Pricing & profit tools · 04
Profit Scenario Simulator
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- Runs in your browser
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Free tool - no sign-up - runs in your browser
Compare business decisions side by side: raise prices, run a discount, cut a cost, add a hire or change your ad budget. See which one produces more modeled profit under your own assumptions, and exactly how many sales each one needs.
Profit scenario simulator
Modeled operating profit / month
- Contribution per unit
- Break-even sales
- Most you can spend to win one sale
- Margin of safety
From revenue to profit
Scenarios
Each scenario starts from the baseline and changes only what you enter. Volume changes are your own assumptions - the simulator does not guess how customers react.
Use a negative number for a discount, e.g. -10.
Your assumption, e.g. -10 for 10% fewer sales.
A hire, new software, a bigger rent. Negative to save.
Your assumption. Leave 0 if unsure.
Modeled operating profit
Modeled profit by scenario
| Scenario | Operating profit | Operating profit | vs baseline | Break-even | Sales to match baseline |
|---|
Highest modeled profit under your assumptions: –
Price and volume sensitivity
Modeled operating profit for every combination of price change (columns) and change in units sold (rows). Cells marked with an up arrow beat the baseline; cells marked with a down arrow fall short.
▲ at or above baseline ▼ below baseline
Revenue, costs and profit by sales volume
Show the chart as a table
How to use it
- Enter your baseline - today's price, costs, units sold, fixed costs and marketing for one period.
- Edit the three starter scenarios or add your own, up to four. Each one changes only the fields you fill in: price, units sold, variable costs, fixed costs or marketing.
- Compare modeled profit in the table and look at the sales each scenario needs to match today's profit. That threshold is often more useful than the profit figure itself.
- Use the sensitivity grid to see how profit moves when price and volume change together.
The formulas
Every scenario is the baseline with your changes applied, run through the same model.
Scenario price = baseline price x (1 + price change)Scenario units = baseline units x (1 + change in units) + extra sales you expect from marketingModeled operating profit = contribution per unit x units - fixed costs - marketingSales to match baseline profit = (baseline profit + scenario fixed costs + scenario marketing) / scenario contribution per unit, rounded upMost you can spend to win one sale = contribution per unit, before marketing
The simulator never infers how customers respond. A price increase does not lose sales and an ad budget does not win any unless you enter that assumption.
Worked example
Baseline: price $100, variable cost $60, 1,000 units a month, fixed costs $20,000. Modeled operating profit is ($100 - $60) x 1,000 - $20,000 = $20,000 a month.
| Scenario | Price | Units / month | Profit / month |
|---|---|---|---|
| Baseline | $100 | 1,000 | $20,000 |
| Raise price; volume unchanged | $110 | 1,000 | $30,000 |
| Raise price; 10% fewer units | $110 | 900 | $25,000 |
| Raise price; 20% fewer units | $110 | 800 | $20,000 |
| Discount price; volume unchanged | $90 | 1,000 | $10,000 |
| Discount price; 1,334 units | $90 | 1,334 | $20,020 |
The 10% price rise can lose up to 20% of its sales before profit drops below the baseline. The 10% discount needs about 33.3% more sales - 1,334 units - just to stand still. These are thresholds, not forecasts.
Questions
Does the simulator predict how my customers will react?
No. It shows what happens under the volumes you enter, and the volume each change needs to break even with today. Whether customers will deliver that volume is the judgement only you can make - test it with real prices where you can.
Why does a discount need so many extra sales?
A discount comes straight out of contribution, not out of price. Cutting a $100 price by 10% takes $10 from a $40 contribution - a quarter of what each sale earns - so you need a third more sales to earn the same.
How do I model a new hire?
Put the full cost of the role for the period in extra fixed costs. The scenario shows the extra sales needed to pay for it. If the hire also brings sales, add them as a change in units sold.
How do I model an ad campaign?
Enter the extra spend and the extra sales you expect from it. The results show whether those sales pay for the spend; the most you can pay to win one sale is your contribution per unit.
Assumptions and limits
- Prices, unit costs and fixed costs are constant within each scenario.
- Volume responses are your assumptions, labelled as such.
- One period, one product or an average unit. No cash timing, tax or capacity limits.
Sources and method
- U.S. Small Business Administration - Break-even point
- U.S. Small Business Administration - Plan your business
- OpenStax, Principles of Accounting Vol. 2 - Contribution margin (3.1)
- OpenStax, Principles of Accounting Vol. 2 - Break-even point in units and dollars (3.2)
- Shopify - Markup vs. margin
These tools model your own inputs with standard formulas. They are for planning and education, not financial, tax or legal advice.
More pricing and profit tools
- Product pricing calculator Set a price from your costs, fees, VAT and the margin you want to keep. Open the tool
- Markup calculator Turn cost and price into markup and margin, or work backwards from either. Open the tool
- Break-even calculator See the units and revenue that cover your fixed costs, and what a profit target needs. Open the tool