allowable marketing cost

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The amount that can be spent on marketing while preserving the required profit margin. It is often calculated by deducting the cost of goods, the cost of fulfilment, and the desired profit from the total expected sales revenue. For example, if a company's sales revenue is £150,000, cost of producing goods is £65,000, cost of distribution, etc. is £15,000, and the required profit is £37,500, then the allowable marketing cost would be £32,500. Companies engaged in direct marketing activity often maintain cost control in this fashion.

Subjects: Business and Management.

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