Estimator
What revenue do you need to hit your number?
Most owners have a profit figure in mind and no idea what revenue produces it. Gross margin is the bridge, and the sensitivity table underneath usually settles the pricing argument faster than the headline does.
Your numbers
Refine the target
A profit target after tax needs more revenue than one before it.
Revenue needed for your target
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- Revenue to break even
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- Pre-tax profit needed
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- Revenue to hit your target
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- That target, annualized
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- Each revenue dollar contributes
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- Sales needed at your price
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What a few points of margin are worth
| Gross margin | Break-even | For your target |
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Read this part
What this still leaves out
A number without its assumptions is worse than no number. Here is what the model does not reach.
- Margin that moves with volume. One blended margin is assumed. In most businesses the tenth client earns a different margin from the first, and discounting to win volume quietly moves the whole calculation.
- Fixed costs that step. Costs called fixed rarely stay flat. Growth eventually forces another hire or more space, and break-even jumps with it rather than drifting.
- Timing. This is a monthly average. A business that hits the number across a year but misses it for four consecutive months still has a cash problem, which is what the runway calculator is for.
- Your actual tax position. The rate you enter is applied flat. Entity type, other income, and the qualified business income deduction all change what you really keep.
Use it comparatively rather than absolutely. The sensitivity table is the point: seeing what five points of margin does to the revenue you need is usually a shorter conversation than arguing about whether to raise prices.
The mechanism
Why margin does more work than revenue
Every revenue dollar contributes its gross margin toward fixed costs. At a 62% margin, a dollar of sales puts 62 cents toward rent and salaries, and break-even is simply where those contributions cover the fixed costs entirely.
That is why margin is the more powerful lever. Adding revenue at a thin margin means chasing a great deal of it. Lifting margin a few points lowers the revenue you need for the same profit without adding a single client or an hour of delivery, which is what the sensitivity table is there to show.
A profit target after tax needs grossing up. Wanting to keep $10,000 a month at a 25% effective rate means earning about $13,300 before tax, and the revenue that produces it is correspondingly higher. Working from the post-tax number is the version that matches what you actually take home.
It also explains why growth can make cash worse. Fixed costs step up in blocks while revenue arrives gradually, so scaling through a step increase means a stretch further from break-even than before it.
Common questions
Before you act on the number
A fixed cost stays roughly the same whether you serve ten clients or twenty: rent, salaried staff, software, insurance, your own draw. A variable cost moves directly with the work: contractor time on a project, materials, payment processing, usage-based hosting. When something is genuinely mixed, split it rather than forcing it into one bucket.
Take revenue for a period, subtract the direct cost of delivering it, and divide by revenue. For a service business the main direct cost is the labor that delivers the work, contractors included. The most common mistake is leaving your own delivery time out, which flatters the margin and hides the fact that the business cannot grow past your calendar.
That is a useful result rather than a failed calculation. One of three things has to change: prices go up, cost of delivery comes down, or fixed costs come down. The sensitivity table shows which does the most work, and it is usually a shorter conversation than it feels like from the inside.
Yes, as long as gross margin includes cost of goods rather than only labor, and the average price field turns the revenue target into units. Watch the difference between margin and markup: a 50% markup on cost is a 33% margin on revenue, and confusing the two is one of the more expensive arithmetic mistakes in a small business.
Is the answer price, cost, or volume?
Usually it is the one nobody wants to touch. We will tell you which.