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Marketing & agency

Agency Email Marketing ROI Calculator

Works email marketing return, where the list is the asset.

Your numbers

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Result

Payback period 10.2 Months
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.

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.

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How 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.

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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

  1. Up-front cost ($). Enter your own figure; the page starts at $12,000.
  2. Extra gross profit per month ($). Enter your own figure; the page starts at $1,400.
  3. Extra running cost per month ($). Enter your own figure; the page starts at $220.
  4. 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

InputValue
Up-front cost$12,000
Extra gross profit per month$1,400
Extra running cost per month$220
Period to judge it over36

What comes out

ResultValue
Payback period main result10.2
Net gain per month$1,180
Net return over the period$30,480
Return on investment254%

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

ResultWhat it is
Payback periodThe headline result. A decimal figure.
Net gain per monthA money figure.
Net return over the periodA money figure.
Return on investmentA 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.