Variable, Not Fixed Costs

The same analysis holds true for the multibuyer segment (see chart “A Sample Mailing: Multibuyers” — please check back Jan. 12 to view chart).

While the fixed-cost cutoff of $2 would eliminate the 25-to-36-month multibuyers, the correct decision is to mail to these individuals, since the demand per catalog of $1.79 exceeds the variable catalog cost break-even figure of $1.67.