Economics of advertising

Here is something to discuss with those customers who are satisfied with their business and don't feel they need to advertise. This is simple economics--there are two kinds of costs in business, fixed and variable. The fixed costs include things like rent and insurance. The variable costs are related to sales, for example merchandise costs go up when sales increase--not a bad thing. This is where advertising can help, because fixed are "Duh"--fixed, they are not affected by sales volume. A business can not make a profit until the fixed costs are covered but once they are covered the business gets to keep a larger and larger share of each additional dollar they bring in. This is because the fixed costs become a smaller and smaller percentage of the business's sales. This means that if a business is already covering costs, increasing volume through advertising means a higher profit margin for you customers. For an example of using this on a sales call, go to the PaperChain website, click on the Link and Learn Tab and read "What does an empty table cost?"

Keep Smiling, Keep Selling!

Thanks

Jim Busch