Target Profit Planning: How Many Units Must You Sell?

Break-even is a starting point, not necessarily a business goal. To plan for a profit above zero, add that profit target to fixed costs and divide by contribution per unit. This turns a desired result into a sales requirement that can be checked against capacity and demand.

Build the target from four inputs

You need fixed costs for a selected period, target profit for that period, selling price per unit and variable cost per unit. Contribution is selling price minus variable cost. Required units = (fixed costs + target profit) ÷ contribution, rounded up.

Suppose fixed costs are $1,000, target profit is $500, price is $30 and variable cost is $18. Contribution is $12. The required quantity is ($1,000 + $500) ÷ $12 = 125 units, generating $3,750 revenue.

Reconcile the result

At 125 units, variable costs total $2,250. Subtracting those costs and $1,000 fixed costs from $3,750 revenue leaves exactly $500. This reverse check is a useful way to catch a mistaken per-unit input or a missing cost.

The target profit has the same scope as your cost model. If taxes, interest or overhead are omitted, the output is not a target for after-tax accounting net income.

Test the effect of a lower price

If the selling price drops to $28 while variable cost stays $18, contribution falls to $10. The same $500 target then needs 150 units. Revenue is $4,200, but more revenue is required because each unit contributes less.

If the store can supply only 140 units, the revised price does not achieve the target: 140 × $10 − $1,000 = $400. A sales target that exceeds capacity needs a different plan, not a more optimistic spreadsheet.

Add a margin-of-safety view

At the original $30 price, break-even is 84 whole units because $1,000 ÷ $12 = 83.33. A 125-unit plan therefore sits 41 whole units above that operational break-even quantity.

For the conventional continuous calculation, the safety margin is (125 − 83.33) ÷ 125, approximately 33.33%. Be clear about whether you are using theoretical break-even or rounded whole units when reporting a percentage.

Check your plan

Use the Target Profit Units Calculator and compare it with the Break-Even Units Calculator. Repeat with conservative prices and realistic variable costs before treating the output as a committed sales plan.

Related reading

Continue with Discounts and Profit: How Much Extra Volume Makes a Sale Worthwhile? for another part of the calculation.