How to Use the Target Profit Sales Calculator
This calculator works backwards from the profit you want: how much revenue does a month have to produce before a set operating profit is left over? Break-even covers fixed costs only; here the target profit is stacked on top of them.
The formula is (fixed costs + target profit) ÷ contribution margin ratio. The contribution margin ratio is sales minus variable costs divided by sales — not the same as gross margin, because only variable costs are removed and fixed costs stay in.
If you do not know your contribution margin ratio, take last month and compute (sales − variable costs) ÷ sales, counting food cost, packaging, card fees, and shipping as variable. The lower that ratio, the more revenue each extra dollar of profit demands.
Adding an average ticket converts the revenue target into a transaction count, which is easier to plan against day by day. Everything shown is calculated from the figures you enter — check tax and inventory effects against your own books.
Frequently Asked Questions
Contribution margin ratio removes only variable costs, while gross margin removes cost of goods sold, which usually contains fixed items such as factory rent. Enter the contribution margin ratio here, or the required revenue will come out too low.
Operating profit is a pre-tax figure. If you have an after-tax number in mind, gross it up using your expected tax rate first, then enter that pre-tax amount as the target.