Valuations & Acquisitions: Why Deal Due Diligence Is Worth a Try

The first (and foundation model) is the prospecting Contribution to Fixed Expense P&L (see 2007 Catalog Prospecting Breakeven Model Example below).

Note the $1.147 gross demand per catalog mailed is the break-even point. At this $1.147 level, the mailing has covered variable expenses and will start contributing to fixed expenses. In this example, the $1 sales per book achieved was below breakeven. So the 20 orders/customers secured (at a total cost of $65) means the cost per new customer was $3.25 each.