STUDIO NOIR · Break-Even Analysis
When does the studio pay its own bills, and when does it start putting money in Taj’s pocket.
Break-even = the point where money coming in covers money going out.
Two different break-even numbers
Two different things matter:
- Monthly break-even. The revenue we need every month to cover that month’s operating costs. Below this, we lose money that month.
- Cumulative break-even. The point at which we’ve earned back what we spent to open. Below this, the business is still “in the hole” on the opening investment.
Both matter. We track both.
1. Monthly break-even (Phase 1)
Monthly fixed operating costs at Phase 1 steady state (with two-lever capital stack: landlord TI amortized in rent + equipment lease):
| Cost | Monthly |
|---|---|
| Rent (includes ~$1,000 TI amortization) | $5,000 |
| Utilities | $450 |
| Insurance | $550 |
| Booking software | $500 |
| Cleaning | $400 |
| Equipment lease (poles, sound, lighting) | $400 |
| Supplies + marketing baseline + accounting + processing + misc | $1,600 |
| Fixed costs | $8,900 |
Variable cost (grows with volume): contract instructor pay, roughly $60 per class, roughly 48 classes per month = $2,880/mo.
Total monthly cost at steady class schedule: about $11,780.
To cover this, we need $11,780 in monthly revenue.
At blended member price of $259/mo, that’s $11,780 ÷ $259 = 46 members to break even monthly.
At 46 members we clear zero. Every member beyond 46 goes toward Taj’s clean cash.
| Members | Monthly revenue | Monthly costs | Clean cash to Taj |
|---|---|---|---|
| 30 | $7,770 | $11,300 | -$3,530 (loss, reserve draw) |
| 40 | $10,360 | $11,600 | -$1,240 (loss, reserve draw) |
| 46 | $11,914 | $11,780 | +$134 (break-even) |
| 50 | $12,950 | $11,800 | +$1,150 |
| 60 | $15,540 | $11,900 | +$3,640 |
| 70 | $18,130 | $12,000 | +$6,130 |
| 80 | $20,720 | $12,100 | +$8,620 |
| 100 (Phase 1 stretch) | $25,900 | $12,400 | +$13,500 |
Monthly break-even = 46 members.
Add drop-ins, private lessons, merch and small events at steady state, and the effective break-even moves down to about 40 to 42 members.
Why 46 not 40
The old plan (cash-only $85K, no landlord TI, no equipment lease) had a break-even of 40 members but forced a compromised buildout at $40K. This plan trades six extra break-even members for:
- Full-spec buildout at $76K to $106K effective (buildout landlord + equipment lease + tenant cash)
- $20,000 less cash at risk if the business fails
- A bigger reserve ($45K vs $25K)
- Space quality that actually delivers on the 5-star hospitality frame from day 1
Six members is roughly 3 to 4 months of ramp difference. The full-spec buildout is a permanent structural improvement to member experience and retention. Recommended trade.
2. Cumulative break-even (payback on Taj’s $85K)
Once monthly cash flow is positive, how long until Taj’s original $85K is fully returned to her through distributions?
Assumptions: - Reserve is refilled to $45K first (roughly month 10 to 12 based on cash flow forecast). - Distributions start after reserve refill (roughly month 13 to 14). - Distributions run at $5K/mo starting month 13, ramping to $9K/mo by month 24.
Cumulative distributions:
| Month | Cumulative distribution to Taj |
|---|---|
| 12 | $0 (reserve refilling) |
| 15 | $12,000 |
| 18 | $32,000 |
| 21 | $54,000 |
| 24 | $78,000 |
| 26 (approx) | $85,000 fully returned |
| 30 | $110,000 |
| 36 | $158,000 |
Cumulative break-even: about month 26 (roughly two years after opening).
Everything Taj receives after month 26 is profit on her original $85K.
The two-lever stack does NOT push cumulative break-even meaningfully further out than the cash-only plan because the fuller buildout supports faster member ramp AND the $20K less cash at risk means less to earn back.
3. Sensitivity: how the numbers move
If any of these change, break-even moves:
| Change | Monthly break-even effect | Cumulative break-even effect |
|---|---|---|
| Rent goes up $500/mo (bigger space or worse TI deal) | +2 members | +2 to 3 months |
| Member churn goes up from 4% to 6% | +8 members | +6 to 9 months |
| Blended member price drops to $229 (Access-heavy mix) | +5 members | +3 to 5 months |
| Class schedule expands (extra $1,000/mo instructor cost) | +4 members | +2 to 3 months |
| Merch and events add $800/mo revenue | -3 members | -2 to 3 months |
| Waitlist converts at 30% instead of 20% | Faster ramp, break-even at month 5 | -3 to 4 months |
| Landlord TI at $80K instead of $50K (rent +$600 more) | +3 members | +2 to 3 months |
| Equipment lease PG denied, buyer pays $11K cash instead | Break-even at 43 (no lease line), but cash reserve shrinks | Neutral to slightly worse |
4. The “how low can we go” floor
If everything went wrong, what’s the minimum we could survive at?
- 30 members at $259 blended = $7,770/mo revenue
- Cut instructor schedule to 3 classes per week instead of 12 (from $2,880/mo to $720/mo instructor cost)
- Cut supplies and marketing to bare minimum ($200 to $400/mo)
- Reduced monthly cost: about $9,620 (rent + insurance + lease + skeleton opex + minimum instructor)
At 30 members with a stripped-down schedule, we lose about $1,850/mo. That’s the survival floor. Reserve drains in about 6 months if held at that floor, meaning we’d need Trill-bridge or wind-down conversation by month 6 of hitting bottom.
Floor: 35 members. Below this, the model does not work at Phase 1 spec with the two-lever stack. Rent and equipment lease are the two lines that make the floor higher than the old cash-only model would have suggested.
5. What accelerates break-even
Fastest levers, in order of impact:
- Aggressive pre-launch waitlist. Every 20 extra members at open means 3 months less to cumulative break-even.
- Referral program. Existing member gets 1 free month per 2 referrals. Cheapest new-member acquisition.
- Drop-ins from month 3. Adds $700 to $1,400/mo of near-pure margin.
- Private lessons. $1,000+/mo, high margin.
- Corporate wellness soft outreach. Even a small pilot ($3K/mo per account) accelerates.
- Better TI deal. If the landlord gives $80K TI instead of $50K but only bumps rent by $600 not $1,000, three fewer break-even members.
6. Phase 2 break-even preview (rough only, rebuilt in 2028)
Phase 2 flagship has much higher fixed costs (bigger space, GM salary, more staff, higher insurance, broadcast production overhead). Rough monthly fixed cost at flagship steady state: $85K to $110K.
At blended $450 member price, that’s 189 to 244 members to break even monthly. Target Phase 2 open with 200 committed members to break even from month 1.
Phase 2 cumulative break-even (payback on the ~$4M raise) is a 5 to 7 year horizon at base case, faster with THE NOIR INVITATIONAL and Phase 3 franchise royalties layered in.
Full Phase 2 break-even model rebuilt in 2028 against real Phase 1 numbers and real Phase 2 build costs.