Return on Investment Calculation for Online Businesses - Domain Registration and ROI
(Page 3 of 4 )
There are several factors that influence the rate of return. It is important to control them in your business planning stage so that your business can attain maximum % ROI.
It all starts with domain registration. Here you have several alternatives through which you can save some money for your start-up capital. There are basically three approaches to domain registration which have their own weaknesses and strengths.
- You can register your company name as the domain name.
- You can buy a keyword-rich domain name which is already registered to someone else.
- You can buy a new keyword-based domain name.
If you are a new online business owner with a brand to promote, registering your company name is the best approach. Registering it will cost only a few bucks, as compared to buying a keyword-based domain name which could affect the long-term branding strategy of your business. Think Google, Yahoo and eBay. The domain name is their company name.
If you are planning to run a blog with a specific niche and earn income from Google AdSense, buying or researching a keyword-rich domain name could help associate it with your niche and could be profitable in the long run. Make sure you have done your research in advance as far as the main keyword which you will be targeting to be used in your domain name.
Let's look at an example. Say I have expertise in playing guitars and I am planning to offer a free guitar tutorial on a blog. I would like to earn income via Google AdSense. So I check the Google Keyword tool.
From this, I learn that "guitar tutorial" is attracting around 18,100 monthly visitors worldwide -- that's high traffic potential. And from using www.domaintools.com , I learn that GUITARTUTORIAL.COM is available for sale at around $750. You might want to read more on selecting domain names.
Now we can start doing some ROI computations:
- Planned hosting cost: $150 (for three years plan/package).
- Domain purchase (assuming this is the agreed price): $750.
- Web development cost: $1500 (assuming you plan to hire a fairly good developer).
- SEO Cost: $5000 (assuming you plan to hire a fairly reputable SEO company).
- Total investment: $150 + $750 + $1500 + $5000 = $7400
Now we will do a rough computation of the expected net profit. Assuming the site will reach Google's first page after a six-month SEO campaign for the main terms, and boasts a daily update of quality content, we can make the following estimates:
- Estimated monthly visitors to the site: 18000 (600 visitors per day coming from major terms and long tail variations of your targeted guitar tutorial niche and blog post).
- Estimated Google AdSense click through: 3%
- Estimated earning per click: $0.2
- Expected Net Profit = Estimated Monthly Visitors to the site x 3% x $0.2, therefore our expected net profit = 18000 x 3 % x $0.2 = $108
If you depend on Google AdSense alone as a source of income for your website, it will take $7400 / $108 ~ 5 years to break even.
And the corresponding percentage for the first year ROI:
% ROI = ($108* 12)/($7400) x 100%
% ROI ~ 17%
Next: Other Factors Influencing ROI >>
More Website Marketing Articles
More By Codex-M
/ 3 
