Analyze Your Profit Contribution
How to determine contribution to profit and overhead
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How Much is Enough?
The answer depends on your business model. Discern what contribution ratio you need to achieve your desired profitability.
Look at the proforma chart again. On an incremental basis, this holiday mailing generated a positive contribution to profit and overhead ratio. It was enough contribution to yield a nice pre-tax profit after being applied to the total overhead expense of this mailing.
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- Companies:
- Lett Direct Inc.
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