About the Target Profit Units Calculator
What is the Target Profit Units Calculator?
Break-even tells you how to avoid a loss; a target profit calculation tells you what it takes to earn the profit you want. It adds the target profit to fixed costs and divides by the contribution per unit.
If your target is after tax, the calculator first grosses it up to the profit before tax.
How to use the Target Profit Units Calculator
- Fixed Costs (₹) (sample: 9,00,000)
- Target Profit (₹) (sample: 6,00,000)
- Target Is (sample: Profit before tax)
- Tax Rate (%, for an after-tax target) (sample: 25.17)
- Selling Price per Unit (₹) (sample: 750)
- Variable Cost per Unit (₹) (sample: 450)
- Press Calculate Units for Target Profit (results also refresh as you type). The result card shows the Units to Sell, along with Sales revenue needed, Profit before tax needed and Break-even units (zero profit).
Formula used
Units = (Fixed costs + Target profit before tax) ÷ (Price − Variable cost)
- Profit before tax = after-tax target ÷ (1 − tax rate)
Units are rounded up to the next whole unit.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Fixed Costs (₹) | 9,00,000 |
| Target Profit (₹) | 6,00,000 |
| Target Is | Profit before tax |
| Tax Rate (%, for an after-tax target) | 25.17 |
| Selling Price per Unit (₹) | 750 |
| Variable Cost per Unit (₹) | 450 |
| Result | Value |
|---|---|
| Units to Sell | 5,000 |
| Sales revenue needed | ₹37,50,000 |
| Profit before tax needed | ₹6,00,000 |
| Break-even units (zero profit) | 3,000 |
Tips for using the Target Profit Units Calculator
- Break the annual unit target into monthly and weekly targets for the sales team.
- Check the target against capacity before committing to it.