Variable, Not Fixed Costs

Similarly, your fixed break-even demand per catalog is calculated the same way, using the fixed catalog cost figure:

$0.84 divided by 70 percent divided by 60 percent, which equals $2 demand per catalog to break even.

Do you need $1.67 or $2 demand per catalog to break even? Let’s answer that.

Step 3: Analysis. Next, look at what each of these figures means with respect to a sample mailing (see chart “A Sample Mailing: One-time Buyers.” Based on the figures, if you were to use a fixed break-even approach, you would not mail to 13-to-24-month buyer names. The $1.89 demand per catalog would be less than your $2 fixed cutoff.