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Target Profit Calculator
How much do you need to sell to make the profit you want? Enter your price, variable cost per unit and fixed costs, then set a profit amount or a profit margin, before or after income tax. You get the units and sales dollars required, the break-even point and how price changes move the target.
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Price and costs
$
$
Materials, packaging, shipping, commissions per unit
$
Rent, salaries, insurance, software
To see the gap to your target
Target
Target profit as
$
% of sales
%
Enter your values to see the result.
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How to use the Target Profit Calculator
- Enter your selling price and the variable cost of each unit.
- Enter fixed costs for the same period as the target (a month, a quarter or a year).
- Set the target as a profit amount or a profit margin, and tick after-tax if your goal is net income after tax.
- Optionally add your current sales to see how far you are from the goal.
- Press Calculate target sales and review the units, revenue, tables and chart.
Target profit formulas
| What you want | Formula |
|---|---|
| Contribution margin (CM) | Price − variable cost per unit |
| CM ratio | CM ÷ price |
| Units for a target profit | (Fixed costs + target profit) ÷ CM |
| Sales dollars for a target profit | (Fixed costs + target profit) ÷ CM ratio |
| Pre-tax profit from an after-tax goal | After-tax profit ÷ (1 − tax rate) |
| Units for a target margin m | Fixed costs ÷ (CM − m × price) |
| Break-even units | Fixed costs ÷ CM |
Worked example
A shop sells a product for $120 with $72 of variable cost per unit and $150,000 of yearly fixed costs. The owner wants $60,000 of profit after a 21% income tax.
- Contribution margin = $120 − $72 = $48 per unit (40% of the price).
- Pre-tax profit needed = $60,000 ÷ 0.79 = $75,949.37.
- Units = ($150,000 + $75,949.37) ÷ $48 = 4,707.3 → 4,708 units.
- Sales = ($150,000 + $75,949.37) ÷ 0.40 = $564,873.42.
- Break-even is $150,000 ÷ $48 = 3,125 units, so the extra 1,583 units carry all the profit.
Ways to reach a profit target sooner
- Raise the price: a small price increase lifts the contribution margin of every unit; the price table shows how much it cuts the volume needed.
- Lower variable costs: cheaper materials, shipping or payment fees work the same way as a price rise.
- Trim fixed costs: each dollar of fixed cost removed reduces the sales needed by one dollar ÷ CM ratio.
- Improve the sales mix: for several products, push the ones with the highest contribution margin.
Frequently asked questions
What is the target profit formula?
Units needed = (fixed costs + target profit) ÷ contribution margin per unit, where contribution margin = price − variable cost per unit. Sales dollars needed = (fixed costs + target profit) ÷ contribution margin ratio. With a $50 price, $30 variable cost and $40,000 fixed costs, a $20,000 profit needs (40,000 + 20,000) ÷ 20 = 3,000 units.
How do I use an after-tax target profit?
Convert it to pre-tax profit first: pre-tax profit = after-tax profit ÷ (1 − tax rate). A $60,000 after-tax goal at a 21% tax rate needs $60,000 ÷ 0.79 ≈ $75,949 of pre-tax profit, which then goes into the units formula.
How is a target profit margin handled?
If profit must be a percentage m of sales, units = fixed costs ÷ (contribution margin − m × price). The margin must be lower than your contribution margin ratio; otherwise no sales volume can reach it.
How is target profit related to break-even?
Break-even is the special case where target profit is zero: units = fixed costs ÷ contribution margin. Every unit sold beyond break-even adds its full contribution margin to profit.
Why round units up?
You cannot sell part of a unit, and selling the exact fractional amount would leave you slightly short of the target, so the calculator rounds up to the next whole unit and shows the profit at that volume.
What counts as a variable cost?
Costs that rise with each unit sold: materials, direct labor paid per unit, packaging, shipping, payment fees and sales commissions. Rent, salaries, insurance and subscriptions that stay the same regardless of volume are fixed costs.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.
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