Category: Roi

More On Web Design ROI

7/28/2011

In our last blog post we talked a little bit about the ROI of web design. I'd like to elaborate on that a little bit in today's post.

Again, we'll compare a brochure with a website. If you print out 1,000 brochures at a fixed cost of $500, your unit per cost is $2.00. A single brochure that earns you more than that can be said to have earned you a positive ROI, but you know that you are not going to make money on every single brochure. Most recipients are going to toss it away.

Industry standard is a 1%-2% response rate. Let's say you experience a low response rate of only 1%. That's 10 people who call you based on receiving your direct mail brochure. Now let's say you close 50% of those sales and an average sale for your business is $200. You've earned yourself $1,000, or a 100% ROI on your investment. That's not bad.

The difficulty in judging the effectiveness of print marketing is that sometimes you don't realize a sale for a long time. If you send out your brochures today, what is a reasonable time period for receiving a response from that brochure? 3 months? 6 months? 1 year? It really depends on your business.

How Web Design ROI Is Different

Judging web design ROI is different. As mentioned two days ago, your website has an unlimited distribution. That means you can't put a "per unit" cost on it. Not per se.

If that website cost you $500 to produce and you get 1,000 visits per month to that site every month for 10 years, you can break down your "per unit" cost for the time period, but that doesn't really help you in terms of determining the overall ROI of your website. In truth, you can't get a realistic number the same way you can with a print brochure.

It is best to judge your ROI for web design in terms of time increments. For instance, we'll look at traffic numbers for one month. If you got 1,000 visitors to your site this month and your site has been active for 10 months, divide the cost of your site ($500) by the number of months it has been active (10). Your cost per month is $50. Now, you could try to figure the cost per visitor for this month, but don't bother. Instead, count your conversions.

A conversion is the number of people who bought something. Let's say you sold something to 1% of your site visitors (that's 10 sales). If your average sale is $200, then you've earned $1,000 for your business this month. Is that your ROI?

In a word, no. Your ROI is the total return you've received over and above your total expense. You spent $500. Anything over and above that is your ROI. If you earn $1,000 per month on your website every month for its life, then your ROI is that total minus the $500 you spent. Remember, you're looking at the total life of your website. Your "per unit" cost is likely going to be so small you can't measure it.

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