Variable, Not Fixed Costs

Step 2: Determine Break-even Calculations. To discern your break-even demand per catalog, take your catalog costs and divide by your gross-to-net margin.

Then divide again by your gross merchandise/operations margin. So, your variable break-even demand per catalog calculation is:

$0.70 divided by 70 percent, divided by 60 percent, which equals $1.67 demand per catalog.