Whether you’re a hairdresser, restaurant owner or accountant, before you embark on your digital adventure, you need to make sure that your website will be profitable. Will you earn back your initial investment? How long will it take? How much money will your website bring in? How much will it cost? How can you calculate your ROI? Let’s help you figure out the answers to these questions.
1. Quantify your goals
Are you hoping to use a “showcase” website to increase visibility for your business activity? You’ll be able measure your goals in number of visits and page views, as well as the amount of time Internet users spend on your site. If you opt for an e-commerce site, the focus will be on the number of sales and requests for quotes that stem from your website.
2. Keep track kof your conversion rate.
The profitability of your website depends on the proportion of web generated contacts and/or requests for quotes that lead to a sale or signed quote.
If your site yields 40 contacts via your contact form or email, and 10 of these materialize, your transformation rate is 25% ((10 /40) x 100) This means that 1/4 of your sales turnover comes from your digital marketing.
Handy Tip
ROI (Return On Investment) = (Gains – Investment Costs) / Investment Costs
3. Calculate your projected sales turnover
In the above example, if each service is billed at an average of $500 plus tax, the sales turnover will be $5000 (40 x 25) / 100 x 500)
4. Estimate the creation cost of your future site
From design to launch time, the expenses your website incurs will impact its overall profitabilty. Potential expenses include SEO (SEO services, Google Ads campaigns), content writing, hosting fees and more. Every website will have a different budget. But for a showcase website, costs generally vary between $600 and $6500 on average. E-commerce sites tend to range from $1750-$50 000.
5. Calculate your Return on Investment
To calculate your return on investment (or ROI) for your web project, deduct the sales turnover you can trace back to your website and then divide your result by your expenses.
In our example, if $3000 went towards your digital marketing, each invested dollar will bring in $0.66. ((5 000 – 3 000) / 3 000 = 0,66).
Handy Tip
To calculate your return on investment (or ROI) for your web project, deduct the sales turnover you can trace back to your website and then divide your result by your expenses.
In our example, if $3000 went towards your digital marketing, each invested dollar will bring in $0.66. ((5 000 – 3 000) / 3 000 = 0,66).
Key Points to Remember:
- Calculating your ROI lets you visualize the profitability of your web marketing strategy.
- You can boost your ROI by reducing your website costs and/or improving your conversion rate.
- Some sites will not yield profits immediately but will highlight your expertise and boost your client loyalty. In this case it is a bit difficult to attribute these benefits to your ROI.
