How to Calculate The Costs Of Your Promotions For any Home Or Internet Business

Let's first talk about Direct Mail Programs. Direct Mail Programs are still a viable force as far as marketing is concerned.

For direct mail programs you can calculate either total costs or costs/M, to figure costs/M, you will need to know how many thousands you intend to mail since creative and prep work costs should amortized over the entire mailing, and other production costs vary depending on quantity. Let's take for example the cost /M for 1M letters might be $39.00 whereas the cost /M for 20M obviously would be less when dealing in quantity.

Be sure to include all creative costs; salaries or fees of the writers and artists, materials costs, etc. Than there is all prep work costs such as typesetting, photography, pasteups, color separations, etc.

Printing costs can be obtained from your printer. List rental costs should include the costs of preparing and using your own house lists, rental of other lists, and merge-purge operations.

If you have a lettershop handle the mailing, inserting, addressing, and mailing charges may be grouped as one cost. If you do the mailing yourself, you need to consider the costs of inserting all pieces into the outer envelope, the costs of labeling the envelope, and the costs of bagging, sorting, and mailing. Be sure to include all labor costs.

One miscellaneous cost you might want to include is a percentage of your overhead for the advertising department and mailing operations. Some mail order people include it and many do not. The ones that do not consider it as an overhead or fixed cost.

Postage costs vary depending on whether you use first class, third class, bulk rate, or some other means of delivery such as by hand, or by mailgram, or by UPS, or by birds, or by lizards, or whatever...you get the idea-just be creative.

Tomorrow let's talk a little about media advertising.