💼 Running a business is all about balance: covering your costs and making a profit. Whether you’re selling products, offering services, or launching a new campaign — it helps to know how much you need to sell to hit your target profit.
That’s where a Target Profit Calculator comes in handy! Let’s break down what it is, why it’s useful, and how to use it.
Table of Contents
📈 Target Profit Calculator
🙋♀️ What Is Target Profit?
Target profit is the amount of profit you want your business to earn over a specific period — like a month, quarter, or year. It’s basically your profit goal.
Instead of hoping for a profit, this approach helps you reverse-engineer how many units you need to sell to hit your goal.
🔢 The Target Profit Formula
To calculate how many units you need to sell to reach your target profit, you can use this formula:
Units Needed = (Fixed Costs + Target Profit) ÷ (Selling Price – Variable Cost per Unit)Let’s break it down:
- Fixed Costs – Expenses that don’t change with sales (e.g. rent, salaries)
- Variable Costs – Costs that increase per unit sold (e.g. materials, packaging)
- Selling Price – What you sell each unit for
- Target Profit – Your profit goal 💰
✅ Example
You want to earn a profit of $5,000 this month. Your business has:
- Fixed costs = $2,000
- Selling price per unit = $100
- Variable cost per unit = $40
Plug into the formula:
Units = (2000 + 5000) ÷ (100 – 40)
Units = 7000 ÷ 60
Units = 116.67🎯 You’ll need to sell 117 units (rounding up) to hit your target profit of $5,000.
✨ Why It’s Useful
- Sets realistic sales goals
- Helps price your product or service better
- Supports budgeting and marketing strategies
- Gives you financial clarity and reduces guesswork
📊 Pro Tip
You can also tweak the formula to:
- Calculate required selling price to hit a target
- See how a change in cost affects your profit goal
- Estimate impact of bulk discounts or promotions