Finding Our Break-Even Point

In his book, The Bootstrappers Bible, Seth Godin talks about four questions an entrepreneur must answer before starting a business. They are:

  1. Who is going to buy your product?
  2. How much are they going to pay for it?
  3. Where will they find it?
  4. What is the cost of making one sale?

1. Who is going to buy your product?

Funny gift givers and random pickle lovers. We named these two people Pip and Paul. Pip is our main audience, but we still want to please Paul if he wants pickles.

PipPip “gets” this site, in every sense of the word. He is a fun-loving, creative individual who has stumbled upon what he believes is a fantastic source of comedy in all his gift-giving endeavors. Every month, when that pickle arrives at the home of Pip’s friend, that friend is reminded of the wacky buddy who cared enough to send him pickles for half a year.

Paul – Paul is a pickle lover. The man appreciates a good pickle, either as a garnish or eaten solo. He loves the various flavors, textures, recommended temperatures, and histories associated with these pickles. He’s been know to scour the web researching pickles, and he takes great satisfaction in eating a delicious pickle. The man just really loves pickles.

2. How much are they going to pay for it?

$25 for 6 months of service, plus shipping. That’s $25 for 6 shipments of one pickle apiece. Depending on the pickle size, shipping may total out to (pickles and shipping) $44 or $52. We may offer two size of pickles – a small one for $22.95 plus $19.32 for shipping for a total of $42.27, and a super big one for $25.95 plus $26.40 for shipping for a total of $52.35.

3. Where will they find it?

Online at http://www.pickleofthemonth.com/. We will use word-of-mouth marketing to start. Once things get rolling then we will look at doing guerilla marketing, PR, and perhaps advertising.

4. What is the cost of making one sale?

I ran some numbers tonight to see exactly the minimum number of customers we would need to break even on a monthly basis. I’ll not bore you with the detailed numbers, but it turns the cost of making one sale is around $1.43 for the small pickle and $1.70 for the large, and our fixed monthly costs come in right around $80. This means we need right around 62 active customers to break even per month, or 124 total customers per year.

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