Marketing & agency
Marketing ROI Calculator
Works marketing return, where margin rather than revenue is the numerator.
Result
Attribution is the weak link. Revenue credited to a campaign often would have arrived anyway through brand or referral, so treat attributed revenue as an upper bound.
Get a Free Business AuditHow the calculation works
Gross margin on revenue attributable to the spend, less the spend, divided by the spend. Using revenue instead of margin is the near-universal error, and it overstates return by the entire cost of delivering the work, which in most businesses is the majority of the revenue.
What moves the number
- Gross margin rather than revenue.
- Attribution and the window used.
- Whether the revenue was actually collected.
- Repeat business from acquired customers.
Where this one goes wrong
A campaign returning several times its spend in revenue can be losing money once delivery cost is taken out, which is why revenue-based return figures are reassuring and useless. Use margin and say so. Attribution is the other half, and a window shorter than the decision cycle credits the wrong channel, which is how businesses cut the spend that was working and keep the spend that was taking credit.
Before you quote
- Use gross margin as the numerator, every time.
- Match the attribution window to the decision cycle.
- Use collected revenue, not invoiced.
Questions
About this calculator
Why use margin rather than revenue?
Because the work still has to be delivered and paid for. A campaign returning several times its spend in revenue can lose money once delivery cost is taken out, which makes revenue-based return figures reassuring and useless.
How long should the attribution window be?
At least as long as the decision cycle. A short window credits the last touch and misses the activity that created the demand, which is how businesses cut what was working and keep what was taking credit for it.
Should repeat business count?
Where it is measured rather than assumed, yes, since a customer who returns was still acquired by that spend. The discipline is using actual repeat rates, because an optimistic assumption makes any campaign look profitable.
The formula
ROI = (gross profit − total marketing cost) ÷ total marketing cost × 100
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Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Marketing spend ($). Enter your own figure; the page starts at $8,000.
- Revenue attributed ($). Enter your own figure; the page starts at $46,000.
- Gross margin (%). Enter your own figure; the page starts at 44%.
- Other campaign costs ($). Creative, agency fees, tools.
The result updates as you type, so you can try a figure, see what it does to marketing roi, 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 |
|---|---|
| Marketing spend | $8,000 |
| Revenue attributed | $46,000 |
| Gross margin | 44% |
| Other campaign costs | $1,200 |
What comes out
| Result | Value |
|---|---|
| Marketing ROI main result | 120.00% |
| Gross profit generated | $20,240 |
| Net gain after all costs | $11,040 |
| Revenue return (ROAS) | 5.0× |
A ROAS of 5.0× looks good, and on gross profit it still returns 120.00%: a net gain of $11,040.
How sensitive the answer is
Holding everything else steady and changing only marketing spend, this is what happens to marketing roi. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Marketing spend ($) | Marketing ROI |
|---|---|
| $4,000 | 289.23% |
| $6,000 | 181.11% |
| $8,000 example above | 120.00% |
| $12,000 | 53.33% |
| $16,000 | 17.67% |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Marketing spend ($)
- A money amount, starting at $8,000.
- Revenue attributed ($)
- A money amount, starting at $46,000.
- Gross margin (%)
- A percentage, between 0 and 100, starting at 44%.
- Other campaign costs ($)
- Creative, agency fees, tools.
What the results tell you
| Result | What it is |
|---|---|
| Marketing ROI | The headline result. A percentage. |
| Gross profit generated | A money figure. |
| Net gain after all costs | A money figure. |
| Revenue return (ROAS) | A number. |
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.
Keep going
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