How to Determine Your Catalog’s Break-even Point
* direct selling expenses—cost per catalog of 58.5 cents as shown;
* returns and allowances ratio—shown at 6 percent of net sales;
* cost of goods ratio—shown as 45 percent of net sales;
* variable cost to process an order—shown at $5 per order, or 8.55 percent, of net sales.
Based on quotes we’ve received in our example, we know it’ll cost $793,814 to print the desired number of catalogs. When we divide this number by the gross-margin percentage less the variable order-
- Companies:
- Lett Direct Inc.
Steve Lett graduated from Indiana University in 1970 and immediately began his 50-year career in Direct Marketing; mainly catalogs.
Steve spent the first 25 years of his career in executive level positions at both consumer and business-to-business companies. The next 25 years have been with Lett Direct, Inc., the company Steve founded in early 1995. Lett Direct, Inc., is a catalog and internet consulting firm specializing in circulation planning, plan execution, analysis and digital marketing (Google Premier Partner).
Steve has served on the Ethics Committee of the Direct Marketing Association (DMA) and on a number of company boards, both public and private. He served on the Board of the ACMA. He has been the subject of two Harvard Business School case studies. He is the author of a book, Strategic Catalog Marketing. Steve is a past Chairman of both the Catalog Council and Business Mail Council of the DMA. He spent a few years teaching Direct Marketing at Indiana University in Bloomington, Indiana.
You can contact Steve at stevelett@lettdirect.com.
