What is ROI and How is it Calculated?

ROI, which is a kind of data that shows how the return on investment you make on behalf of your brand will be a great benefit.

The main purpose of this data is to show you how much return your investment will bring to you. In this way, you can see whether your investment should be sustained. Profit or actual loss rate can be calculated thanks to the ROI metric.

What is ROI and How is it Calculated?

ROI is very important data, just like Conversion Rate. If you are making a profit from your investment, the ROI rate should be above 100%. For example, if you have an ROI rate of 185%, every 100$ you invest will return you at 185$. At the same time, the ROI ratio of 85% indicates that every 100$ you deposit will return you at 85$, which means you are at a loss.

How is ROI Calculated?

The formula to use for ROI calculation is as follows:

ROI = (Return on Investment - Investment Cost) ÷ Investment Cost

You can fill in the above formula according to your own data and see if you make a profit or a loss when you make the transaction.

Now let's fill in the above formula according to the examples we gave for your better understanding.

Profitable example;

(190 - 100) ÷ 100 = 0.9

When you look at the result of the transaction, you see a positive ratio of 0.9. According to this result, you have made a 0.9% profit from your investment.

The example that money is lost;

(85- 100) ÷ 100 = -0.15

As a result of this process, you see a negative ratio of -0.15. According to this negative result, you have made a loss of -0.15 from your investment.

How to Calculate ROI for SEO

If you are considering hiring an SEO agency, but you may wonder how much this work will cost you and how much you will earn as a result.

In this case, the formula you will apply is as follows:

(Monthly Search volume% Click Through Rate)% Purchase rate) x Product Price = Earnings

CTR, or Google Organic Desktop click-through rate, shows the following distribution for the first 10 results encountered: