12/3/2011 ea4634b4-7738-4f0d-9d56-0c84c3b7681f.xls Confidential
Direct Mail Analysis
[ ] Use this form to run the numbers on a direct-mail campaign. The form includes a breakdown of gross margin of the product
being sold, the cost of the direct mail piece, and an analysis of the profit and break-even point. For some mailings,
you may know the total cost of each mail unit but not the breakdown of costs for the individual components.
In this case, simply enter the total unit cost into the Other field (cell B30), and enter "0" for each of the individual costs in
cells B20 to B29. Enter your data into the unprotected cells in blue.
Direct Mail Analysis
Promotion: [Promotion Name]
Direct Mail Investment Gross Mar
Direct Mail Fixed Costs Product Unit Selling Price
Art / Creative Development $6,000 Add: Handling Charge
Other (e.g. Consultant fee) $2,000
Promotion Fixed Costs: $8,000
Mailing Piece Variable Costs Cost of Goods Sold
Circulars $0.25 Shipping & Handling Costs
Cover Letter $0.03 Order Processing / 800# Cost
Inserts $0.10 SPIFF to Telesales People
Lift Note $0.10 Credit Card Charges
Envelopes $0.04 Cost of Returns / Bad Debt
Order Form $0.10 Other
List Rental $0.10
Assembly (folding, stuffing, etc.) $0.10
Addressing * Lettershop $0.10
Postage $0.32 Gross Margin per Product Un
Other $0.15
Cost per Mailing Piece: $1.39
Total Number of Pieces to be Mailed: 100,000
Total Costs of Mailing Pieces: $139,000
Total Investment in Direct Mail Promotion: $147,000
ANALYSIS
Lowest Projected Response Rate 0.5%
Response Rates Increments 0.5%
Projected Response Rates 0.5% 1.0% 1.5%
Projected Product Unit Sales 500 1,000 1,500
Projected Gross Profit on Product Sales $24,819 $49,638 $74,456
Total Investment in Direct Mail Promotion $147,000 $147,000 $147,000
Projected Total Net Profit ($122,181) ($97,363) ($72,544)
Financial Analysis
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R.O.I. on Mailing -83.1% -66.2% -49.3%
Cost Per Customer (Order) $294.00 $147.00 $98.00
Net Profit Per Customer (Order) ($244.36) ($97.36) ($48.36)
Break-Even Analysis
# of pieces needed to break-even (at the above Response Rate) ---- ---- ----
Product Unit Sales (if only break-even # of pieces are mailed) ---- ---- ----
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of the product
osts in
Date: 12/03/11
Gross Margin per Product Unit
nit Selling Price $60.00
dling Charge 5.00
Total Revenue per Product Unit: $65.00
oods Sold $8.00
& Handling Costs $3.00
cessing / 800# Cost $0.90
Telesales People $1.00
d Charges 2.25% $1.46
turns / Bad Debt $1.00
Total Cost per Product Unit: $15.36
rgin per Product Unit: $49.64
2.0% 2.5% 3.0% 3.5% 4.0%
2,000 2,500 3,000 3,500 4,000
$99,275 $124,094 $148,913 $173,731 $198,550
$147,000 $147,000 $147,000 $147,000 $147,000
($47,725) ($22,906) $1,913 $26,731 $51,550
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-32.5% -15.6% 1.3% 18.2% 35.1%
$73.50 $58.80 $49.00 $42.00 $36.75
($23.86) ($9.16) $0.64 $7.64 $12.89
---- ---- 80,706 23,034 13,434
---- ---- 2,421 806 537
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