Reference no: EM133183474

Marie is now launching her own business called, "Brand You", a small boutique logo and marketing company that can help small businesses with their marketing. The benefit is that she can work from home and meet clients on site. She can design logos and print materials such as business cards, thank you cards, and brochures. At the same time, some clients have asked her to manage their social media outreach because they would like to concentrate on their business as opposed to doing the marketing outreach.

As a result, Marie has created two marketing packages. The first package is a basic marketing piece where she will design and create the business cards, thank you cards, and brochures. She charges a flat rate of $250.00 per month for this service to her clients. The second package is for social media bundle. For this package, she will charge $40 per month which will cover completing 4 Instagram posts, 4 Tweets and 4 Facebook posts a month.

Based on market research, Marie knows she can easily find 4 clients per month for package 1 and 10 clients per month for package 2. Due to time constraints, she will not be able to take on more clients. Maria can only focus on one of the packages, not both.

Marie will pay $150 per month for business insurance and $30 a month for additional business telephone service, while working from home. She also will need to pay $60 a month for digital design software for either marketing package. Marie will need to pay $120 a month for the supplies, the equipment will cost $1200 upfront with an annual maintenance bill of $360 for the first package.

If she offers the second package, she will have to upgrade her phone to one with a bigger screen to be able to accurately check her work on mobile versions of social media platforms. The new phone will cost $1130; however, she can sell her current phone for $600. Marie also will need to pay $25 a month for social media management software subscription. Her new business set up is expected to incur $550 in legal and administrative costs.

Calculate a breakeven point (in units) based on this information for each month. Please show your calculations.

a) How many packages would Marie need to sell in total to reach the breakeven point for Package 1?

b) How many subscriptions would Marie need to sell to reach the breakeven point for Package 2?

c) Based on the two calculations, explain which is the better option and provide your reasons to why it is the better option.