The Break-Even Math Every Home Care Owner Should Do Before Hiring Their First Caregiver
By Dr. Devon Boswell, DBA, Boswell Consulting Agency
Most people start a home care agency backwards. They get the license, hire caregivers, take on clients, and then wonder why the bank account is empty at the end of month three. The math was never done. Or it was done on hope instead of paper.
Before you hire your first caregiver, you need to know one number: how many billable hours it takes to cover your fixed costs. Everything else in your business plan is decoration until that number is on paper.
Start with the two numbers the industry gives you
The national median rate agencies charge for non-medical home care was $35 an hour in 2025, according to the CareScout Cost of Care Survey. The national median pay for home health and personal care aides was $17.21 an hour in 2025, according to the Bureau of Labor Statistics. Those are medians, not promises. Your market will differ. But they give you an honest starting point instead of a guess.
Build the example
Every number below is an assumption for illustration, not a quote. Your job is to replace each one with your real numbers.
Bill rate: $35 per hour.
Caregiver wage: $18 per hour. Slightly above the national median, because you will struggle to recruit at the median in a competitive market.
Payroll burden: about $3 per hour. This covers the employer share of payroll taxes, workers compensation, and unemployment insurance. For scale, published workers comp examples for home health care run around $3.87 per $100 of payroll ( One80 industry white paper), which is roughly 70 cents on an $18 wage before payroll taxes and unemployment are added. Treat the $3 as a planning estimate, not a quote.
Contribution per hour: $35 minus $18 minus $3 equals $14.
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That $14 is not profit. It is the contribution each billed hour makes toward your fixed costs: insurance installments, scheduling software, background checks, phone, marketing, and your own pay. Everything that does not change when you add one more hour of care.
Run the formula
Now list your fixed monthly costs. For a lean startup run from a home office, a realistic example is $3,500 a month. Your number will differ. Write down yours.
The break-even formula is simple:
Break-even hours per month = fixed costs / contribution per hour
$3,500 / $14 = 250 billable hours per month.
That is about 63 billable hours a week. Two full-time clients at 30 hours a week each gets you there. Or five clients at 12 to 13 hours a week.
Read that again. A lean agency charging the national median rate needs roughly 60 to 65 billable hours a week just to cover costs, before the owner takes home a dollar. If your fixed costs are $5,000 instead of $3,500, the answer is 357 hours, or about 90 hours a week. The math does not care about your enthusiasm.
Three things this exercise forces you to face
First, the spread pays the bills, not the rate. A $35 bill rate sounds good until the wage is $22 and the burden is $4, leaving $9 of contribution. At $9 an hour, that same $3,500 in fixed costs needs 389 billable hours a month. Small changes in the wage you offer move the break-even point more than almost anything else. Set wages with the formula open, not after the offer letters go out.
Second, fixed costs are a choice. Every dollar of monthly overhead raises the hours you must sell before you earn anything. A $1,200 office lease in month one is not an investment. At $14 of contribution per hour, it is 86 extra billable hours a month you have to sell. Start lean. Add overhead when the hours justify it.
Third, unbilled hours are the silent killer. The formula assumes every hour you pay a caregiver is an hour you bill a client. In real life, you pay for training time, travel between clients, call-offs you still cover, and gaps in the schedule. If 10 percent of paid hours go unbilled, your effective contribution drops and break-even moves further away. Track billed hours against paid hours every week. That ratio is the health of your business.
