Profitability Calculators

 
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Instructions

  1. Fill in all fields in the calculator.
     
  2. If you are unsure of what a field means, hover your mouse over it. An explanation will appear in the box at the bottom of the calculator.
     
  3. The calculator will automatically display a result when all fields contain some value. (This is true even if you've only entered the first of two or more digits in the last field. Don't worry, it will recalculate the result as you add more digits.)
     
  4. When you change a number, the calculator will automatically recalculate the result.
     
  5. The cost of the ads has already been subtracted. The campaign is profitable if the result is greater than zero. (It appears in green for a profit, red for a loss.)
  6. Some percentages should not be over 100. If you ignore a warning about a percentage value being too high, the calculator will still work but the result may not be meaningful.
     
  7. Don't evaluate an ad campaign solely on the results from this calculator. Note the caveats below.

Caveats

This calculator should be only a starting point for evaluating campaigns. It can under or overestimate campaign profits/losses for many reasons, including:

  • This calculation assumes only one sale and can, therefore, greatly underestimate the profitability of an ad campaign. A new customer may become loyal. He or she may make several purchases over time as a result of a single ad exposure. To compensate, consider using an estimate of customer lifetime value in the "Average Sale" field.
     
  • Your mailing will create brand awareness that may not trigger an immediate response. If so, you will not count it as a response nor attribute a subsequent sale to the mailing. However, the mailing may contribute to a prospect's response through another channel. Had they not become familiar with your brand through the original piece, they may not have been significantly motivated to act through the second channel. If, because of the low attributed response and conversion rates, you decide to discontinue a direct mail campaign, you may find that sales through other channels also drop in response to the lower brand exposure.
     
  • The corollary to the previous point is that some click-throughs and conversions to sales are supported by brand awareness created through other channels. Since this calculator does not include the cost of those exposures through other channels, it may underestimate the cost of winning click-throughs and sales.