Required Sales for Target Profit Calculator

Enter Calculation

Target Profit

Variable Cost Ratio (%)

Fixed Cost

Results

Required Sales

2,400,000

sales revenue needed to reach the target profit

Contribution margin ratio	50%
Formula	(Target Profit + Fixed Cost) / (1 - Variable Cost Ratio)

What this calculator does

This tool tells you how much sales revenue (turnover) your business needs to generate in order to earn a specific target profit. It is based on cost-volume-profit (CVP) analysis, the same framework used for break-even calculations, but extended so the result covers not just your costs but also a profit you choose. It works with any currency — just enter your figures in the same units.

How to use it

Enter three values: the Target Profit you want to earn, the Variable Cost Ratio (variable costs expressed as a percentage of sales), and your total Fixed Cost. The calculator returns the Required Sales, rounded to the nearest whole currency unit.

The formula explained

Profit equals Sales minus variable costs minus fixed costs. Variable costs scale with sales, so they equal Sales × v, where v is the variable cost ratio as a fraction. Setting profit equal to your target gives:

$$\text{Target Profit} = \text{Sales} \times (1 - v) - \text{Fixed Cost}$$

Solving for Sales: $$\text{Required Sales} = \dfrac{\text{Target Profit} + \text{Fixed Cost}}{1 - v}$$ The term \(1 - v\) is the contribution margin ratio — the share of every sales dollar available to cover fixed costs and profit.

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Each dollar of sales splits into variable cost, with the remaining contribution covering fixed cost and profit.

Required sales is where revenue covers fixed costs, variable costs, and the target profit.

Worked example

Suppose you want a profit of 1,000,000, your variable cost ratio is 50% (so \(v = 0.50\) and the contribution margin ratio is 0.50), and fixed costs are 200,000. Then $$\text{Required Sales} = \frac{1{,}000{,}000 + 200{,}000}{0.50} = \frac{1{,}200{,}000}{0.50} = 2{,}400{,}000$$ Check: at 2,400,000 sales, variable costs are 1,200,000, fixed costs 200,000, leaving exactly 1,000,000 profit.

FAQ

What is the variable cost ratio? It is your variable costs divided by sales, expressed as a percentage. If variable costs are typically 60 cents per dollar of sales, the ratio is 60%.

Why does a 100% ratio give an error? If variable costs equal sales, the contribution margin is zero, so no amount of sales can ever cover fixed costs or generate profit — the target is mathematically unachievable.

Can I plan for break-even instead? Yes — set Target Profit to 0 and the result is your break-even sales.