Contact the CPA

Monte Carlo Profit Simulator

A single-point forecast hides the range of outcomes a plan could produce. Simulate profit thousands of times with uncertain volume, price and costs to see the full distribution, the probability of a loss and the chance of meeting a target.

How it works

Simulate profit thousands of times with uncertain volume, price, unit cost and fixed costs to see the full distribution of outcomes, percentiles and the probability of missing a target.

Profit = Volume × (Price − Unit cost) − Fixed costs, repeated N times
Volume ~ Normal(mean, sd), floored at 0;  Price, Unit cost ~ Triangular(min, mode, max)
Fixed costs ~ Uniform(min, max)
P10 / P50 / P90 = 10th / 50th / 90th percentiles of simulated profit

Common uses

  • Budget and forecast risk assessment
  • Pricing, launch and investment decisions
  • Communicating uncertainty to boards and lenders

Worked example

The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.

Volume: expected (mean)50,000
Volume: standard deviation6,000
Price: minimum$36
Price: most likely$40
Price: maximum$42
Unit cost: minimum$20
Unit cost: most likely$22
Unit cost: maximum$26
Fixed costs: minimum$570,000
Fixed costs: maximum$640,000
Profit target (optional)$250,000
Iterations10,000
Random seed42
Example inputs
Expected profit (mean)$229,011
P10 (downside)$60,042
P50 (median)$225,176
P90 (upside)$405,190
Probability of a loss3.5%
Standard deviation$133,290
Probability of meeting target42.4%
Single-point estimate$295,000
Results

10,000 simulations. Volume is normal, price and unit cost are triangular, fixed costs are uniform; inputs are treated as independent. The simulated mean is below the single-point estimate because the input ranges are skewed toward unfavorable outcomes.

Interpreting the results

  • P10 and P90 bracket the middle 80% of outcomes; present them alongside the plan to show realistic risk.
  • The mean of a simulation often differs from the plan built on most-likely values, because asymmetric ranges shift the average.
  • Inputs are simulated independently; if volume and price move together in reality, the true range may be wider.

Frequently asked questions

What is a Monte Carlo simulation?

A Monte Carlo simulation repeats a calculation thousands of times, each time drawing input values at random from specified probability distributions. The results form a distribution of possible outcomes rather than a single estimate.

What do P10, P50 and P90 mean?

P10 is the value that 10% of outcomes fall below, P50 is the median and P90 is the value that 90% fall below. Together, P10 and P90 bracket the middle 80% of outcomes.

Why is the simulated average different from my plan?

Plans usually use the most likely value of each input. When input ranges are asymmetric, for example costs that can rise more than they can fall, the average outcome differs from the outcome at the most likely values.

Browse all 13 Statistics & Forecasting calculators