Question

Your client's product costs us$50 to produce, and it sells for us$150. she's sold 10 units and spent us$700 on her adwords campaign. how would you calculate her return on investment (roi) to help her understand the benefit of using adwords?

Answer 1

ROI is the ratio of the net profit to the costs. To calculate ROI, take the revenue that resulted from the ads, subtract the overall costs, then divide by the overall costs.

ROI = (Revenue - Cost of goods sold)  /  Cost of goods sold

[US$1500 (revenue) - US$1200 (cost + AdWords spend)] / US$1200 (cost + AdWords spend)