What can you expect to make as a mail order entrepreneur? The amount is entirely up to you, depending only on how serious you are and how willing you are to work for the rewards. One of the entrepreneurs we interviewed brings in annual gross revenues of $150,000; another brings in more than $1 million. Schulte of the NMOA says annual incomes for the industry generally range from $40,000 to more than $100,000, depending on how long the business has been in operation and how much has been invested in building the business.
By a mail order company's fourth or fifth birthday, Schulte says, about 60 percent will find themselves in the $0 to $40,000 bracket, about 25 percent will fall into the $40,000 to $100,000 category, and a final 15 percent will land in the $100,000-plus range.
The Minneapolis-based direct-mail expert estimates that it takes two to four years to break even with a mail order operation. "Profitability," he advises, "comes at about the same time, in three to five years. You want to start breaking even right away, but the real profits come when you have a solid customer base that buys from you with some frequency. It takes a few years to build up this base."
Content Continues Below
And while success doesn't come overnight to most, it doesn't come at all to some. "Only about 20 percent make it," cautions Schulte. This isn't a reason to quit before you start, but it's a darn good reason to get everything you can going for you before you start.
Figuring Your Mark-Up
The norm in the mail order industry is a markup of 300 to 400 percent on each product to cover the cost of advertising, mailing and product manufacture or purchase. This is an excellent rule of thumb, but keep in mind that you've got to take a variety of factors into consideration before coming up with your final price.
You should tweak your figures until you came up with a price that:
a) meets your customers' expectations of what a box made of gourmet chocolate, for example, should cost (too incredibly high or too implausibly low, and you lose your customers)
b) is comparable to competitors' prices for the same or similar goods
c) adequately covers expenses and provides a healthy profit.
Page
1 |
2 |
3 |
4 | 5 |
6 |
7 