Your Studio’s Monthly Revenue Target: How to Find It
Your studio's monthly revenue target comes from one division. Want 30% profit? Divide your monthly breakeven by 0.70. The breakeven is every cost the studio carries in a month, including your own pay. The 0.70 is the slice of revenue left over for costs once profit takes its 30.
I ran a studio for nine years, and this is the question I put to every owner early: how much does your studio need to make each month? Almost no one has a number. They know the rent, they know roughly what payroll runs, and they hope the month covers it. Hoping is not a plan, and it is not pricing either.
A profit analysis tells you where last year's money went. The revenue target tells you what next month has to bring in. This post covers the second number: what goes into the breakeven, how the profit percentage changes the target, and why this math belongs at the top of every pricing decision you make.
Build the breakeven first
Four lines. Add them up. If a month comes in under that total, somebody isn't getting paid, and it's usually you.
Operating expenses. Everything the business spends that isn't payroll: rent, utilities, insurance, software, merchant fees, cleaning, marketing, equipment. Use a monthly average from your last full year, not last month's bills. Insurance renewals and equipment purchases don't land evenly across the calendar, and one quiet month will understate what the studio costs to run.
Payroll, with payroll taxes. Everyone who works in the business except you: instructors, front desk, contractors, plus the employer taxes that ride on top of wages. The wage on the pay stub is not what an employee costs you.
Tax liabilities. Sales tax, service tax, use tax, property tax. The ones tied to running the business, averaged monthly. (Income tax on your profit is separate. Ask your CPA what to hold back.)
Your own pay, as its own line. Not a leftover, not "whatever's in the account on the 30th." A real salary line with its own payroll taxes, sized by what your life requires. That number is your Need Number, and you can calculate it for free in about ten minutes. Putting your pay inside the breakeven is what most people never do, but the studio truly has not broken even until you have been paid. (In the profit analysis, your teaching hours sit inside the payroll bucket because that analysis sorts last year. This is next month's budget, so all of your pay moves onto this one line where you can see it.)
Then divide, don't add
Here is where most owners go wrong. To earn 30% profit, you do not add 30% on top of your costs. You divide by what's left after profit takes its share:
Want 30% profit? Divide your monthly breakeven by 0.70. (For 20%, divide by 0.80. For 10%, by 0.90.)
This isn't just a math technicality. If you add instead of divide you'll come up short even if you hit your calculated target. Take the studio from my profit analysis post: $240,000 of revenue last year, $103,000 of expenses, $98,000 of payroll with the owner's hours inside it. Rebuilt as a monthly budget, that studio looks like this: $8,600 of operating expenses, $5,200 of staff payroll, $3,000 of owner's pay. Breakeven: $16,800 a month.
Adding 30% on top gives you $21,840. Dividing by 0.70 gives you $24,000. Price off the first number and your "30% profit" quietly shrinks to 23%, because the profit itself has to be a percentage of revenue, not a percentage of costs.
Run the division at three profit levels and you get a ladder instead of a cliff:
At 10% profit: $16,800 ÷ 0.90 = $18,667 a month
At 20% profit: $16,800 ÷ 0.80 = $21,000 a month
At 30% profit: $16,800 ÷ 0.70 = $24,000 a month, $288,000 a year
Thirty percent is the destination, the profit bucket from the 35/35/30 standard. The 10% and 20% rungs are not consolation prizes. They are how you reprice in stages instead of trying to leap the whole gap in one season.
One cross-check before you settle on the number. The profit analysis has a gauge of its own: expenses ÷ 0.35, the revenue where your costs become the right share of the business. For this studio that's $8,600 ÷ 0.35, about $24,600 a month, the same roughly $295,000 a year the profit analysis found. Your target is the larger of the two results. The division guarantees the profit. The gauge guarantees the buckets. A healthy studio clears both.
Two more numbers fall out of the ladder, and they are the ones worth staring at. Monthly profit at each rung is revenue × profit %: $1,867, $4,200, and $7,200 on the example. And your total take-home is your salary line plus that profit. On the 30% rung, an owner paying herself $3,000 a month takes home $36,000 in salary plus about $86,000 in annual profit. That is what the same studio, same costs, same classes, looks like when the revenue is sized to the math instead of to hope.
Why the target is monthly
Your studio's obligations arrive monthly. Rent, payroll, software, insurance premiums, your own mortgage. Your strongest revenue should arrive the same way, which is why memberships anchor a sustainable studio. An annual target hides three slow months inside a good year. A monthly target catches the problem in July instead of at tax time.
The target itself stays flat while your revenue moves around it, and that is the point. A month above target is profit. A month below target is a measured shortfall, not a mystery.
What the target does to pricing
Divide the target by what your schedule can realistically hold and you get what each member has to produce. Two planning rules keep that division honest.
Build the math on 75% of your capacity, not on full classes. Studios do not run full, and pricing that assumes they do sets every price too low. At 75%, slow seasons are already inside the prices, and the busy months above the floor are true profit rather than catch-up.
And aim for at least 80% of the target to come from recurring revenue: memberships and autopay packages. When four-fifths of the number is committed before the month starts, drop-ins and workshops are upside. When it isn't, you rebuild the target from zero every four weeks, and one slow stretch turns into a rent problem.
How to raise prices without losing your community is its own topic, and the sequencing matters. But direction comes from a number, not a feeling, and this is the number.
If you want to see how your studio's math sits before you touch a price, the Pricing Clarity Diagnostic walks your business through the right questions in about ten minutes. $37.
And if your gap looks like the example's, thousands a month rather than a rounding error, book a call. We'll look at your target and whether I'm the right person to help you close it.
Common questions
How much revenue does a studio need each month? Your monthly breakeven (operating expenses, staff payroll with payroll taxes, your own salary with its taxes, business tax liabilities) divided by 0.70 for a 30% profit target (by 0.80 for 20%, by 0.90 for 10%). Cross-check against expenses ÷ 0.35 from the profit analysis and take the larger number.
Is the revenue target the same as breaking even? The breakeven in this method already includes your salary, so it is stronger than what most owners call breaking even. But it still isn't the target. The target adds profit on top by division, so the business earns a return beyond paying everyone, including you.
Why divide by 0.70 instead of adding 30% on top? Because profit is a share of revenue, not a markup on costs. Adding 30% to costs produces a price where profit works out to about 23% of revenue. Dividing by 0.70 produces the revenue where profit is actually 30%. Same intention, different math, thousands of dollars apart over a year.
Where do I get the owner-salary number? That is your Need Number, the annual pay your life requires. The calculator is free and takes about ten minutes. Use it instead of a guess, because the guess is almost always low.
What if my current revenue is nowhere near the 30% target? Use the ladder. Price to the 10% rung first, then 20%, then 30%. Each rung is a real, calculated target, not a guess. Cutting has a floor: rent, insurance, and equipment do not shrink on request, so expense trimming alone will not carry you there.
Does the revenue target change month to month? No. The target holds steady while revenue moves around it, and the 75% capacity floor exists so that normal seasonal dips are already priced in. If your costs change, rerun the math; otherwise the number stands until you reprice.
Educational content, not financial or tax advice.
