Marketing & agency
Agency Email Marketing ROI Calculator
Works email marketing return, where the list is the asset.
Result
Simple payback, with no discounting and no financing cost. For anything large or long, money now is worth more than money later and a lender will want interest, both of which make the real return lower than this.
Get a Free Business AuditHow the calculation works
Gross margin on revenue attributable to email, less the cost of the platform, the content production and the management, divided by that cost. Email's costs are low relative to paid channels, which is why its return looks high, and the figure to watch is whether the list is being built or consumed.
What moves the number
- Platform, content and management costs.
- Gross margin on attributed revenue.
- List growth against attrition.
- Whether the revenue would have arrived anyway.
Where this one goes wrong
A high return on email can be the result of harvesting an existing list rather than building anything, and a list consumed by over-sending and not replenished produces excellent returns for a while and then nothing. Track list health alongside return. Incrementality also applies here as much as in paid channels, since a promotional email to existing customers captures sales that might have happened regardless.
Before you quote
- Track list growth and attrition alongside return.
- Consider whether the revenue was incremental.
- Include content production and management in the cost.
Questions
About this calculator
Why does email show such high returns?
Because the costs are low relative to paid channels and the audience already knows the sender. The caution is that a high return can come from harvesting an existing list rather than building anything, which is not sustainable.
What should be tracked alongside return?
List growth against attrition. A list consumed by over-sending and not replenished produces excellent returns for a while and then nothing, and the return figure gives no warning before that happens.
Is email revenue incremental?
Partly. A promotional email to existing customers captures sales that might have happened anyway, which means the attributed figure overstates the true contribution. It is the same incrementality question that applies to retargeting.
The formula
payback = cost / (monthly gain - monthly running cost)
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Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Up-front cost ($). Enter your own figure; the page starts at $12,000.
- Extra gross profit per month ($). Enter your own figure; the page starts at $1,400.
- Extra running cost per month ($). Enter your own figure; the page starts at $220.
- Period to judge it over. Enter your own figure; the page starts at 36.
The result updates as you type, so you can try a figure, see what it does to payback period, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Up-front cost | $12,000 |
| Extra gross profit per month | $1,400 |
| Extra running cost per month | $220 |
| Period to judge it over | 36 |
What comes out
| Result | Value |
|---|---|
| Payback period main result | 10.2 |
| Net gain per month | $1,180 |
| Net return over the period | $30,480 |
| Return on investment | 254% |
It pays for itself in 10.2 months and returns $30,480 over 36 months, a 254% return.
How sensitive the answer is
Holding everything else steady and changing only up-front cost, this is what happens to payback period. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Up-front cost ($) | Payback period |
|---|---|
| $6,000 | 5.1 |
| $9,000 | 7.6 |
| $12,000 example above | 10.2 |
| $18,000 | 15.3 |
| $24,000 | 20.3 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Up-front cost ($)
- A money amount, starting at $12,000.
- Extra gross profit per month ($)
- A money amount, starting at $1,400.
- Extra running cost per month ($)
- A money amount, starting at $220.
- Period to judge it over
- A number, between 0 and 240, starting at 36.
What the results tell you
| Result | What it is |
|---|---|
| Payback period | The headline result. A decimal figure. |
| Net gain per month | A money figure. |
| Net return over the period | A money figure. |
| Return on investment | A percentage. |
Attribution is the weak link
Return and cost-per-lead figures depend on knowing which enquiries came from which source, and most home-services businesses do not track that reliably. If the source data is guesswork, so is the return.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.