Target Profit Formula: Sales and Units You Need

Published by MyBreakeven. Report a calculation or content issue to support@mybreakeven.com.

Published September 30, 2026 · Updated September 30, 2026

Calculate the sales and units needed for a target profit after variable costs, overhead and owner pay. Follow a checked service-business example.

Break-Even Concepts · Target Profit · Small Business

Break-even tells you when the month stops losing money. If you need the business to earn another $3,000 after its planned owner pay, you need a target profit calculation. Add that profit to fixed costs, then divide by the contribution left from each sale. The answer becomes useful only after you check whether you can deliver that many jobs and find enough customers.

Quick answer: Target units = (monthly fixed costs + desired operating profit) ÷ (selling price per unit − variable cost per unit). Round up to whole units. For a service priced at $240 with $90 of sale-linked cost, $7,500 of monthly fixed costs and a $3,000 profit goal, the target is 70 completed jobs, or $16,800 in sales. That profit is after the stated fixed costs, including planned owner pay, and before taxes in this example.

Calculate profit from the contribution left by one sale

Imagine a US home-service owner who sells one fairly standard job. The numbers below are invented planning inputs, not a market rate. A completed job brings in $240 and requires $90 of job-specific labor, supplies, travel and payment fees. Its contribution is $240 − $90 = $150. Monthly fixed costs total $7,500 and include insurance, software, a base owner salary, rent and administration. Do not add that base owner salary again as target profit.

The numerator is $7,500 + $3,000 = $10,500. The denominator is $150. Therefore $10,500 ÷ $150 = 70 jobs. Check the result from the full income statement: 70 × $240 = $16,800 sales; 70 × $90 = $6,300 variable costs; $16,800 − $6,300 − $7,500 = $3,000 operating profit. The break-even formula guide stops at $7,500 ÷ $150 = 50 jobs. Those next 20 jobs produce the $3,000 target because 20 × $150 = $3,000.

For sales revenue rather than units, divide fixed costs plus target profit by the contribution-margin ratio: $150 ÷ $240 = 62.5%. Thus $10,500 ÷ 0.625 = $16,800. OpenStax's target-profit explanation shows both the unit and dollar forms of this cost-volume-profit calculation. Keep the cost definition consistent in either form.

Decide what the profit target actually includes

An owner often means one of three different things by “I want to make $3,000”: salary for work performed, a return above an already budgeted salary, or cash they can withdraw after tax and debt payments. The example uses the second definition. Owner base pay is inside the $7,500 fixed-cost line; the $3,000 is additional operating profit. If your owner pay changes per job, put that job-linked amount in variable cost instead. Never put the same dollars in both places.

An after-tax income goal needs a tax-aware plan outside this simple pre-tax formula. Loan principal repayments and inventory purchases can use cash without appearing as operating expenses in this calculation. Keep a cash-flow forecast beside the profit target. Also distinguish booked revenue from collected revenue: a client who delays payment does not fund payroll on the due date merely because a job is profitable on paper.

The $240 price is the amount actually collected for the standard scope. If some customers use a coupon, use the realized average price and keep variable payment fees aligned with that price. If jobs vary substantially, split them into service types or calculate a defensible mix. The multiple-product sales-mix guide shows why multiplying one premium service's margin across every booking can overstate your likely result.

Three outcomes from the same monthly cost structure

Hold the $150 contribution and $7,500 fixed costs constant. The scenarios show how the target differs from merely covering costs:

Now change one assumption. A $20 discount makes the price $220 while job cost remains $90. Contribution drops to $130. The target becomes $10,500 ÷ $130 = 80.77, so you need 81 whole jobs. Eighty-one jobs contribute $10,530 and leave $3,030 after fixed costs. The extra eleven jobs may be impossible to fit into the same calendar; calling the discount a growth tactic does not create capacity.

