Desired Profit Calculator
Cost Breakdown
| Cost Type | Amount | % of Revenue |
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| Date | Desired Profit | Required Revenue | Units to Sell | Currency | Actions |
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Desired Profit Calculator: Complete Guide
Learn how to calculate exactly how much revenue you need to achieve your profit goals
Running a business without knowing your profit targets is like driving without a destination. The Desired Profit Calculator helps you set clear financial goals and understand exactly what it takes to achieve them.
In this comprehensive guide, we'll break down every aspect of the calculator in simple, easy-to-understand language with practical examples and formulas.
What is a Desired Profit Calculator?
Definition
A Desired Profit Calculator is a financial tool that calculates how much revenue you need to generate to achieve a specific profit target, taking into account all your costs, expenses, and taxes.
Unlike traditional profit calculators that tell you how much profit you'll make from given revenue, this calculator works backward from your profit goal to determine the required sales.
Try Our Desired Profit Calculator
See exactly how much revenue you need to hit your profit targets. Input your numbers and get instant calculations.
Key Calculator Fields Explained
1. Desired Profit
This is the amount of money you want to earn after all expenses and taxes.
Example
If you want to earn $50,000 in profit this year, you would enter 50000 in this field.
2. Fixed Costs
These are expenses that stay the same regardless of how much you sell. They include rent, salaries, insurance, and utilities.
Example
If your monthly rent is $2,000, salaries are $5,000, and other fixed expenses total $1,000, your fixed costs would be $8,000 per month or $96,000 per year.
3. Variable Costs (%)
These are costs that change with your sales volume, expressed as a percentage of revenue. They include materials, shipping, and sales commissions.
Example
If it costs you $30 in materials to make a product you sell for $100, your variable cost percentage would be 30%.
4. Average Selling Price
The average price you charge for your products or services.
Example
If you sell three products at $50, $75, and $100, your average selling price would be $75.
5. Cost Per Unit
How much it costs you to produce or acquire one unit of your product or service.
Example
If you manufacture a product that costs $25 in materials and $15 in labor, your cost per unit would be $40.
6. Tax Rate (%)
The percentage of your profit that goes to taxes.
Example
If your business pays 25% in combined federal and state taxes, you would enter 25 in this field.
The Formula Behind the Calculations
Required Revenue Formula
The calculator uses this formula to determine how much revenue you need:
Then it adds taxes to get your final revenue target.
Units to Sell Formula
To find out how many units you need to sell:
Gross Margin Formula
Your gross margin percentage is calculated as:
Step-by-Step Calculation Example
Let's walk through a complete example:
Business Scenario
Sarah runs a small bakery and wants to know how much she needs to sell to make $30,000 profit this year.
- Desired Profit: $30,000
- Fixed Costs: $50,000 (rent, utilities, salaries)
- Variable Costs: 40% (ingredients, packaging)
- Average Selling Price: $25 per cake
- Cost Per Unit: $10 per cake
- Tax Rate: 20%
Step 1: Calculate Required Revenue Before Tax
Step 2: Calculate Tax Amount
Step 3: Calculate Final Required Revenue
Step 4: Calculate Units to Sell
Key Insight
Sarah needs to sell 6,400 cakes at $25 each to make her $30,000 profit goal. That's about 123 cakes per week or 18 cakes per day (assuming 52 weeks of operation).
Advanced Features of the Calculator
Multi-Currency Support
Calculate in over 40 different currencies with automatic symbol display and formatting.
Visual Charts
See your revenue breakdown in easy-to-understand pie charts and progress bars.
Calculation History
Save and compare different scenarios to track your financial planning.
Export Options
Download your calculations as PDF, HTML, or text files for sharing and record-keeping.
Practical Applications
For Business Planning
Use the calculator to set realistic sales targets for your team and create achievable business plans.
For Pricing Strategy
Test different pricing scenarios to see how they affect your profit goals and required sales volume.
For Cost Control
Identify which costs have the biggest impact on your profitability and focus on optimizing them.
Pro Tip: The Power of Small Changes
Reducing your variable costs by just 5% can significantly lower the revenue needed to hit your profit target. For example, in Sarah's bakery scenario, reducing variable costs from 40% to 35% would lower her required revenue from $160,000 to $145,455 - a savings of $14,545!
Frequently Asked Questions (FAQ)
Fixed costs stay the same regardless of your sales volume (like rent and salaries). Variable costs change with your sales (like materials and shipping).
Divide your total variable costs by your total revenue, then multiply by 100. For example, if you spend $30,000 on variable costs and have $100,000 in revenue, your variable cost percentage is 30%.
Taxes reduce your actual profit, so you need to earn enough revenue to cover both your desired profit AND the taxes on that profit.
Use your weighted average selling price. Multiply each product's price by how many you expect to sell, add them up, and divide by total expected units.
Recalculate whenever your costs change significantly, or at least quarterly to account for seasonal variations.
This varies by industry, but generally, 50% or higher is excellent, 30-50% is good, and below 30% may indicate pricing or cost issues.
You can reduce required revenue by lowering fixed costs, reducing variable costs, increasing prices, or adjusting your profit target.
This is a red flag that your business model might not be viable. Consider raising prices, reducing costs, or scaling back profit expectations.
The calculator uses current exchange rates to convert between currencies, so you can plan in your local currency regardless of where you're based.
Yes! Use the "Save to History" feature to store your calculations and compare different scenarios over time.
Markup is the percentage added to cost to get selling price. Margin is the percentage of selling price that is profit. A 50% markup equals a 33% margin.
The calculations are mathematically precise based on your inputs. Accuracy depends on how realistic your cost and price estimates are.
Calculate separate averages for each, then create a weighted average based on expected revenue mix.
Include them in your fixed costs for the period they occur in, or annualize them if they're recurring but not monthly.
Yes! Simply set your "desired profit" to the amount you need to fund programs or build reserves.