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Campaign ROAI & Breakeven Calculator
The Marketing Campaign ROAI Calculator(return on advertising investment or sometimes called the ROMI (return on marketing investment) Calculator will help you learn immediately if your product(s) made money or can make money via the media used. The advertising investment is your total spending for all promotional / advertising costs supporting the campaign.
Instructions (Click to Open)
In the section labeled “Campaign Revenue,” enter the projected revenue and number of orders for the campaign.
In the section labeled “Campaign Costs,” enter the product gross margin %, returns %, bad debt %, credit card processing fee %, total fulfillment costs (pick and pack, warehousing, order processing, etc.), and the total postage and shipping costs for delivering the order to the customer. If a variable doesn’t apply to your campaign, leave it at “0.”
* Remember actuall fulfillment cost can make or break a campaign or make it unprofitable to ship a product direct to the buyer. To calculate the fulfillment cost, you need to consider these factors as a part of the total: set up fees; inbound shipping; receiving; storage and warehousing; pick and pack and order fulfillment; box fees, returns processing fees; order insert fees and custom labeling; kitting fees; and account managment fees. Your average per order fulfillment cost is the total fulfillment cost divided by the expected number of orders.
Both outbound shipping and the cost of returns (stated as a percentage) have separate entry fields in the calculator. Don't lump them in with the other fullfillment costs. Returns may vary anywhere from 0 to 50% depending on the product category and product itself. Apparel generally has much higher return rates than home goods. Returns are calculated as a percentage of the total outbound order value that is billed to the customer.
Also enter the total marketing (promotional / advertising) budget (or expenses) you have for this campaign...all creative, production and media cost in the field labeled "Total of all marketing (promotional/advertising costs)." This would include any direct marketing, sales promotion expenses, public relations expenses, telemarketing, media, lists rental, and the cost of content and collateral creation and production, etc.
Once you have entered these variables, you can view the marketing ROAI and profit projections in the section labeled “Campaign ROI.” You can run different “what-if” scenarios by changing the variables in the “Campaign Revenue” and “Campaign Costs” sections.