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Profit Goal Calculator

Enter your costs, price and profit target to find the sales you need.

Result

How it is calculated

The engine first finds the contribution margin ratio: CM% = (price - variable_cost) / price, the share of each sale left after variable costs. Required revenue is revenue = (fixed_costs + profit_target) / CM%. The unit count is units = ceil(revenue / price), rounded up because you cannot sell part of a unit.

Price and variable cost are per unit; fixed costs and the profit target are totals for the same period (month, quarter or year). The target is profit you want after fixed costs, before any income tax. If the price is not above the variable cost, each sale contributes nothing and no result is produced. Revenue is the exact figure, so it can be slightly lower than units × price. Taxes, discounts and changing costs at higher volumes are not modelled.

Worked example

Fixed costs are 7,000 for the period, you want 3,000 of profit, the unit price is 40 and the variable cost is 25 per unit. The contribution margin ratio is (40 - 25) / 40 = 37.50%. Revenue needed is (7,000 + 3,000) / 0.375 = $26,666.67. Dividing by the price gives 26,666.67 / 40 = 666.67, which rounds up to 667 units. Selling 667 units at 40 brings in 26,680, a little over the exact revenue figure, because whole units are needed.

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Common mistakes

  • Entering the profit target as a percentage. The field is a money amount in the same currency as your costs, not a margin.
  • Mixing periods, such as annual fixed costs with a monthly profit goal. The revenue and unit figures then describe no real period.
  • Putting total variable costs in the per-unit field. The variable cost must be the cost for one unit sold; entering a total makes the price look lower than the cost and returns nothing.
  • Leaving out a variable cost such as packaging, shipping or payment fees. A cost per unit that is too low inflates the margin ratio and understates the sales you need.
  • Expecting the target to be after tax. It is profit before income tax, so a net goal needs a higher target.

Sources

About this calculator

The starting point of any profit-goal calculation is the contribution margin — selling price minus variable cost per unit — which represents how much of each sale is left over to cover fixed costs and then profit. From there, the units you must sell to hit a target profit follow directly: Target units = (Fixed costs + Target profit) / Contribution margin per unit, and the corresponding sales revenue is that unit count multiplied by the price.

This is the core mechanic of cost-volume-profit (CVP) analysis, a staple of managerial accounting that small business owners, startup founders and finance teams use to translate a profit target into a concrete, actionable sales number rather than a vague aspiration. It also shows at a glance how sensitive the goal is to price or cost changes — a small drop in contribution margin can push the required sales volume up sharply. This calculator works through those steps from your price, costs and desired profit.

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Comments (1)

  • Editorial team

    Use the tool twice to see how fragile a goal is. With the defaults (fixed 50,000, target 20,000, price 40, variable cost 25) you need 4,667 units. Raise the variable cost by only 3 to 28 and the requirement jumps to 5,834 units, about 25% more volume from a 12% cost increase, because the margin per unit shrinks from 15 to 12. Which cost in your business moves the most, and how did you find it?

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