How do I calculate breakeven on a promotion?

The Breakeven volume must factor in how much you will spend on the marketing of the event/ promotion. Simply divide your Fixed Costs (total marketing expenditure) by the Gross Margin % of your offer:

 

                                         Total Promotional Expenditure

                                          Gross Margin % of the offer

 

                                                             $500

                                                               40%

                                                           = $1250 (of Sales must be achieved to breakeven.)

 

This is a shortcut method and not 100% accurate, but close enough to be in the ball park. (This presumes you know the total cost of the promotion, and that these costs are all fixed.)

 

You should remember that a promotion does not ONLY return you the short term sales, but you may be gaining a few new customers who continue to spend with you.