Dr. Chen holds a Doctorate in Financial Planning and advises executives on high-level revenue forecasting and profitability goals.
The **Sales Target Revenue Calculator** is a vital strategic tool for setting profit goals. It determines the total sales revenue required to achieve a specific financial objective (covering costs, hitting a profit target, etc.) based on your cost structure. This calculation uses the core Cost-Volume-Profit (CVP) relationship. Enter any three of the four key variables—**Total Margin Goal (F)**, **Price (P)**, **Variable Cost (V)**, or **Quantity (Q)**—to instantly solve for the missing one.
Sales Target Revenue Calculator
Sales Target Revenue Formula
Sales Revenue is calculated by multiplying the Quantity (Q) by the Price (P). If Q or P is the unknown variable in the CVP equation, it is solved first to determine the final revenue target:
$$\text{Revenue} = P \times Q$$
$$Q = \frac{F}{P – V} \quad \text{(Solve for Quantity)}$$
$$P = \frac{F}{Q} + V \quad \text{(Solve for Price)}$$
$$F = Q \times (P – V) \quad \text{(Solve for Total Margin Goal)}$$
$$V = P – \frac{F}{Q} \quad \text{(Solve for Variable Cost)}$$
Formula Source: Investopedia – CVP AnalysisKey Variables Explained
- **F (Total Margin Goal):** The combined dollar amount of Fixed Costs plus the specific desired Target Profit.
- **P (Price):** The selling price per unit.
- **V (Variable Cost):** The cost incurred per unit of product.
- **Q (Quantity):** The expected or target number of units to be sold.
- **Required Sales Revenue:** (Calculated) The final total dollar amount of sales needed to achieve the goal (P $\times$ Q).
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What is Sales Target Revenue?
Sales Target Revenue is the total dollar amount of sales that a business must generate to meet its fixed costs and achieve its specific profit objectives (the Total Margin Goal, F). This metric provides a crucial top-line target for the entire sales organization.
Unlike unit targets (Quantity, Q), revenue targets are often preferred because they are simple to track against budgeting and forecasting tools. The calculator works by ensuring that the quantity and price are aligned to produce a total revenue figure that is economically viable for the cost structure and the desired profit.
How to Calculate Required Sales Revenue (Example)
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Define the Total Margin Goal (F)
Fixed Costs are $60,000, and the Target Profit is $30,000. Total Margin Goal (F) is $90,000.
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Set Price (P) and Variable Cost (V)
The Selling Price (P) is $50.00 per unit. The Variable Cost (V) is $20.00 per unit.
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Calculate Required Quantity (Q)
Contribution Margin is $30.00. Required Quantity is $90,000 / $30.00 = 3,000 units.
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Calculate Required Sales Revenue
Multiply the Required Quantity by the Price: 3,000 units $\times$ $50.00 = **$150,000**.
The Required Sales Revenue can also be calculated as: Total Margin Goal (F) / CMR. The CMR is calculated as $(P-V)/P$.
Is this the same as the Break-Even Revenue Calculator?No. The Break-Even Revenue Calculator sets the Target Profit to zero, solving only for the revenue needed to cover fixed costs. This calculator includes your specific profit target in the goal (F).
What if the calculated revenue is too high for the market?If the revenue target is unrealistic, you must revisit your inputs: either raise the price (P), reduce the variable cost (V), reduce the fixed costs, or accept a lower target profit.
What assumption about taxes is included?This calculation determines the revenue needed for a *pre-tax* profit. To determine the revenue needed for a specific *after-tax* profit, you must first calculate the required pre-tax profit amount.