Direct Marketing Analysis
Promotion Date October 27, 2011
Gross Margin per Unit Direct Mail Cost per Unit
Selling Price $50.00 Circulars $0.15
Add: Handling Charge 3.00 Letters 0.15
Total Revenue per Unit $53.00 Inserts 0.14
Lift Pieces 0.06
Cost of Merchandise $16.50 Envelopes 0.10
Shipping or Delivery 2.00 Order Forms 0.05
Order Processing 0.65 List Rental 0.20
Cost of Returns 1.00 Assembly 0.15
Bad Debt 0.55 Addressing 0.05
Other (Guarantee Card) 0.06 Postage 0.14
Total Cost per Unit $20.76 Other 0.00
Gross Margin per Unit $32.24 Direct Mail Cost per Unit $1.19
Net Profit and Breakeven Point
Units Mailed 175,000
Response Rate 4.500%
Unit Sales 7,875
Gross Margin $253,890
Mailing Costs $208,250
Fixed Costs
Creative Development $12,000
Allocations, Other 500
Total Fixed Costs $12,500
Total Net Profit $33,140
Breakeven Unit Sales 403
Breakeven Unit Mailing 8,946
Prepared by
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