Professional services
Law Firm Marketing ROI Calculator
Works marketing return, where the right numerator is margin and not revenue.
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
Revenue attributable to the spend, converted to gross margin, divided by the spend. Using revenue rather than margin overstates return by the whole cost of doing the work, which in a service business is most of it. Attribution over a long sales cycle is the other difficulty, since legal matters frequently originate months after first contact.
What moves the number
- Margin on the work won, not its revenue.
- Attribution window, which in legal services can be long.
- Collection on the matters attributed.
- Whether referrals generated are credited to the source.
Where this one goes wrong
Legal matters have long and indirect origination paths: someone reads an article, remembers the firm a year later when something happens, and arrives as a direct enquiry. Short attribution windows credit that to nothing and the firm cuts the spend that actually produced it. Ask at intake how the client came to call, consistently, because it is cheap and more reliable than any tracking. And measure collected margin rather than billed revenue, since an attributed matter that was never paid returned nothing.
Before you quote
- Use gross margin on collected revenue as the numerator.
- Ask at intake how the client found you, every time.
- Use an attribution window that matches a long decision cycle.
Questions
About this calculator
Why is marketing ROI usually overstated?
Because revenue is used as the numerator instead of margin. The cost of doing the work has to come out first, and in a service business that is most of the revenue, so a return that looks excellent on revenue can be marginal on margin.
How do I attribute legal enquiries?
Ask at intake, consistently, and accept that the answer is approximate. Legal decision cycles are long and indirect: content read a year ago produces a direct enquiry today. Short attribution windows credit that to nothing and cut the spend that produced it.
Should referrals count toward a channel's return?
Arguably yes, where a client won through a channel then refers others, because that value originated with the spend. It makes attribution messier and it also stops a channel looking worse than it is, which matters when deciding what to cut.
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. |
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.