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break even question help?

Jack Abbot is planning to do a fundraising mailer for the victims of the Clear Springs explosion. Jack has talked to a fundraising consultant and they advised that given the emotional impact of the recent tragedy he should expect about a 10% response rate if he selects a good target list. Jack plans to send out a fairly expensive mail piece, with pictures of the collapsed structures, details about how the gas explosion occurred, and diagrams explaining the location of some of the gas drilling sites nearby. The mail pieces will cost $1.75 each with postage. Jack will send each donor a ribbon worth $5.00, a thank you card, and a form showing how much they donated they can use to document their gift for tax purposes. Jack is concerned that given the cost of the mail piece, they might not be making a profit and won’t have anything left over to give the victims. So you have been asked to look at the numbers and see if they are likely to be above break-even, assuming they will get a 10% response rate. Average Order:$50 Cancels, bad Debt:1% COGS %:10% (the $5 ribbon) Fulfillment Cost:$5.00 (gift entry, processing, thank you, tax form) Cost per Reach:$1.75 Question One: Would you say they are likely to be above break-even? Question Two: What is the break-even $ per name? Question Three: If Jack offered a $15.00 commemorative coin instead and it increased the average gift (average order) to $75 (so COGS=20%), would break-even response% go up or down? Would break-even $/name, go up or down?

Public Comments

1. Hi The best way to help you is to redirect you to the "Science and Mathematics" Category on Yahoo Answers. Since this is the "Yahoo Answers Help Site" - you're apt to find more answers from the saavy math wizzes up in that category than in here. http://answers.yahoo.com/dir/;_ylt=AqaQdAqbw0PsaBtDqaVe9QXpy6IX;_ylv=3?link=list&sid=396545122 And don't worry about using another 5 points. You can always vote on a couple of questions or answer a few to make them up, while you wait for your question to appear. Good luck! :)