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Product Breakeven
& Profit Analysis Tool
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You can use this
calculator to determine the breakeven for a product order for a campaign that
includes a single item or multiple products where you know the promotional
and fulfillment costs for the individual product. At the bottom of the calculator, you can
also set the desired net profit % that you want this product to achieve. It will calculate the number of orders and
gross sales required to achieve breakeven and profitability.
Enter the data in the cells below. The calculator returns the breakeven
percentage and the responses required to attain that percentage based on your
average order value and the estimated advertising and other costs for this
promotion. This is a simple breakeven
calculator and only gives you a ball park estimate of the breakeven response
and orders required. If you're not
sure of the order related fulfillment and order processing costs, leave those
blank. Without them, this is a good
guide because if it can't achieve breakeven without those other costs, it
won't achieve breakeven with them included.
You may reset all factors to "0" to start over or when you are
finished using the tool by clicking the RESET button at the bottom. You save a PDF copy of this analysis by
clicking the PRINT button at the bottom.
You can also save the evaluation to your browser if you're not able to
complete it in one sitting. Just save
the results, then open the file later.
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General Program Parameters
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Enter the total
advertising/promotional costs (for item or campaign)
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Enter total audience, mailing
quantity or circulation
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Enter the product's unit selling
retail price
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Enter the product's unit cost
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Product Margin ($'s)
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Product Margin %
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Product Related Costs
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Enter the product's inbound
shipping costs to you (per unit)
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Enter the product's warehousing
cost (per unit)
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Enter the product's refurbishing
cost (per unit)
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Fulfillment & Order
Processing / Handling Related Costs
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Returns % (Enter the average
returns % for this product or campaign if more than one product. This % may vary from 5 to 100% depending on
the product and product category.)
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%
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Exchanges % ( Enter the average
exchange % for this product or campaign if more than one product. This is usually in the 2 to 10% range, but
can be higher.)
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%
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Adjustments % (Enter the
average adjustments % for this product or campaign if more than one
product. This is usually in the 1 to
10% range, but can be higher if the product has problems.)
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%
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Cancellations % (Enter the
average cancelations % for this product, product category or campaign if more
than one product. Cancelations usually
occur because a product can't be reorder.
The percentage can vary widely.)
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%
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Bad Debt % (Enter campaign
average bad debt %. This figure may
also vary by product category.)
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%
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Credit card discount rate
(Enter discount rate %.)
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%
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Credit card processing fee per
product/order (Enter the processing fee %.)
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%
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Fulfillment Costs Per Order
(Picking & Packing, Supplies, Order Processing, Etc.) *
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Actual Outbound Shipping Costs
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Postage/Shipping/Handling Costs
Billed to Customer
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Returns / Exchanges Processing
Costs
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Returns & Exchanges Return
Shipping Cost per Return or Exchange
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Restocking Charge for Returns or
Exchanges per Product
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Product or Total Order
Breakeven & Profitablity Analysis
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Total Order Retail Value
(includes shipping costs billed to the customer and product retail)
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Total Order Costs (includes
product cost, all fulfillment and order processing and order processing
costs, returns processing costs)
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Total Margin $'s (if the total
margin $'s are zero or a negative amount, you will not be able to achieve
breakeven no matter how many of these orders or products you ship.
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Breakeven percentage required
based on the order value and product retail price and cost entered.
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Breakeven orders required
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Net Profit Calculation
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Enter Net Profit % Desired
(before corporate overhead/operating costs)
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%
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Required Units (Orders) to
Achieve Net Profit %
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Required Gross Sales
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Note: The breakeven is
the response rate required for the margin $'s generated from all sales to
cover total advertising and other costs for the promotion of this product or
order. If the "Total Margin
$'s" is zero (0) or a negative value, then it will not cover advertising
costs no matter how many are sold. It
will appear in red, if it's a negative value.
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