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 Google Ads campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using Google Ads?

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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 Google Ads campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using Google Ads?

US$1500 (revenue) / US$1200 (cost + Google Ads spend)

[US$1500 (revenue) – 10 (number of products sold)] / US$1200 (cost + Google Ads spend)

[US$150 (sales price) – US$1500 (cost)] / US$700 (Google Ads spend)

[US$1500 (revenue) – US$1200 (cost + Google Ads spend)] / US$1200 (cost + Google Ads spend)

The correct answer is:

[US$1500 (revenue) – US$1200 (cost + Google Ads spend)] / US$1200 (cost + Google Ads spend)

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 Google Ads campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using Google Ads?
Explanation:

ROI is the ratio of your net profit to your costs. To calculate ROI, take the revenue that resulted from your ads, subtract your overall costs, then divide by your overall costs: ROI = (Revenue – Cost of goods sold) / Cost of goods sold.

Read more here: https://support.google.com/adwords/answer/14090?hl=en

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