Determining Your Profits

The method used to determine your profits is similar to the method that we used to price your handmade items. Again, you will need to do a few mathematical calculations to determine your break-even point. This number is the point at which your income minus your expenses is zero.

For example, to determine the profit from last month I would take my total profits ($425) minus my total expenses ($111). The resulting number is $314. This means that I made a profit of $314! (Note: If this number is negative, it means that you have lost money.)

Calculating profits are easy to do, but let`s look at another example. I want to mail postcards to 100 people on my mailing list, because I am introducing a new product. If printing my postcards (and postage) costs me $1.85 each, the total amount of this printing would be $185. My new product will sell for $8.99, so I would need to sell 21 products to break even from this postcard mailing ($185 divided by $8.99).

You can use this concept to figure out profits (or anticipated profits) for new products, mailings, weekly or yearly periods, and more.

Copyright, 2007, Inch By Inch Designs

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