Phil’s Army Surplus calculator business was going great, especially the newest models with exclusive camouflage color schemes. These calculators blended into a variety of backgrounds making them virtually invisible to everyone except those equipped with polarized “Cheep” sunglasses. Phil sold the calculators and sunglasses combination package from his own dedicated website: Phil-the-Bill.com. The packages sold for $45 earning Phil a margin of 47%. Shipping was extra. He also sold the calculator plus polarized glasses combination for the same price through an online department store, BigMuddy.com. BigMuddy earns a 17% commission on sales resulting from clickthroughs originating from BigMuddy. The latter accounts for 17% of total unit sales and somewhat less of dollar sales after commissions were paid. Weekly sales of the combination package are 480 units.
1. What incremental sales per week would be required through Phil-the-Bill.com to breakeven on a banner ad costing $5,000 per week?
Divide the cost of the banner by the unit contribution for sales through Phil-the-bill.com.