How it is calculated
Net gain = revenue minus the cost of the goods sold minus the investment. ROI = net gain divided by the investment, as a percent.
Net gain is what the investment brought back once it is paid for: the revenue, minus the cost of the goods you sold, minus the investment itself. Leaving out the cost of the goods would count the money that went to your supplier as profit.
ROI is the net gain as a share of what you put in. At 0% you got your money back and nothing more; a negative ROI means you lost part of it.
Money back per unit spent is the gross profit, revenue minus the cost of the goods, divided by the investment. It counts the money you put in as well, so it is always one more than the ROI written as a ratio.
A worked example
These are the numbers the calculator opens with, so you can follow each step in the form above.
- A campaign costs €2,000.00 in all. It brings in €6,500.00 of sales, and the goods sold cost €2,100.00.
- Net gain: €6,500.00 minus €2,100.00 minus €2,000.00 is €2,400.00.
- ROI: €2,400.00 divided by €2,000.00 is 120.0%.
- Money back per unit spent: €6,500.00 minus €2,100.00 is €4,400.00 of gross profit, and €4,400.00 divided by €2,000.00 is 2.20, one more than the ROI of 1.20.
Terms used: ROAS (return on ad spend), MER (marketing efficiency ratio), CAC (customer acquisition cost).
Before a launch, check the demand: the product research tool finds the Shopify stores that already sell a product, with their best sellers, their prices and their estimated sales.
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