How To Figure Out Your Per Mail Peice Budget

So you have a direct mail budget but not sure if you should send as many as possible, or put more effort into a smaller group.

Here is an example for a product and only considering the first sale:

Lets say that with 50 new sales your cost per unit is $135 each (Overhead, materials, labor, etc). No Marketing.

Lets assume with 100 new sales that drops to $100 per unit.

Then finally at 250 new sales your cost is $75 each.

Then lets assume you average $250 of gross income sale and you need at least $5000 more gross profit out of this campaign. After that $25 for each sale.

That means you can spend $15 per sale to sell 50 units.

You have $84 ea left for 100 units.

And $133 ea for 250.

If you spend $15 each for 50 new sales then you can only send out 2,500 30 cents mailers and you would require a 2 percent conversion rate. That is high for most mailing campaigns.

If you end up spending $84 per new sale for 100 that would be 28,000 30 cent mailers. You would need a 1/3 of a percent conversion rate, much easier than 2%.

If you end up spending $133 per new sale for 250 that would be 110,000 30 cent mailers. You would only need a 1/4 of a percent conversion rate.

Now to the point.

As you can see, the more TOTAL # of sales the more you can spend to get them and the lower the acceptable response RATE is. As you broaden your demographics and the response rate decreases you end up needing to send so many you cant find enough good prospects. At that point you would NEED to put more effort into a smaller group to increase the total number of sales.

So if you can afford $2,500 per mailing and you have 8,000 good prospects then a cheap 30 cent mailer is probably just fine. If you have 2,000 in your TOP tiers and 8,000 is dipping down into 3rd and 4th, then I would do a nicer mailer for 1-3,000 and then with the left over money send as many as possible of the cheapest mailer to the other prospects. The cheapest mailer may end up going to your TOP tiers with the nicer mailers going to the harder to convert prospects. Each business is different, so each campaign will also be different.

Bryan Bresnan runs CustomersByMail.com in Salt Lake City, UT and has been in the printing and marketing industries since 1997. If you are interested in growing your business with Direct Mail please contact him by email; bryan@print2day.com or visit http://www.customersbymail.com for more information and marketing articles.Sons Of The Pioneers
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