How to Calculate Your Website's ROI
What is Return On Investment?
How to measure ROI – Return on investment, sometimes known as ROI, is a straightforward metric for calculating profitability. How much money did an investment make (or lose) after deducting its costs?
Return on investment is a critical factor in many business and financial decisions. It can be used to determine the actual returns on investment or to compare the potential returns of different investment options. It can also assess the possible return on a new acquisition.
For instance, the formula can estimate the costs and potential profits of a business owner’s decision to extend into a new website. A return on investment analysis can help a business owner determine whether a novel strategy has a chance of being successful. The formula is a straightforward predictor of expected or actual website performance and past or present outcomes.
Justifying the Investment Amount for a New Website
Unquestionably, investing in a new company website is a wise move. mainly if you write the writing, graphics, product descriptions, and everything else fresh. This implies that you must ensure the cost will be supported by the prospective expansion of your business. As a result, one of the first things you should study is the return on your investment.
Let’s go over a quick calculation that will help you determine your website’s Return On Investment more precisely in light of this.
How to Measure ROI
How to Calculate Your Website’s ROI – Say you spent $6,000 designing your website, for example. If it takes three years until a redesign is required, your annual web development cost will be $2,000.
This investment must yield a profit of at least $2,000 per year to be worthwhile (preferably more). Your website should be directly responsible for bringing in two new clients yearly if each customer earns $1,000 in sales.
Once you have the average worth of your clients, the remaining calculations for your website are simple. If the average customer is worth $500, simply multiply it by the aforementioned 36 to get your website’s annual revenue of $18,000. The ROI on your website is 90% compared to the $2,000 yearly expenditure.
The impact of your website on attracting new customers should now be calculated. Based on the products, industries, or services the website offers, as well as our design recommendations and guidance, we anticipate that the website receives 500 visitors each month, or 6,000 visits per year. If 3% of the visitors to your website convert to queries on average, your website will generate 180 new leads each year. Again, 20% of these leads become paying clients, corresponding to 36 new clients annually.
(average customer value x annual customers generated) / annual website cost = website ROI.
Of course, in order to accomplish that goal, you need a website created specifically to attract visitors, elicit enquiries, and convert them into customers. If you need help developing that online presence, get in touch with us.
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