In this case, you need to use the MRE (Marketing Expense to Revenue) formula, which is very similar to ROMI. However, MRE is a more specialized indicator. It is more suitable for marketing managers and business owners.
To calculate the percentage of income spent on marketing (we are talking about advertising and paying specialists), you need to use the following formula:
Marketing expense to income ratio = Marketing expenses for a period / Income for the same period.
For ease of understanding, let's use the above example:
In one year, the company overseas chinese in worldwide data received income of 15.5 million rubles.
During the same period, the organization spent 1.7 million rubles on advertising and marketers.
Now let's calculate the marketing expense to income ratio: 1,700,000 / 15,500,000 = 0.11%.
It turns out that the company spends 11% of its income on marketing needs.
Example of ROI calculation in real estate
Let's assume that a person is going to buy a one-room apartment with a mortgage loan. The purpose of the project is to rent out the property. The cost of the apartment is 1,500,000 rubles. The down payment on the loan is 15% of the property value, or 225,000 rubles. The loan is issued for a period of 20 years at a rate of 10% per annum. You will need to pay 12,304 rubles monthly. The estimated rent for the specified apartment will be 15,000 rubles.
Now let's calculate the return on investment:
ROI = (15,000 – 12,304) * 12 / 225,000 * 100% = 14.4%.
Thus, buying an apartment will be comparable to placing 1,500,000 rubles in a deposit at 14.4% per annum. The project can be called quite profitable. However, it should be understood that tenants can move out, and the housing will be idle. In addition, it is impossible to rule out a decrease in loan rates in the near future.
Example of calculating ROI when acquiring a business
Let's consider a situation in which an entrepreneur is going to buy a small grocery store in a residential area.
The investment amount for the project will be 400,000 rubles.
Average monthly turnover (income) – 250,000 rubles.
The average monthly value of goods and distribution costs (expenses) is 212,000 rubles;
Let's determine the return on investment ratio:
ROI = (250,000 – 212,000) * 12 / 400,000 * 100% = 114%.
The indicator is slightly higher than the standard value of return on investment. When deciding to invest in this business, it is necessary to take into account the competition factor. The fact is that chain hypermarkets are able to offer a wider range of products at reduced prices. Thus, the project has high risks.
An example of how to calculate ROI when calculating the effectiveness of an advertising campaign
Let's say a blogger decides to take part in an affiliate program. He is paid a reward for each client who downloads and installs the online store application. To attract more traffic, PR in teaser networks is used.
The cost of advertising is 3,000 rubles.
Income from the affiliate program after the launch of the advertising campaign reached 6,500 rubles.
Now let's determine the return on investment ratio:
ROI = (6,500 – 3,000) / 3,000 * 100% = 117%.
ROI is a good metric to understand how effective a particular business operation is.
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