To add to what David and Jim said: Pay yourself! Your expense calculation should include your wages. Uncle Sam doesn't allow you to deduct wages paid to yourself, but your cost calculations need to include them, anyway. And don't be chintzy. Pay yourself at least as much as you'd pay a good assistant.

Then you should use Jim's approach of including a fixed profit percentage in the cost structure. Taken altogether, you'll have a good idea of real expenses, and how hard you'll need to work to earn a given income.

Best way to get educated on all this: Check with your local business development council and the Federal Small Business Administration. They'll have seminars and courses and such, and can put you in touch with retired business-people who volunteer to help newbies. I benefited greatly from a business training program called 'Nex-step.' It ain't easy, but if it was easy, everybody would be doing it.