Three Years and $3 Million to Break Even

A typical response rate for prior buyers is perhaps 5 percent (averaged over three years worth of buyers). Which means you must mail (and pay for) just 20 catalogs to get each order. This drops your catalog creation cost from $50 to just $10 per order (since you must mail only 20 catalogs to get one order, not 100 catalogs as before). All other costs stay the same, so your total costs for a sale to a prior buyer are now $10 + $37.50 + $10= $57.50, which when subtracted from your gross revenue of $75 leaves you with a healthy profit of $17.50 on each order from a prior buyer.