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Real-Life Math

You are the circulation manager for a monthly magazine.

You are thinking about using a direct-mail campaign to sell subscriptions. You are planning on mailing sales material to 200,000 people. A typical industry response rate for a mail-out of this type is 1.5 percent. That is, you can expect 1.5 percent of the people to respond by subscribing to the magazine. A one-year subscription costs $60.

The postcards that you are sending out cost $1 each. It costs $0.45 to mail them.

When you send the magazine to subscribers, each copy costs you $4, plus $0.69 postage.

Will you make a profit or experience a loss if you do the mail-out? How much? Should you proceed with the mailing?

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OCAP believes that financial literacy and understanding the financial aid process are critical aspects of college planning and student success. OCAP staff who work with students, parents, educators and community partners in the areas of personal finance education, state and federal financial aid, and student loan management do not provide financial, investment, legal, and/or tax advice. This website and all information provided is for general educational purposes only, and is not intended to be construed as financial, investment, legal, and/or tax advice.