Marketing Plan Help

Hi Tom As I understand it the key figures to start with are gross profit (selling price minus direct cost) and fixed costs (overheads). If your product portfolio has, say, 100 products priced between £10 and £40, your forecast will include a break down of what you expect to sell the most of, as a proportion of the whole. For example, you might predict that 30% of sales will be items priced between £30 and £40 at an average gross profit of £12 (call this product group A) 60% of sales will be items priced between £20 and £30 at an average gross profit of £6 (call this Product Group B) 10% of sales will be items priced between £10 and £20 at an average gross profit of £2 (call this product group C) Then, let's say your fixed costs/overheads each month come to £2000, that means your gross profit from sales needs to be £2000 in order to break even. 30% of 2,000 = 600. Divide by 12 (your average g.p. from group A) - comes to 50 60% of 2,000 = 1,200. Divide this by 6 (your average g.p. from group B - comes to 200 10% of 2,000 = 200. Divide this by 2 (your average g.p. from group C - comes to 100 You would then know you would need to sell each month to break even: 50 top price items, plus 200 mid range and 100 low-end At this point of course you might well play around with the percentages, revisit your pricing and review your sales forecasts/expectations. The break-even point is always going to be a floating target, especially with a large product range at different price points or flexible pricing, and you will undoubtedly be making adjustments to it when you start trading and have some sales history to go on. I'm not an accountant, btw - someone else will probably give a much better answer! But this is how I would do it as a 'rule of thumb'. Hope that's helpful; best of luck Robin http://www.robinhoughton.com http://marketingkarma.co.uk
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Eggbox: Cracking Online Marketing
http://www.eggboxmarketing.co.uk

I am an accountant and would concur with Robin’s computations as being perfectly decent! IMO B/even is probably the best tool for planning - you are always going to be putting your finger in the air for planning purposes trying to forecast revenues, and it clearly shows the margin for error in a project. Excel tip - If you do it in excel, don’t hardcode anything, but use a formulae that can be easily changed so you can play with the numbers as you learn more about the reality of your project and explore the "what if's" Good luck! James Smith Chartered Accountant www.uktaxshop.co.uk 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Oh phew! Thanks James. Figures were never my strong point so I was starting to regret answering that Q as soon as I had posted it [:I] Robin http://robinhoughton.com http://www.marketingkarma.co.uk
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Eggbox: Cracking Online Marketing
http://www.eggboxmarketing.co.uk

Hello James and Robin Thank you both, especially you Robin that explained it wonderfully really has helped i was stumpted for a bit but you have solved the problem for me many many thanks again. Cheers Tom[]
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