What Is The Return On Investment for SEO?
1What is Return on Investment?
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.
2How to Calculate ROI
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
- 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:
- 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) .
- 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
- 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
The 7SEO team hope that you find our Return on Investment Calculator useful in calculating the profit that you can make from our top SEO services, we are excited to meet you and look forward to working on your project