Return on Investment Calculation for Online Businesses
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“Return on Investment” (also called “ROI” or “Rate of Return”) is one of the most important measurements for online business success. A high return on investment means that there is substantially greater income to cover the operating cost of the website. Or in other words, it simply means that the business is profitable.
Why is it important to measure ROI? If you need a business to last for a lifetime, it should sufficiently cover all of the operating expenses of the website. If the entrepreneur fails to meet this requirement, she/he will be forced to close down or sell the website to another owner.
In this article, I will illustrate possible ways to increase the return on investment in a website by proper investment planning. This involves selection of the proper web hosting company, using web development agencies, and/or even low cost tips on website marketing. Be warned that I am not recommending any particular web hosting or web development companies in this tutorial; it is your job to look for the right one that meets your requirements as stated in your business plan, and that includes % ROI calculation.
This tutorial applies to the following online entrepreneurial scenarios:
- You are starting a website or blog that offers content to your targeted visitors; at the same time, you earn money via advertisements like Google AdSense.
- You are starting an online shopping website that attracts visitors to buy items online.
- You are planning to start a charity website. Though it is non-profit, you still hope to increase awareness and funding of your project through donations.
This article does not apply to personal websites that are set up for non-commercial purposes.
Next: Explaining the ROI mathematics >>
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