Example of How to Calculate ROI
Now that we know the formula for calculating ROI, we can see an example of how to put it into practice. Imagine you made a $1,000 investment and earned $3,000 in profit. According to the formula, your ROI calculation is:
(3000 -1000) / 1000 = 2
ROI is expressed as a percentage . That is, if you want to know the ios database percentage of profit from your investment, you must multiply the ROI by 100 (2 x 100 = 200).
A 200% ROI means you're earning 200% of the money you invested, or, in other words, you're getting two dollars for every dollar you invest.
On the other hand, a negative return on investment means you're losing money. And if it's very close to zero, it may mean the investment isn't very attractive.
How to Calculate Return on Marketing Investment?
To calculate the return on investment in marketing, it's important to consider multiple variables, both profit and investment-wise. To do this, we recommend defining your marketing plan as a first step .
Understanding the ROI formula is essential to understanding the results of your marketing investments.
It's important to determine what constitutes your return and what your true investment is . For example, you might consider the following for return:
Total revenue generated for a campaign (or gross revenue, which is the sales generated by the campaign).
Gross profit or an estimate of gross profit (revenue less cost of goods to produce/deliver a product or service).
Net profit (which is gross profit less expenses).
On the investment side, it's easy to consider media costs as investment. But what other costs should be included ? To run your campaign, you may have:Example of How to Calculate ROI
Now that we know the formula for calculating ROI, we can see an example of how to put it into practice. Imagine you made a $1,000 investment and earned $3,000 in profit. According to the formula, your ROI calculation is:
(3000 -1000) / 1000 = 2
ROI is expressed as a percentage . That is, if you want to know the percentage of profit from your investment, you must multiply the ROI by 100 (2 x 100 = 200).
A 200% ROI means you're earning 200% of the money you invested, or, in other words, you're getting two dollars for every dollar you invest.
On the other hand, a negative return on investment means you're losing money. And if it's very close to zero, it may mean the investment isn't very attractive.
To calculate the return on investment in marketing, it's important to consider multiple variables, both profit and investment-wise. To do this, we recommend defining your marketing plan as a first step .
Understanding the ROI formula is essential to understanding the results of your marketing investments.
It's important to determine what constitutes your return and what your true investment is . For example, you might consider the following for return:
Total revenue generated for a campaign (or gross revenue, which is the sales generated by the campaign).
Gross profit or an estimate of gross profit (revenue less cost of goods to produce/deliver a product or service).
Net profit (which is gross profit less expenses).
On the investment side, it's easy to consider media costs as investment. But what other costs should be included ? To run your campaign, you may have.