free business calculator break even
Marketing Break Even Analysis
[ Page 56 of Instant Sales by Bradley J. Sugars ]
It's essential that you work out your costs up front. Otherwise, you'll have no idea what you need to achieve in order for the process to be worthwhile. You may find out after doing the analysis that the process costs you so much that it's not worth the trouble.
This analysis is for the whole campaign. After you've worked out your total fixed costs (for the campaign), you then work out your profit (your average dollar sale minus your variable costs), which gives you enough information to work out how many responses you need in order to break even.
Divide this number by the total number of prospects you are planning to approach. This will give you a percentage response rate. As a very rough guide (every case is different), anything over 40 percent is stretching it. If you need that high a response, you might need to rethink your campaign. The very best businesses get around 40 percent. These are rare results. If you need higher than that to break even, reassess whether this is the best marketing method for you.