Break-even and a profit target are related but distinct numbers — mixing them up leads to setting sales goals that only cover costs, not ones that actually deliver the profit you want.
Break-even point
The sales volume where revenue exactly equals costs — zero profit, zero loss. It’s the floor, not the goal.
Profit target
The sales volume needed to hit a specific profit number above break-even. Calculated the same way as break-even, but with your target profit added to fixed costs in the formula.
The formula for a profit target
(Fixed costs plus target profit) divided by (Price minus variable cost per unit) gives you the sales volume needed to hit that specific profit goal — not just to avoid a loss.
Why this distinction matters for goal-setting
A sales target set at break-even means a good month leaves you with nothing left over. Setting targets against a real profit goal, not just break-even, is what actually grows the business.