Guidelines for Acceptable Direct Selling Expenses (1,202 words)

Incremental Break Even Formula:

Net Sales

- Cost of Goods

- Direct Selling Expenses

- Direct Ordering Processing Costs

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Incremental Break Even

Catalogers who try to grow too fast increase their selling expense-to-sales ratio, which makes their bottom line suffer. So what is an acceptable ratio for a consumer and for a business-to-business cataloger? For a consumer catalog company, the selling expense-to-sales ratio should be between 25 percent and 30 percent of net sales. For a business-to-business cataloger, this critical ratio should range from 15 percent to 20 percent of net sales. Let's take a look at what makes up these ratios.