Profit First Calculator

This calculator applies the Profit First budgeting approach — popularized by Mike Michalowicz's book of the same name — which flips the traditional accounting formula of Sales minus Expenses equals Profit into Sales minus Profit equals Expenses. One definition matters before you enter anything: Profit First percentages apply to Real Revenue, not gross sales. Real Revenue is total revenue minus the cost of materials and subcontractors — bill $100,000 and spend $30,000 on materials and subs, and your Real Revenue is $70,000. Applying the percentages to gross sales instead systematically over-allocates every account. Instead of hoping money is left over at the end of the month, you set aside percentages for profit, owner's pay, and taxes the moment revenue arrives, and operating expenses have to fit inside whatever remains. The default 5% profit / 50% owner's pay / 15% tax / 30% operating-expense split shown here is the book's published target for the under-$250K annual Real Revenue band, not a fixed rule: the book recommends a graduated set of target allocation percentages (TAPs) that shift as a business's real revenue grows, and your own healthy split depends on your industry, payroll structure, and margins.

For reference, the book's published target allocation percentages by annual Real Revenue are: under $250K — 5% profit / 50% owner's pay / 15% tax / 30% opex; $250K–$500K — 10/35/15/40; $500K–$1M — 15/20/15/50; $1M–$5M — 20/10/15/55; $5M+ — 25/5/15/55. Multiply the Monthly Real Revenue you enter by 12 to find your band, then set the four fields to match it. The defaults shown correspond to the lowest band. The four percentages you enter should sum to 100% of revenue; the calculator flags any shortfall or surplus as an adjustment figure so you can see immediately whether your targets are internally consistent. What this tool does not do: automatically detect which revenue band you fall into or flag a mismatch between your entered percentages and the book's published table, account for irregular income, or replace a bookkeeper allocating actual bank transfers between real accounts.