Question

Analysts closely watch the "conversion rate" when analyzing an Internet business. This rate is computed by dividing the number of people who buy something at an Internet site by the number of people who visit the site. Conversion rates have an obvious effect on the break-even point. Studies show that conversion rates increase if the site has an easy-to-use interface, fast-performing screens, a convenient ordering process, and advertising that is clear.

Besides increasing their conversion rates, what steps can online merchants use to lower their break-even points?

Answer 1

To lower their break-even points, online merchants can reduce fixed costs, increase average order value, and improve conversion rates.

Step-by-step explanation:

Lowering the Break-Even Point

Online merchants can take several steps to lower their break-even points:

1. Reduce Fixed Costs: By finding ways to lower fixed costs, such as reducing office space or renegotiating supplier contracts, online merchants can decrease the break-even point.
2. Increase Average Order Value: By encouraging customers to add more items to their carts or offering upsells and cross-sells, online merchants can increase their average order value, thereby lowering the break-even point.
3. Improve Conversion Rates: By employing strategies to improve conversion rates, such as optimizing the website's user experience, simplifying the checkout process, and running effective advertising campaigns, online merchants can increase sales and lower the break-even point.