What is the ROI for SEO?

Return on Investment or "ROI" is the net income generated by an investing activity. Typically we will express it as a percentage because that makes it easy to express and to compare different investment options and also to apply a decision rule.

The easiest way to explain this is with a simple example- ROI calculation you can read this example and then use our ROI Calculator below to use your own figures and see if our SEO will make a profit for you

1. First calculate the return. This can be defined as the gross income that you earn from a customer in their lifetime less the directly attributable costs of those sales. Here are some examples:
2. If you sell a physical item for $300 that costs you $150 plus $10 to ship to the customer and $5 in transaction fees then your return on that then your net return on one sale is $135 but wait - now you have a customer and you know from historic data that on average customers make three purchases from you in their lifecycle as a customer, so on average the return on acquiring that customer is $405 (3 x $135) .
3. The same approach applies to a service based company, the company's own data or estimates will be used to define the average return from a customer by calculating the average return from the customer multiplied by the average customer lifecyle
4. ROI as a percentage - once we have calculated the return from a customer over the average customer lifecycle then we can compare it to the cost of acquiring the customer. Say our SEO campaign creates 4 new customers each month and it costs $250, the total customer lifetime value is $1,620 ( 4x$405) the net gain or return on investment after marketing costs of $250 is $1,370 the Return on investment percentage is 548% ($$1370/ $250