Suppose a better purchasing process cuts variable cost from $90 to $80 while keeping the original $240 price. Contribution rises to $160, and $10,500 ÷ $160 = 65.625, so 66 jobs meet the target. That is a planning scenario, not a promise that suppliers will lower prices. Compare actual invoices and quality before changing the budget.

Check hours and customer demand before treating 70 as a plan

Assume each job uses three paid production hours including setup and travel. Seventy jobs require 210 paid hours. Two workers with 30 genuinely available production hours each per week provide about 240 hours in a four-week planning month before absences and other commitments. That leaves 30 hours of slack. At 81 discounted jobs, demand for labor rises to 243 hours, three hours above that assumed capacity. A fifth calendar week in some months helps, but it does not repair a schedule that lacks backup for sickness or rework.

If only one in four qualified inquiries becomes a completed job, 70 jobs require roughly 280 qualified inquiries under that assumed 25% conversion. This is not a benchmark: use your own inquiry-to-booking and booking-to-completion data. A lead source may produce inquiries that are outside your service area or cannot be scheduled. Count jobs completed and collected, not just requests or tentative bookings. If you want an income-goal example for one industry, the cleaning clients for $5,000 guide makes the sales and capacity bridge more concrete.

How to run your own numbers

Use the MyBreakeven general calculator with your collected average price, costs that truly move per sale, monthly fixed expenses including your chosen owner-pay treatment, and your desired additional profit. Check required units against labor hours and actual lead conversion. The site supports other currencies; the US-dollar example is only for showing the arithmetic.

Mistakes that make the target look too easy

Treating owner pay as both fixed cost and desired profit. State whether the target is above the owner's already budgeted pay. Add each dollar once.

Using revenue per job instead of contribution per job. A $240 invoice does not provide $240 to cover overhead when $90 must fund delivery.

Rounding 80.77 jobs down to 80. A partial booking cannot pay the remaining $100 of required contribution. Round up, then verify the completed-job count.

Ignoring a staffing step. If job 71 requires a new guaranteed shift or another vehicle, the $7,500 fixed-cost assumption may no longer hold. Recalculate at that capacity range.

Calling pre-tax operating profit take-home cash. Taxes, debt principal, working capital and unpaid invoices need separate treatment. Profit and cash do not arrive on the same schedule.

Assuming every job has the standard scope. A portfolio of deep cleans and routine visits has different labor and price. Use actual mix and do not let a high-priced outlier define the average.

FAQs

What is the difference between break-even and target profit?

Break-even sets modeled operating profit to zero after the costs you included. Target profit adds a desired amount above those costs to the numerator. In the example, 50 jobs break even and 70 produce the extra $3,000.

Should I include my own salary in fixed costs?

Include the planned base salary if the business must cover it regardless of this month's job count. If you pay yourself per completed job, model that variable amount per job. State the choice so you do not count the same pay twice.

How do I calculate sales dollars for a profit goal?

Divide fixed costs plus desired operating profit by the contribution-margin ratio. Here, $10,500 ÷ 62.5% = $16,800. This assumes the price and cost mix used to calculate that ratio stays reasonably stable.

What if each customer buys several services?

Model the expected mix of services and calculate a weighted contribution for one representative sale or basket. Do not assume every customer buys the premium service. Check whole-service quantities after rounding the total target.

Can I use the formula for a net after-tax income target?

Not directly. The basic calculation produces a pre-tax operating result under the costs included. Work out the tax and cash implications with your own records and relevant professional advice before interpreting it as spendable income.

What if the required units exceed my team's capacity?

Revisit price, per-job cost, service mix, delivery time or the target date. If you hire to expand capacity, add the new cost and rerun the formula. A mathematically correct target is not automatically a deliverable one.

Keep from this example

• Add desired profit to fixed costs, then divide by contribution per sale.
• State exactly where owner salary and taxes sit in the model.
• Round required jobs up and audit the income statement.
• Test the job count against paid hours and qualified inquiries.

For related planning topics, browse the MyBreakeven guide library.