About the Target Profit Calculator
This target profit calculator tells you how much you need to sell to earn a specific profit. Enter your selling price, variable cost per unit, fixed costs for the period and the profit you want, and it returns the number of units to sell and the sales revenue required — the cost-volume-profit (CVP) “target income” calculation taught in every managerial accounting course.
Turn on the after-tax option if your goal is net income after income tax: the calculator grosses the target up to the pre-tax profit required at your tax rate before working out volume. It also shows contribution margin per unit and ratio, the break-even point, and how many units above break-even your goal sits.
It is useful for setting sales targets and quotas, checking whether a business plan is realistic, pricing a new product and answering homework problems. The model assumes a constant selling price and variable cost per unit and fixed costs that do not change over the volume range, and it treats the tax rate as a flat percentage of profit.
With the default inputs, the units to sell (rounded up) is 5,000. Change any value above to recalculate instantly.
How to use the target profit calculator
- 1Enter the selling price and variable cost of one unit.
- 2Enter total fixed costs for the period (month, quarter or year).
- 3Enter the profit you want to earn in the same period.
- 4Turn on the after-tax option and enter a tax rate if your goal is net income.
- 5Read the units and sales revenue required, and compare with break-even.
Formula and method
Every unit sold contributes its contribution margin — price minus variable cost — toward fixed costs and then profit. To reach a target profit, total contribution must cover the fixed costs plus the target, so required units equal (fixed costs + target profit) divided by the contribution margin per unit. Dividing the same total by the contribution margin ratio gives required sales revenue.
If the goal is after-tax net income, the target is first grossed up to the pre-tax profit needed: target ÷ (1 − tax rate). A $60,000 after-tax goal at a 25% tax rate needs $80,000 before tax. Because you cannot sell part of a unit, the headline answer rounds up to the next whole unit. Setting the target to zero gives the break-even point.
- FC
- Fixed costs for the period
- TP
- Target profit before tax
- P
- Selling price per unit
- VC
- Variable cost per unit
- t
- Income tax rate
Worked examples
$60,000 pre-tax profit goal
Each unit contributes $80 − $50 = $30. Covering $90,000 of fixed costs plus a $60,000 profit needs $150,000 ÷ $30 = 5,000 units, or $400,000 of sales. Break-even is 3,000 units ($240,000).
$60,000 after tax at a 25% rate
Keeping $60,000 after 25% tax requires $60,000 ÷ 0.75 = $80,000 of pre-tax profit. Then ($90,000 + $80,000) ÷ $30 = 5,666.67 units, so you must sell 5,667 units, about $453,333 of sales.
High-margin product
A $15 item with $6 of variable cost has a 60% contribution margin ratio. ($27,000 + $20,000) ÷ $9 = 5,222.2 units, so 5,223 must be sold; required sales are $47,000 ÷ 0.60 ≈ $78,333.
Frequently asked questions
What is the target profit formula?+
Required units = (fixed costs + target profit) ÷ contribution margin per unit. Required sales dollars = (fixed costs + target profit) ÷ contribution margin ratio. Both come from cost-volume-profit analysis.
How do I calculate units needed for a target after-tax income?+
Convert the after-tax goal to pre-tax profit by dividing by (1 − tax rate), then use the normal formula. For a $45,000 after-tax goal at 25% tax, the pre-tax target is $60,000.
How is target profit related to break-even?+
Break-even is the special case where target profit is zero: units = fixed costs ÷ contribution margin per unit. Every unit beyond break-even adds one contribution margin of profit, so the target simply adds target profit ÷ unit margin more units.
Why round units up?+
You cannot sell a fraction of a unit, and rounding down would leave you slightly short of the goal. The calculator shows the exact figure and rounds the headline answer up to the next whole unit.
Can I use this for a service business?+
Yes. Treat an hour, a project or a client as the unit, enter the price you charge and the variable cost of delivering it, and the result is how many hours, projects or clients you need.
What if I sell several products?+
Use a weighted-average contribution margin based on your sales mix, or try the multi-product break-even calculator, which handles a sales mix directly. Set the target profit there by adding it to fixed costs.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.