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If you don’t make the necessary adjustment, you could continue to mail unprofitable names. The chart “Break-even Point” (below) shows how the BEP can and will be affected by varying the gross margin ratio. In the chart, the original gross margin ratio of 59.5 percent yielded an incremental BEP of $1.08 per catalog mailed. With a decrease in the gross margin ratio to 55 percent, the break-even point increased to $1.17 per book.
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