add a person and fixed costs rise by their loaded cost, so the additional revenue you need is loaded cost / contribution margin.

At a 40% contribution margin, an $87,000 loaded hire needs $217,500 of new annual revenue before the business is back where it started. At 25% it needs $348,000. The thinner your margin, the more brutal the arithmetic — and thin margin businesses are exactly the ones that tend to think of a hire as costing a salary.

Read it as a weekly number

Annual figures are easy to nod along with and hard to feel. The weekly version is the one that tells you whether the plan is real.

"This hire needs to generate $4,200 of additional revenue every week" is a claim you can actually test against your pipeline, your capacity, and your close rate. "$217,500 a year" is a number that sounds achievable to almost everyone, because a year is long enough to imagine anything.

Margin of safety is the number that should worry you

Margin of safety is how far revenue can fall before you hit break-even. At $1.84m of revenue against a $1.41m break-even, you could lose 23% and still be at zero — genuinely comfortable.

After the hire, break-even is $1.63m and the cushion is 11%. The business is no less profitable at today's revenue, but it is meaningfully more fragile: a soft quarter that would previously have been an annoyance now takes you below the line. That fragility, not the salary, is the real cost of the decision.

Not every hire has to pay for itself in revenue

Some do it by removing cost or unlocking capacity. A bookkeeper who ends $2,000 a month of outsourced work only has to justify the difference. An operations hire who frees fifteen hours of your week pays off if you reliably use those hours on something worth more.

The discipline is to say which one it is, in advance, and in a number. "This role generates $4,200 a week" and "this role saves $2,000 a month and frees fifteen of my hours" are both legitimate cases. "We really need the help" is true, universal, and tells you nothing about whether you can afford it.