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Guide · Break-Even

Target Profit Sales Volume: Add the Dollar Goal

Calculate units and revenue required for a defined operating-profit target, then verify rounding, capacity, and the contribution assumptions.

By PriceAndProfit Editorial Updated 3 min read

On this page
  1. Worked calculation
  2. Decision checks and limits
  3. Apply the calculation

Break-even covers fixed costs and leaves zero operating profit in the model. A target-profit calculation adds a specified dollar goal to the amount contribution must cover. The target needs a period and a profit definition. A monthly operating-profit goal should not be mixed with annual fixed costs or treated as after-tax take-home income.

Worked calculation

Required units = (fixed costs + target operating profit) ÷ unit contribution; required revenue = (fixed costs + target operating profit) ÷ contribution ratio

Assume a product sells for $80, has $50 of variable cost per unit, and the business incurs $12,000 monthly fixed costs. Contribution is $30 per unit and 37.5% of revenue. To earn $6,000 of monthly operating profit, total contribution must be $18,000. Required volume is $18,000 divided by $30, or 600 units. Revenue is $48,000, variable cost is $30,000, and subtracting $12,000 fixed costs leaves the intended $6,000.

If the target instead is $6,100, the continuous requirement is $18,100 divided by $30, or approximately 603.3333 units. Selling whole units requires 604, producing $48,320 revenue and $18,120 contribution. Operating profit is $6,120. Rounding to 603 would yield only $6,090 and miss the target. Show the rounded operational plan and its actual profit rather than presenting the fractional result as a deliverable sales quantity.

Hypothetical worked example
Goal or capacity caseUnitsRevenueOperating profit
$6,000 target 600 $48,000 $6,000
$6,100 target, rounded up 604 $48,320 $6,120
Capacity limited to 550 units 550 $44,000 $4,500

Decision checks and limits

The revenue form gives the same continuous result: required sales dollars equal fixed costs plus target profit, divided by the contribution ratio. It assumes the ratio remains stable at the target volume. If discounts, shipping thresholds, overtime, or product mix change with volume, rebuild the unit economics before using the ratio. Additional fixed costs triggered at the required volume also need to be included, followed by another feasibility check.

A target is a planning requirement, not a forecast. Compare the required units with the order pipeline, production capacity, and selling season. If maximum feasible volume is 550 units, the original $30 contribution produces $4,500 operating profit after fixed costs, leaving a $1,500 gap to the $6,000 goal. That gap identifies the combined contribution or fixed-cost change needed; it does not show that a price increase will necessarily be accepted. With nonpositive unit contribution and positive fixed costs plus target profit, the formula has no attainable positive-volume solution under the stated model.

Apply the calculation

  1. Align the period and definition

    Use the same month or year for fixed costs, unit volume, and the operating-profit goal.

  2. Verify the rounded plan

    Multiply whole-unit sales by contribution and subtract fixed costs to confirm the required profit is actually reached.

  3. Expose the feasibility gap

    Compare the required quantity with demand and capacity, and show the dollar shortfall when the target cannot be achieved under current assumptions.

Method references: OpenStax: Break-even units and dollars. Accessed October 22, 2026. All dollar figures are hypothetical worked examples.

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