In this post we are glad to present to you yet another freebie: the Website ROI Calculator, a free Google Spreadsheet created by Anders Hoff specifically for Smashing Magazine and our readers. Of course, the tool is absolutely free to use in private as well as commercial projects.
Is your website doing the job you are paying for it to do? The Website ROI Calculator (ROI being “return on investment”) can get you started with setting goals and following them up in order to make the most of your website.
Further Reading on SmashingMag:
- Turning Small Projects Into Big Profit, A Case Study
- Passive Income Strategies For Web Designers
- Getting Started with Banner Advertisements
The calculator can be used throughout the website’s lifespan, from planning to termination. Update the figures in the calculator at set intervals in order to see how your website or campaign is doing, and take action depending on the results.
Download The Calculator
The Website ROI Calculator is a free Google Spreadsheet that contains:
- 1 overview sheet,
- 3 sample calculator sheets for different types of websites,
- 3 template calculator sheets.
To edit the data, first make a copy (you need to be signed in at a Google account in order to do this). Then, either edit the data in one of the sample calculator sheets or duplicate the template and rename it appropriately.
Using The Calculator Sheet
When beginning a project, duplicate the template sheet and start entering data about your website.
At each evaluation point, archive the current data before changing anything. This way, you can see what effect a measure that was introduced at a particular time may have had. Create a separate Google Spreadsheet (named something like “Website ROI Archive”), and use the “Duplicate” function in the tab at the bottom of the sheet to copy the current version to the archive. Relabel the sheet so that you know what period it applies to (for example, “Website ROI Jan – Jun 2011”).
At each evaluation point, we suggest that you make a back-up copy of the current data by copying the calculator sheet to a separate Google Spreadsheet (from the menu in the tab at the bottom). Then, at each evaluation point for the duration of the website, you can copy the calculator sheet and update the figures in the new sheet.
- Figures updated. Date of when the current data was extracted and entered into the calculator.
- Name. Name of the person who updated the sheet.
- Currency. Currency of figures for expenditures and revenues in the sheet.
- ROI goal, percent. Set the goal of the return on your investment. A 0% ROI means that 100% of your expenses are returned (i.e. you did not lose any money). Normally, the goal is set at the start and is not changed at subsequent review points.
- ROI goal, days. Set the number of (maximum) days to achieve your percentage-based ROI goal. If you have to run a campaign for a very long time to reach your ROI goal, then you may want to consider stopping the campaign and allocating your resources to more profitable opportunities. Normally, the goal is set at the start and is not changed at subsequent review points.
- Site launch date. The date when the website or campaign launched.
- Site ran for. The number of days that the website or campaign has run since the launch date.
- # of visitors The unique number of visitors since the launch date. You will have to get the actual numbers from your Web statistics package (such as Google Analytics). During the planning stage, you may want to enter fictitious numbers here to see how many visitors your website will need in order to get a reasonable ROI.
- Net # of visitors These numbers will be more realistic if you subtract the visitors from your development partners and from your own organization. Your statistics package should have support for doing this.
- Page views. The number of pages that visitors have viewed. Again, this number will be found in your statistics package.
- Average page views. To keep it simple, the average number of page views is automatically calculated by dividing the number of page views by the total number of visitors.
Development and Operating Costs
Add in the costs of developing and operating the website. The sample sheets show examples of different types of development and operating costs.
Make a list of marketing costs. If your marketing activities are for channels other than the website, then allocate a portion of the total marketing costs to the website. The sample sheets show examples of different types of marketing costs.
Calls to Action and Revenue
List the actions that users can take on the website that are of value to you. In the calculator, you will find a separate sheet with a sample list of calls to actions.
You can select calls to action from the drop-down list in the “Calls to action” section of the calculator sheet, or enter a call to action directly in one of the cells. Regardless, we recommend that you collate all of the calls to action in the “Calls to action” sheet.
The value of each call to action will be specific to your organization. Estimate a value, and then enter it in the “Value” column.
In the ROI summary section, you will see how your website is doing, calculated using the current figures that you have entered in the sheet.
- ROI. This shows how your website is doing so far and what the ROI would be if you terminated the website today.
- ROI, percent. The ROI as a percentage of your investments (i.e. costs).
- Break even after. The number of days (from launch) before the costs are recovered (i.e. before the ROI equals 0).
- Will reach ROI goal of (ROI goal, percent) after. The number of days (from launch) before the ROI goal is reached.
- Prognosis, ROI. The expected final ROI if the current rate of traffic and activity on the website continues.
The “Overview” sheet also shows the ROI prognosis for projects that are running (the ROI goal in days has not exceeded). Once the ROI goal in days has passed, the ROI will then be displayed as actual ROI, not a prognosis.
Measures to Increase ROI
When you review the ROI for your website at a point in time, you may find that performance is not as good as you had hoped. You may need to make adjustments or even terminate the website or campaign. Make sure to specify who is responsible for putting in place a particular measure, and then prioritize the measures and suggest concrete solutions.
Using the Website ROI Overview Sheet
Once you have entered all of the data about a website, you will need to activate the project by selecting “Active” in the status field on the Overview page. When the website is terminated, you can deactivate the project in the same place. You can also suspend projects by selecting “Pause.”
If you have more than one website, you can get a quick view of how they’re doing on the “Overview” sheet, and you can write comments to elaborate on individual results and measures.
If the project is active, the ROI prognosis will be displayed. If the project has ended, the resulting ROI will be displayed. The prognosis for how many days it would take to achieve the ROI goal is also shown.
How the ROI Prognosis Is Calculated
The ROI prognosis calculation is linear, meaning that the traffic and activity on the website will be assumed to continue at the same rate for the duration of the project as it has up to when the current data was entered. However, traffic and activity could fluctuate; for example, a campaign could see a spurt of activity early on and then level off, while some websites have seasonal fluctuations. This is not factored into this simplified ROI prognosis calculation.
Behind the Calculator
The intention of the calculator is to help project managers, designers and developers start thinking about and planning for revenue as early as possible in a website’s lifecycle. By planning and setting goals, we are better able to evaluate how we work. If a website is costing a lot of money and eating up a lot of resources, then terminating the project and spending the resources elsewhere might be best.
Please share you feedback so that I can continue to improve the calculator.