Answer first
What this calculator tells you
Calculate the units and revenue needed to reach a profit goal from fixed costs, price and variable cost. Turn a profit target into a number of units to sell. Formula: Units needed = (fixed costs + profit goal) ÷ (price − variable cost per unit). At the worked-example inputs, the units to sell is 1,200. Holding every other input steady, moving price per unit from $20 to $30 moves the result from 900 to 1,800.
Transparent method
The formula
Turn a profit target into a number of units to sell.
Worked example
Example inputs
How to interpret the result
A profit target adds to the cost you have to cover before the first dollar of profit. With $12,000 of fixed costs and a $6,000 goal, the business needs $18,000 of contribution. At $25 a unit and $10 of variable cost each, every sale adds $15, so it needs 1,200 units, or $30,000 of revenue. Any change in price or variable cost changes that count sharply.
At the worked-example inputs the units to sell is 1,200. It rises with variable cost per unit, fixed costs and profit goal and falls as price per unit increases.
These are planning metrics, not audited accounting or a valuation opinion.
Before you rely on it
What to check
Use the contribution per unit, not the price. Only what is left after the variable cost pays toward fixed costs and profit.
The common error
Where people go wrong with profit goal calculator
Dividing the profit goal by the price. That ignores the fixed costs and the cost of making each unit, and it understates the units needed by a wide margin.
Sensitivity evidence
How price per unit changes the units to sell
Holding every other input at the worked-example value, moving price per unit from $20 to $30 moves the units to sell from 900 to 1,800: a spread of 900, or 75% of the worked-example result.
| Price per unit | Units to sell | Revenue needed |
|---|---|---|
| $20 | 1,800 | $36,000 |
| $23 | 1,385 | $31,855 |
| $25worked example | 1,200 | $30,000 |
| $28 | 1,000 | $28,000 |
| $30 | 900 | $27,000 |
Every input, tested
Which input moves the units to sell most
Of the 4 inputs, price per unit moves the units to sell most (385 across the range tested) and profit goal moves it least (80).
| Input | Tested from | To | Units to sell at each end | Swing |
|---|---|---|---|---|
| Price per unit | $23 | $28 | 1,385 to 1,000 | 385 (32%) |
| Variable cost per unit | $9.00 | $11 | 1,125 to 1,286 | 161 (13%) |
| Fixed costs | $10,800 | $13,200 | 1,120 to 1,280 | 160 (13%) |
| Profit goal | $5,400 | $6,600 | 1,160 to 1,240 | 80 (6.7%) |
Two variables at once
Units to sell by price per unit and fixed costs
Across the grid the units to sell runs from 780 to 2,040. Moving price per unit from $20 to $30 shifts it by 900 at the middle column, and moving fixed costs from $9,600 to $14,400 shifts it by 320 at the middle row, so price per unit is the bigger lever here.
| Price per unit \ Fixed costs | $9,600 | $12,000 | $14,400 |
|---|---|---|---|
| $20 | 1,560 | 1,800 | 2,040 |
| $23 | 1,200 | 1,385 | 1,570 |
| $25 | 1,040 | 1,200 | 1,360 |
| $28 | 867 | 1,000 | 1,134 |
| $30 | 780 | 900 | 1,020 |
The highlighted cell is the worked example: 1,200.
Step by step
The worked example, input by input
| Input | Value used | What it means |
|---|---|---|
| Fixed costs | $12,000 | Enter the fixed costs used in this calculation. |
| Profit goal | $6,000 | Enter the profit goal used in this calculation. |
| Price per unit | $25 | Enter the price per unit used in this calculation. |
| Variable cost per unit | $10 | Enter the variable cost per unit used in this calculation. |
| Units to sell | 1,200 | |
| Revenue needed | $30,000 | |
Inputs, definitions and assumptions
Fixed costs
Enter the fixed costs used in this calculation. The prefilled worked-example value is $12,000.
Profit goal
Enter the profit goal used in this calculation. The prefilled worked-example value is $6,000.
Price per unit
Enter the price per unit used in this calculation. The prefilled worked-example value is $25.
Variable cost per unit
Enter the variable cost per unit used in this calculation. The prefilled worked-example value is $10.
How to use this calculator
- 1Verify the inputs. Gather fixed costs, profit goal, price per unit and variable cost per unit from your own documents; the prefilled values are examples.
- 2Save a baseline. The worked example puts the units to sell at 1,200. Store your own version of it as Scenario A.
- 3Test one change. Start with price per unit, the input with the biggest effect here: moving price per unit from $23 to $28 takes the units to sell from 1,385 to 1,000, a swing of 32% of the worked-example figure.
- 4Check the extremes. At half the example price per unit ($13) the units to sell is 7,200; at double ($50) it is 450.
People also ask
Frequently asked questions
How do you calculate profit goal?
Units needed = (fixed costs + profit goal) ÷ (price − variable cost per unit). Enter fixed costs in dollars, profit goal in dollars, price per unit in dollars and variable cost per unit in dollars. At the worked-example inputs the units to sell is 1,200.
What does the profit goal result mean?
Turn a profit target into a number of units to sell. At the worked-example inputs the units to sell is 1,200. It rises with variable cost per unit, fixed costs and profit goal and falls as price per unit increases.
How much does price per unit change the units to sell?
Holding every other input at the worked-example value, moving price per unit from $20 to $30 moves the units to sell from 900 to 1,800, a spread of 900.
What are the limits of this profit goal calculator?
These are planning metrics, not audited accounting or a valuation opinion. The tables on this page test price per unit only from $20 to $30; a value outside that range is not tabulated here.
Which input moves the units to sell most in the profit goal calculator?
Ranked by how far each moves the units to sell across the range tested: price per unit (385, 32%), variable cost per unit (161, 13%), fixed costs (160, 13%) and profit goal (80, 6.7%).
If I double price per unit in the profit goal calculator, does the units to sell double?
Doubling it from $25 to $50 takes the units to sell from 1,200 to 450, which is 0.38 times the worked-example figure. So it falls instead of rising. Halving it to $13 gives 7,200.
How much does fixed costs matter in the profit goal calculator?
The worked example uses $12,000. With the other inputs left at the worked example, moving fixed costs from $10,800 to $13,200 takes the units to sell from 1,120 to 1,280, a swing of 13% of the worked-example figure.
How much does profit goal matter in the profit goal calculator?
The worked example uses $6,000. Holding every other input at its worked-example value, moving profit goal from $5,400 to $6,600 takes the units to sell from 1,160 to 1,240, a swing of 6.7% of the worked-example figure.
How much does variable cost per unit matter in the profit goal calculator?
The worked example uses $10. With the other inputs left at the worked example, moving variable cost per unit from $9.00 to $11 takes the units to sell from 1,125 to 1,286, a swing of 13% of the worked-example figure.
Which inputs change the revenue needed in the profit goal calculator?
At the worked-example inputs it is $30,000. Fixed costs takes it from $28,000 to $32,000, profit goal takes it from $29,000 to $31,000, price per unit takes it from $31,855 to $28,000 and variable cost per unit takes it from $28,125 to $32,150.
What is a reasonable overhead rate?
It varies widely by industry, so compare it with your own history and with similar businesses. A rising rate with flat sales signals cost creep that is worth investigating.
Sources and evidence
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